Young sports professionals should heed Craig Bellamy's warning - and consider specialist financial planning advice

In a frank press interview at the weekend, former Premier League footballer Craig Bellamy revealed how the fortune he earned as player had disappeared, thanks in large part to some unfortunate investment decisions.

Bellamy - who is now a coach with Burnley FC after a lucrative playing career that spanned two decades from 1996, including spells with Newcastle United, Liverpool and Manchester City - spoke about his recent bankruptcy, revealing that he owes nearly £1.4million to HMRC, and warning young footballers not to make the same mistakes he did.

The article stated that Bellamy’s financial ruin ‘is the result of a series of spectacular failed investments made on his behalf in properties … and a film partnership-tax deferral scheme that was targeted by HMRC and was responsible for plunging numerous other footballers and celebrities into financial trouble’.

Adam Osper, Managing Partner at wealth manager Evelyn Partners, says that while Bellamy’s experience is noteworthy given his profile as a player and the sums involved, it’s not uncommon for sports professionals to badly mismanage their finances either by seeking no advice at all – or by putting trust in unscrupulous middlemen.

Osper, who heads up the firm’s specialist financial planning team for sports and entertainment professionals, says: “Craig spoke of the ‘relief’ of bankruptcy, which reveals just how painful years of financial uncertainty and vanishing wealth can be. Chaotic financial management, at any level of income or wealth, can be damaging not just to someone’s financial security but also to their mental health. And this is particularly the case for sportspeople who have a short window of earnings that can largely disappear well before they hit middle age.”

Osper adds that it can be difficult for young sports professionals who hit the big time to establish a healthy relationship with money: “While sports teams and organisations are getting better at mentoring such life skills, it remains the case that athletes need to take control of their newfound prosperity, and resist the not-always helpful advice and demands coming at them from people they are close to or are introduced to. Central to this should be the realisation that they have to think about their future financial security and what could be a huge drop-off in earnings in their early to mid-thirties.

“Even well-meaning financial advisers might not always have the experience and specialist knowledge to devise a financial plan that is optimal for someone in this situation. So while it might be a case of ‘he would say that wouldn’t he’, we believe that a reputable financial planning expert with specialist knowledge and back-up resources like an investment management team, will more than earn its keep for someone who finds themselves in the situation that Craig did at the start of his career in the late 1990s.”

- A short career to establish financial security: A good saving and investment strategy must acknowledge what is likely to be a big drop-off in income at the end of the sporting career. Five or 10 years of earnings must be deployed carefully but profitably, so this requires some investment expertise.

- Don’t get obsessed with owning property: A wisely-purchased main residence could of course prove a good investment as well as a place to live. But location and occupancy can be an issue for sportspeople who might move around a lot or spend a lot of time abroad. Buy-to-let has lost some crucial tax advantages, is subject to some expensive and time-consuming red tape, and might not be for everyone – for instance, those who don’t have a real interest in property or the time and inclination to administer a property portfolio. Property investment schemes meanwhile must be approached with real caution, and those tempted should seek first and second opinions from reputable advisers or experts. Crucially, when a sporting career ends, the individual will need liquid assets and cash flow to supplement income, and property might not always be the best way to provide this.

- Beware ‘get rich quick’ schemes or plans that emphasise tax-avoidance: The old maxim of ‘if it sounds too good to be true’ still applies. Many sportspeople have been mis-sold investments, often in the guise of ‘tax-efficiency’, without seeking a detailed explanation of how they work or understanding the risks involved. It took seven years for the tax tribunal to rule in favour of HMRC over the infamous film partnerships scheme, so investors with spare cash must be wary of any new idea or project that promises big tax advantages, as even if they seem legitimate they might well not remain so.

- Consider personal accident insurances: Retiring due to injury severely impact career earnings potential.

- Make a post-sports career plan: Putting some serious and early consideration to how an income will be earned after they leave a sport benefits all sportspeople. It could be, for instance, that training or qualifications can be undertaken while still playing, or contacts made in the relevant industries or sectors.

- Never too late to get good advice: Ideally a young sports professional will start planning their financial affairs as soon as they start to earn decent money, and it can be the early years of a sporting career where planning will really pay off. But that is not to say someone in the later stages of their career cannot benefit from a financial MOT and ongoing advice – whether they have managed their finances poorly previously or not.

- Specialists with experience of working with sports people understand the typical trajectory of career earnings, how contracts work, how to communicate clearly and how to work with other professional advisers the individual might have. Moreover, financial planners at a larger firm are more likely to have sophisticated investment expertise behind them, as well as dedicated technical and tax expert teams.