Financial planning for a Premier League goalkeeper: Real life case studies
With an annual salary of £6m plus sponsorships, how could we help a Premier League goalkeeper protect his wealth?
The earnings of sportsmen and women is often well documented in the press, perhaps none more so than those of professional footballers. In a sport known for huge transfer fees, which result in equally huge ‘signing-on’ fees and salaries for its players, the weekly take home figure at the top level of ‘the beautiful game’, can often be hard to comprehend.
In the third part of our real life case studies series, we look at the financial advice we gave a premier league goalkeeper.
They think it’s all over…it could be, anytime
Much like our previous case study, which looked at the financial advice we gave an international pop star, longevity in this profession is uncertain. Unlike our previous case study, though, injury or ‘old age’ is more likely to be the reason for a career end, not lack of popularity in the public eye. A goalkeeper, who literally throws himself into his work, is arguably more at risk of the former.
Our client came to us relatively early in terms of age, when he was only 25 years old, but there was no doubt he was at the peak of his career. But when earning £6m per year (approximately £115,000 per week), topped up by various sponsorships and endorsements, he would be forgiven for wondering what he could possibly have to worry about.
Easy. Saving for the day when he was no longer able to be the goalkeeper for his top London club.
It’s all about goals
Goalkeepers are not concerned with scoring goals. Goalkeepers’ priorities are to protect their goals, much like a good financial planner, who wishes to protect the financial goals of his client.
What were the financial goals of this 25 year old multi-millionaire?
1. To understand how much money he and his young family would have, when his career ended
2. To borrow money to buy UK property, which he would rent out
3. To have the money he had saved so far, properly looked after
It’s a game of two halves
We now knew what his financial goals were. The second stage was to fully understand his current situation. In order to provide the best financial advice we could, this included understanding how much he was spending, how much he had saved, what he could afford to save on a regular basis, and of course, the important ‘what if’ scenarios.
1. How much insurance would his club pay out if his was injured?
2. Did he need to top this up?
3. How much did he want to borrow and what were his existing borrowings?
4. How much was the property he wanted to buy?
5. How did he want his money managed? Discretionary or with full financial advice?
After gaining a thorough understanding of his aims, aspirations and current situation, we were able to carry out lifetime cashflow modelling to give him his ‘magic number’ – the amount his would need to have in order to sustain the lifestyle he wanted, when his career ended.
Our client had very clear ideas about what he wanted to achieve, and by when. It was now over to us to advise on how to maximise on his situation, and come up with the winning ‘formation’ for his financial situation. Here is the actual financial planning advice we gave:
1. Tax planning
Our client was a resident in the UK for tax purposes, but was non-domiciled or, to put it another way, born abroad. Working with an accountant, we arranged for the money from his sponsorship deals, endorsements and image rights to be paid into an offshore company for tax planning purposes, taking advantage of his non-domiciled status.
We concluded that he was insured at the maximum pay out level possible in the event of a career ending injury or illness through his club, so no further cover could be sourced.
The goalkeeper had a multi-million pound investment portfolio already and so we took this under our management and made some tax-efficient investments for him, including maximising his UK pension contributions to take advantage of 45% income tax rebates.
We used his investment portfolio as well as some cash as collateral against borrowing for a new buy-to-let property.
5. Multi-currency accounts
We set up multi-currency bank accounts for him in Euros and Sterling so that when he was playing at home and abroad, in European football competitions like the UEFA Champions League, he could use his ATM card to access cash.
6. Regular meetings
We agreed to 6 monthly reviews of his investments which would be timed to coincide with breaks in the Premier League season. This way he could concentrate on his football without making rash financial decisions during times of high stress.
Another interesting client with complex financial requirements, as is often the case with high net worth international professionals.
A lesson to learn from this case study? Future-proofing your financial situation is paramount. Or in other words, defence is the best form of attack.