Guest blog post: Financial literacy for amateur athletes

November 10, 2017 

By Alexandre Bilodeau, two-time Olympic Gold Medalist for Canada

Financial literacy is a key life skill that you need in order to succeed, and nobody knows this better than aspiring amateur athletes.

There are three phases to an athlete’s career in sport, and each phase involves a different financial reality, and requires different financial skills. 

Basic training is the first stage, and the longest. For 99 per cent of athletes, this will be the only phase. During this phase, the cost of doing a sport is higher than the revenues you generate. It’s expensive!

Now, some sports cost more than others. Diving, for example, costs a lot less than tennis, golf or skiing, as these sports require players to travel 12 months of the year to continue their training, and to access the best facilities. All of this often begins at a very young age. For example, I started travelling to Whistler in the summers when I was only 8 years old. 

As a young athlete joins provincial and national teams, these expenses increase exponentially. So how do you pay for it?

The good news is that in Canada, we have developed lots of programs locally and nationally to support our young and upcoming Canadian athletes through grants and scholarships. Applying for free money is an important skill! It requires research, persistence and follow-through.

In addition, athletes should consider grants from foundations. In the province of Quebec, we have an impressive number of these, such as the Fondation de l’athlète d’excellence du Quebec (Athlete of Excellence Foundation of Quebec).” Foundations support young athletes by linking them to the business community, which gives them annual grants on the condition the athletes continue their education while they train.  

But don’t get me wrong, there’s always place for improvement in all provinces across Canada to help our developing athletes achieve the next level. 

This model works very well, not only to provide resources for training, but also to prepare young athletes for the next two phases of their career. It does this by helping them develop a network within the business community, and by reminding them that education is essential to their long-term success in retirement. 

It’s a reality that very few athletes make it to the second phase, which I like to call the “on top of the world” phase. In this phase, an athlete reaches the top ranking in the world, and can make a living by competing. 

At this point, most of the athlete’s expenses are covered by Canada’s national sports organizations. Athletes may also find it easier to get private sponsors at this point in their career.

But that doesn’t mean finding sponsors is easy. Very few companies are actively looking for athletes to endorse their products. The four factors that determine whether you can land a sponsorship are: 

  • the type of sport
  • the ability of the athlete to maintain high performance standards over time
  • who you know (contacts) 
  • the image the athlete projects

In Canada, we often compare ourselves to U.S. athletes, and we think all their Olympic champions are superstars and multimillionaires – for example, swimmer Michael Phelps. But the truth is that Americans have lot more Olympic champions than we do, and only a few of those become superstars. Many Olympic champions in the US are still struggling financially. 

At this second stage of their career, Canadian athletes can use a special financial tool called an “Amateur Athlete Trust Account” which acts as a tax-protected account for amateur athletes, similar to an RRSP. Revenues can be accumulated in the qualifying account without being taxed for up to seven years after an athlete retires. Also, expenses can be deducted against these revenues. 

There are many unknowns in this phase. The question that most athletes ask is, how much should I save and how much should I invest in my career? – for example, paying for extra professional help and extra training. The problem is, no-one knows how long this phase will last. Unfortunately, an injury can suddenly put an end to a career. 

The third phase of any athlete’s career is retirement, which for athletes happens at a young age relative to the rest of the population. Most athletes fear this stage even though it’s unavoidable. It’s not easy for an athlete to reinvent oneself while leaving behind a sport you excelled at, and loved. And, as financially insecure as amateur sport is, the unknown can seem more so. Transitioning into retirement certainly carries real financial challenges. 

All of this underlines the importance of retirement planning several years in advance, in order to prepare for the challenges of returning to school, searching for a job, or starting a business.  Using tools like an athlete’s trust account will help.  In my case, I knew I wanted to be an accountant so during my three years of study to obtain my professional title as a CPA, I also lined up an internship with the firm KPMG. I was also able to start my own business as a keynote speaker to ensure a revenue stream through my study years. And trust me, entertaining hundreds of people for an hour has never been natural for me! I deeply believe that planning years in advance is key for any career transition. 

If I were to give one piece of advice, it’s that athletes need to continue their education while they train for their sport, so that they can reach their dreams in retirement. After all, your post-retirement career will very likely be much longer than your sports career.

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