You’d think that Olympians (the athletes, not the Greek Gods) would be swimming in a sea of money and fame. Or that at least, that they wouldn’t face financial problems. However, the reality is very different, and very harsh.
Did you know that many athletes from the USA alone, who have either already taken part or will take part in the Olympics, are broke? Did you know how to cope with their mounting expenses for training, they work at banks, financial institutions, and even as cab drivers? Why are so many of them so far from financial independence?
Here’s something about the Olympics, something harsh which you may not know: you don’t get paid unless you win a medal. Of course, the more medals you win, the more you get paid. The more sponsorships you win. But what about the ones who don’t win? For them, the ground reality is very different from what we know. Without sponsorship, you can only go so far. You can’t train, and before long you can’t compete either.
Their long list of expenses include:
Fees of sports coach
Diet and nutrition
Fitness club membership fees
You’ll be surprised to know that all this, on average, costs $2,50,000.
In the USA, one does not get paid to compete. In fact, it is the only major country where this still happens.
There are three main ways in which an athlete can make money:
Stipends: In the case of the USA, athletes can get stipends from the US Olympic and Paralympic committee, or from the groups which run sports teams. However, sometimes, they don’t get what’s on paper. For instance, on paper it may show you are getting $2000 a month. But in reality, you are getting barely $500 a month. Hardly enough to win you your financial independence. How much stipend you get depends on your performance and amount of awards. This again depends on your sports, and this is where it gets a bit technical. In your sports, your competitors in the Olympics may be 30 competing for 3 medals. Or, they can be 130 people competing for 30 medals. It depends on your niche sports. Training for different sports cost varied amounts. For instance, training in gymnastics costs a lot.
Sponsorships: There are companies willing to sponsor sport items, equipment and uniforms with their logo on. However, this comes at a price too. Sponsorships are performance-based. One needs to win a certain number of awards to get a sponsorship. Sponsorship deal amounts range wildly, from $500 to $200000. However, sponsorship also depends on the athlete’s popularity, and this is where the problem starts. Sometimes, people who work and train hard are overshadowed by those with a bigger fan base. Therefore, they earn less or nothing at all. This income isn’t sustainable enough to guarantee financial independence.
Prize money: Finally, we have prize money. Athletes can win this by taking part and placing in the events leading to the big league games or events like the Olympics. For instance, at the Diamond League Meet, winners get $10,000. However, this puts a lot of pressure on the athletes. They invest a lot in their training, and need to profit or at least break even by winning prize money. As always, competition is fierce.
In the 2012 Olympics, the track and field athletes got less than $15,000 annually. As you can see, this is much less than what they require to train and keep going. Thus, they have to depend on sponsorships, prize money and stipends. There are therefore valuable lessons in financial independence from these Olympic athletes
Manage your expenses and increase your savings rate during your earning years
Manage your income streams such that you have multiple sources of income
Don’t count on income streams that are one-time windfall gains like medal winnings, or time-bound activities like sponsorships.