With 2010 NFL Draft now complete,Rookies need to plan for 2011 Lock-out

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) April 26, 2010 --
2010 Rookies need to prepare financially for possible 2011 lockout


The 2010 NFL draft will launch a new class of athletes who may very well focus on living a
higher lifestyle than they can afford without considering the financial challenges awaiting

them. The financial decisions that players make even before they sign their contract can affect the quality of their lives for years beyond their playing careers. Given a possible 2011 lockout, this rookie class has much more at risk than prior rookie classes. For one, union dues are increasing from $10,000 to $15,000. Further, those players who qualify for Group Licensing Royalty payments will have to contribute an additional $10,000 in union dues. NFLPA Executive Director DeMaurice Smith has recommended that all players save 25% of their salaries over the next two years. Further, a Dues Lockout Fund has been created to provide players with up to $60,000 in emergency funds in the event of a lockout.

First-round draft picks will sign contracts with large salaries and bonuses. Most rookies, however, will not.

This year’s draft class will earn minimum salaries of $325,000 in their rookie year, then $400,000 in year two and $475,000 in year three. These salaries apply to all but the first 32 players drafted (although round-one draft picks can choose to take these minimum salaries if it makes the most sense in their total contract package). The importance of protecting one’s signing bonus in a possible lockout year is crucial as players may need to live off of their signing bonuses in the event of a lockout.

Unlike MLB and NBA contracts, NFL contracts are not guaranteed. Signing and roster bonuses are the only real guarantees in what are traditionally four-year NFL rookie contracts. Another complexity for NFL players is that they only get paid 17 paychecks during the season and then receive no paychecks during the off season. It is crucial that they create an intentional spending and savings plan well in advance of the off season.

Let’s see how the numbers play out. A rookie who receives a $1 million signing bonus and a starting salary of $325,000 will net about $1.2 million (before any spending but after fees taken by a business manager, agent, taxes, social security and union dues) over the average NFL career of 3.3 years.
If the player earned 7 percent on investment savings while spending $100,000 after taxes per year during
his 3.3-year career, he’d accumulate $1 million at retirement. This will create an annual income stream of
$40,000 (with annual cost-of-living increase) if he wants his money to last for the rest of his life.
If he continued to spend $100,000 after taxes and had no other earned income, he would run out of
money after only nine years.

Being prudent in the early years is crucial to achieving ultimate off-the-field success. Rather than

spending, athletes need to save. Especially in this economic environment where credit is almost impossible to get, ke