Why footballers stumble in their finances

This is an audio transcript of the FT News Briefing podcast episode: Why footballers stumble in their finances

Marc Filippino
Good morning from the Financial Times. Today is Monday, November 8th, and this is your FT News Briefing.

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British industrialist Sanjeev Gupta faces more scrutiny of his business operations, this time from authorities in France. And in the US, President Joe Biden is pushing ahead with his next giant spending bill. Plus, they have glamorous lifestyles and make insanely high salaries. So why can’t some pro athletes keep their finances straight?

Sol Campbell
There are some guys now, 18 years old, and they’re earning £10,000 a week. And when it comes to that level, you can easily lose yourself.

Marc Filippino
Yes, that was British football legend Sol Campbell. He was on the FT’s Money Clinic podcast. We’re bringing some of that conversation. I’m Marc Filippino, and here’s the news you need to start your day.

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French authorities are investigating the business operations of Sanjeev Gupta. That’s the UK industrialist once known as Britain’s saviour of steel, but his empire is under scrutiny because of its close links to the failed supply chain finance company Greensill Capital. Now, the Paris prosecutor’s office told the FT it’s probing Gupta’s French operations over allegations of misuse of corporate assets and money laundering. Gupta’s GFG Alliance has several important assets in France. They were amassed during a multibillion-dollar acquisition spree financed by Greensill. Paris prosecutors say they launched their probe in July after public officials reported suspicious activities. They declined to provide details.

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President Joe Biden is pushing ahead with plans to transform the US economy. Just last week, lawmakers passed the president’s $1.2tn infrastructure bill. Now, Biden is vowing to pass an even larger spending bill that would invest in a broad range of social programmes. He’s pushing forward even as his popularity has ebbed, and after his political party took a hit in state and local elections last week. The FT’s US political correspondent Lauren Fedor says the White House plans to pass the “Build Back Better” bill by the end of the month.

Lauren Fedor
That would obviously be another victory for the White House. But particularly it would be a victory for them when it comes to not only appealing to voters, many of whom polling indicates support a lot of the measures that are included in this bill, but also progressives within his own party who have really been pushing the president to, you know, go big, do more when it comes to these kind of legislative ambitions. Particularly when we have only one year left till the midterm elections. And at that point, we could see the Democrats losing control of Congress and maybe not having another chance really at doing something like this.

Marc Filippino
Lauren Fedor covers US politics for the Financial Times.

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Professional athletes may have short careers, but they can have huge earnings. And they often find themselves swimming in money that they’re not equipped to manage. Some even end up in dire straits. The FT’s Claer Barrett spoke to some British footballers about this for her Money Clinic podcast, and she joins me now. Hi, Claer!

Claer Barrett
Oh, thanks for having me, Marc.

Marc Filippino
So Claer, you didn’t speak to just any British footballer, and I’m going to put aside my American vernacular for a second and not say soccer player for this one. Claer, you spoke to the one and only Sol Campbell. For those who aren’t familiar with him, tell us who he is and why he’s a big deal.

Claer Barrett
OK, so Sol Campbell, he is a legend of English football. I mean, he has played for some of our top teams like Arsenal, he’s been in the English national team. And in his day, he was one of the highest earning Premier League footballers. And he’s a famous pundit talking about football on TV, so he’s really a national institution in the UK.

Marc Filippino
OK, so he knows the game inside and out. I want to play a clip of what he told you about footballers and money.

Sol Campbell
There are some guys now, 18 years old, 17 years old, and they’re earning £10,000 a week and more. And when it comes to that level, you really got to, you know, watch yourself because you can easily lose yourself. If you have a good head on your shoulders and you got good people around you, you’re OK. But if you haven’t got that, you can end up losing so much money and in time, you’re 25, 27, 28, you’ve got no investment other than your house.

Marc Filippino
So Claer, what makes young athletes so vulnerable to mismanaging their money? What does all this money at a young age do to these athletes?

Claer Barrett
There is just enormous temptation to spend, but also to do pretty risky things like gambling the money away, punting it on high-risk investments like crypto. There’s quite a lot of neurological research that’s actually coming to the fore now to say that people who are in risky professions like footballers are kind of perhaps more drawn to risky activities such as gambling. Another, perhaps more traditional way to lose lots of money, getting divorced. And then finally, the amount of financial scams that are targeted at footballers who are, like many of us, got lots of money, but they haven’t got much time to look into things. So they maybe trust advisers that they shouldn’t really trust, don’t look into these things, sign up, and then find out years later that they’re on the hook for a massive tax bill.

Marc Filippino
So Claer, you actually talked to a football player who got into pretty bad financial trouble. Can you tell us a little bit about this fellow, Gareth, that you spoke to?

Claer Barrett
Yeah. So Gareth Farrelly, he started off as a professional footballer for Ireland and he moved to the UK, played for top teams over here like Aston Villa. He was 32 at the peak of his career and this terrible thing happened to him.

Gareth Farrelly
Thirteen and a half years ago I got sick on the M40, I had an aneurysm and I nearly died. So that kind of put paid to my football career, so it was easier for me to kind of transition. But obviously, within my recovery from my illness, I had tax authorities at my house for a debt that I knew nothing about.

Claer Barrett
Gareth is an example of a footballer who trusted his financial adviser. Signed up for a scheme which sounded like a great investment to invest in British films. Investors were being told, you know, British film, the industry is on its knees. It needs money to compete with Hollywood. And if you invest, then in return, you qualify for these big tax breaks. Now in itself that was true. But some of the ways that these schemes were engineered fell on the wrong side of the tax authorities. And the advisers put their clients into these schemes without the footballer, say, explaining what the risks were. And then years later, they were caught up with huge tax debts, which they weren’t expecting. And in Gareth’s case, and in many other players cases, by then they’d retired from their professional careers. So they weren’t earning these fantastic salaries anymore. They were trying to find a life after football, a new career, doing something else, and at the same time, they’ve got these huge debts.

Marc Filippino
OK, so this is all in the context of soccer, sorry, football players. Are there any financial lessons for us, non-athletes?

Claer Barrett
It’s a fantastic example of why we all need a bit of financial planning in our lives. There’s an awful lot that mere mortals, non-sports people like myself, can take away from this thinking about the future, making plans for retirement, being prepared for that curveball that could come and hit you. You know, in the case of Gareth, it was having a horrific accident. In the case of other footballers, it’s just having an injury that can happen at any time. You know, and then your salary can be gone, can be lost to you. And just putting plans in place for how you’re going to transition to the next stage of your career or ultimately, how you’re going to make money in retirement. How the investments that you make today are going to provide for you in the future and whether you’ve got a lot of money or a little money, these are all things that we need to be thinking about.

Marc Filippino
Claer Barrett is the FT’s consumer editor and the host of the FT’s Money Clinic podcast. Thank you, Claer.

Claer Barrett
Thanks for having me!

Marc Filippino
The first part of the Money Clinic’s two-part series on football and finance is out now. The second one is out tomorrow. Make sure you subscribe to Money Clinic wherever you get your podcasts.

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