Q1. There’s been a few fairly high-profile bankruptcies and IVAs with elite athletes. What are your thoughts about these and is this a growing problem?

Max: It is a big problem right now (and has been for some time now), and unfortunately it’s only getting bigger. Ironically, we are in the biggest financial boom time in the history of football in particular and most sports in general, yet the number of player bankruptcies and IVAs is growing at an astonishing rate.

I can remember a specific instruction I had as a sports lawyer several years ago. I was advising a prominent Premier League player with an international career. He owned over a dozen properties, none of which were rented out. He was paying for 12 mobile phone contracts, some of whom he didn’t even know. And that was just the tip of the iceberg when we did our research into his finances. He was on £60,000 a week, spending about £80,000, and he had no idea how.

This is just one example, but it’s indicative of a larger issue where you have individuals in their early 20’s (or even younger, for some of the most talented elite athletes), looking ahead to maybe a 15-year career at best, suddenly thrust into the world of the rich and famous at the stroke of the pen when they sign their first big contract. The world is at their fingertips, and there is no shortage of requests from their circle of contacts – whether well-intentioned or not – looking to tap into their financial power.


Q2. There seems to be a common pitfall for athletes to be advised into badly managed or even dubious investment schemes (e.g. Ingenious Media tax scandal https://international-adviser.com/celebrities-face-450m-tax-bill-over-film-investment-scheme/). How is the McFaddens Sport & Entertainment Division equipped to help avoid these pitfalls?

Max: McFaddens Group is set up for and very clearly going to follow the best principles of a family office as a living, breathing entity. That has to include regulatory oversight, adherence to best practices and board governance whilst also tapping into the significant expertise which is both in-house and available via the broader McFaddens network.

When we look across the spectrum of services we provide all of our clients – not just elite sportspersons or entertainers – there has to be transparency, disclosure over fees, and extensive stress-testing of any initiative we advise a client through. That’s not just because we have to, it’s because it’s in both our client’s and our own best interests. If we steer a client into a bad deal because we haven’t done our homework, that’s bad for us.

The other side of it is that we approach every piece of advice from all angles, whether it’s from a legal, tax, wealth gain or preservation, lifestyle or other perspective. We handle all of those facets in-house, so that’s a benefit to our clients that wouldn’t present itself in several separate relationships where they are hyper-focussed on one angle.


Q3 How do players protect themselves and what recourse do they have in any subsequent litigation for poorly advised investment decisions?

Max: First of all, the protections are the same, whether you are an elite athlete or inheriting family money, or if you’re a sophisticated investor or a novice. Take independent advice and make sure that anyone providing a service or offering has Professional Indemnity (PI) cover behind them. You want to make sure there’s a pot to draw from at the end of the relationship if it all goes wrong.

We see it all the time when advising players who have grown up with fellow players as their friends and confidantes. They often approach decisions from a “changing room” perspective and just trust their teammates’ advice rather than enlisting the checks and balances of independent guidance. One of the more recent “crazes” we’ve seen is around crypto currencies including bitcoin, but you can substitute that with just about any other scheme that’s been presented down the years.

Having a family office to manage your KYC (“know your client”) process, your DD (“due diligence”) process, is a real differentiator.


Q4. Can we dig a bit deeper into the irony mentioned in question 1? Why do so many players face financial difficulties during what is currently the biggest boom in sports earnings?

Max: Firstly, I want to applaud clubs, governing bodies, record labels, and other organisations that guide these elite entertainers, for coming a long way in education. It wasn’t long ago that these teenagers and young adults were forced to educate themselves on things like wealth management, investment decisions, reputation, and other complex considerations. We’re starting to see more examples of organisations taking the long view of how education early on can play a big role in helping their players or entertainers avoid pitfalls.

Now, to answer your question, even with that educational element improving, you’re still dealing with an audience that inherently lacks trust in external advisors. There are too many stories of young sportspeople or entertainers being “turned over” several times by advisors who have pitched them with platitudes of having their best interests at heart, only to steer them in the wrong direction that ends up costing them more money and creating problems. So lack of trust is a major deterrent for a lot of these individuals getting good advice.

I had a big case when I was a lawyer involving another major Premier League player. He’d had success in the League, played in the World Cup and other major international tournaments. He was working with an agent who set up a pension plan for him, and that agent ended up scraping c£2 million off the pension plan illegally. The sad part of it was, he had legal recourse, but when it came time to agreeing fees with lawyers and investigators, the player didn’t trust external advisors and just ended up writing off the £2 million.

Ultimately, the reason for the dichotomy of the financial success of clubs and the increase in financial difficulties from players, is that the more money that has come into the industry, the more we’ve seen bad actors preying on players. That creates a self-fulfilling prophecy of players not seeking the right advice because they simply don’t trust external advisors.


Q5. Clubs are getting better at educating players on financial management, but it’s not perfect and there remains a huge support gap in retirement. What more could be done?

Max: One of the biggest issues facing most elite athletes and entertainers is that their high-earning potential is typically much shorter than other industries. They are accumulating wealth for 10, perhaps 15 years, before they move to the next phase of their lives post-career. Furthermore, as life expectancies increase, particularly for active, fit individuals, you could be looking at upwards of 60-70 years of retirement where their prime earning years are behind them.

One of the things I’d like to see more of – and frankly there are some examples in football where they are doing this very well – is clubs employing their players after their playing careers are over. Whether that’s in coaching, or being club ambassadors, or elsewhere, that kind of relationship end.