Chris Pronger Explains The Realities Of An Athlete’s Finances

This story is just too good not to share even if it doesn’t specifically revolve around the Canadiens. It does however, revolve around every athlete on the planet.

Hall of Fame defenceman Chris Pronger took to Twitter today and posted a series of Tweets explaining the realities athletes face when they make millions of dollars.

To save you time, here is the full transcript of the tweet.

"I played 20 years in the NHL. I was one of the highest earning NHL players of all time. And friends with many other pro athletes.My guess is more than 50% of pro athletes have financial issues in retirement.Here are 3 problems I’ve seen (and some stories). Point #1: Athletes tend to be wasteful early in their careers and think the money train will last forever. (Been there done that) It doesn’t. We are only one injury away from retirement. Always!I had a $1M signing bonus at 18. That’s a huge sum for a young adult. Huge! Understanding the magnitude of that was daunting say the least. I was lucky to have great mentors early on. Many aren’t as lucky.When I first turned pro in 1993 a lot of players at that time made around $300k/year. Nowadays, the median salary in the NHL is maybe around $2m.On a $2m/year salary, there is anywhere from 39%-56% in taxes give or take. But there’s also agents fees (3-5%), escrow and much more Then there’s job related expenses. A chef/nutritionist for some, off-season trainer, $5k-10k/month for a house near the practice facility.An athlete can easily spend $20k/month. And since the avg. career is 4 seasons, an athlete might have $2m-$3m in savings when they’re done. But with spending habits already formed, in a few years there will be issues. And in my opinion, this is a fairly optimistic scenario.For example, I’ve heard crazy stories about guys spending $1M in a strip club ! I know a guy who had a $2M signing bonus. He immediately bought $400k in cars, dropped $1.5m on a home for his mom. But didn’t realize he owed taxes on it! knock knock it’s the IRS.So, while the earning can be great. It’s easy to spend a lot…and the income doesn’t last as long as one might think. Which brings me to point #2: People take advantage of athletes. You always have to have your guard up.My teammates and I joked that there were professional deals and then athlete deals. Financial advisors, lawyers, etc…they assume we don’t read the paperwork (often true for many) and charge us more than the average person.You’re in your 20’s, a public figure, celebrity of sorts and everyone knows you’re making money. You’re a mark. At times I felt like they had 2 sets of documents: one for athletes and another for everyone else.Another example: Very common to get a pitch for an investment that needs $500k and closes in 3 days. Why are they doing this? Because they can’t get $ from alleged more sophisticated investors.After a few errors myself, my rule is: If someone needs an answer right now, the answer is always NO. They learn this lesson real fast. Another example: athletes are convinced to give power of attorney to advisors, which means they do not control their money. This is crazy!Aroldis Chapman, NY Yankees pitcher, had $3m stolen from him by his financial advisor thanks to the power of attorney. We’re pro athletes. Not pro-investors. So I understand why we sometimes make that mistake.But the sad part is that shady professionals are far more common than most think. And it’s a common trap many fall into nut just athletes. And finally, point #3: Many players have an entourage to take care of. It can be hard for many to let go of friends from back home.I’m lucky not to have had too many issues with this. But we have seen many instances of this. Often, athletes have the attitude of “if one of us makes it, we all make it.”That means unqualified friends on payroll, investments in deals because we grew up together, and big entertainment bills. This is another dangerous trap. Instead, we need to be vigilant about saying NO, which is always tough.I’m new to this Twitter game. But I have over 20 years of stories about playing in the NHL, financial stories, and a whole lot more. And I intend to share some of the best ones.So, give me a follow if you want to hear more. And comment on this thread and let me know what other stories you want to hear. Thanks for reading!"

How would that impact someone in Montreal? Let’s take a player who’s on the median like Pronger says and makes $2 million.

To begin with, we have to convert the salary into Canadian Dollars since all players are now paid in American Dollars (it wasn’t the case in the past). With the current dollar value, the player’s salary is $2,497,090 Canadian Dollars.

At that salary, the player would find himself in the highest taxable bracket on both a provincial and federal level. Anyone making more than $216,511 pays a 33% income tax. That’s $824,039.70 deducted from the salary leaving a total of $1,673,050.30.

But since we live in Quebec and we love to pay double, an annual salary of more than $109,755 means you have to pay 25.75% in taxes. That’s $643,000.68 deducted from the salary.

After all is said and done, player is left with $1,030,049.62 and that’s just in taxes. Let’s say player’s agent charges a 5% fee and we’re now left with $905,195.12.

The current escrow agreement with the NHLPA states that a player must submit 20% of their salary before taxes. So player in Montreal is now left with $405,777.12 to live with.

Now 400K is nothing to spit at. Most of us would be more than happy to have that kind of money but when you consider that it’s the approximate amount a player is left with on a $2 million salary, it’s no wonder there are numerous players who turn their backs on the province of Quebec in favor for some of the tax free havens in the United States. The same player who goes and plays for a team like Vegas or Tampa Bay ends up with $1,500,000 in bottom line salary.

All of this of course, doesn’t take into account any other fees including union, retirement and what have you.

This was an incredibly enlightening story that Chris Pronger shared with everyone and really opens your eyes as to why some players require “overpayment” when the time comes to negotiate a contract.

This is a good time to listen to some Pink Floyd, am I right?

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