Stories | August 11, 2016

Going for gold? Why it can be worth earning less for longer

Many people envy Olympic sports stars, imagining big money and a fantastic lifestyle. But you can be better off earning an “average” income.

US basketball star Kevin Durant reportedly earned $150,000 a day in the year-long run-up to the 2016 Olympic Games in Rio de Janiero, Brazil. When we hear what some sports stars earn, it can be easy to assume that “ordinary people” are relative losers at life. After all, it can seem harder all the time to stretch an average income and make ends meet.

But it’s easy to get a false impression of the financial reward on offer to many superstar athletes. Availability bias means we tend to forget about the far larger number of sportspeople who do not earn much money – because they are typically not the ones in the public eye.

Read on to learn more about the cost of Olympic success.

Stars in our eyes
US Bureau of Labor Statistics research into weekly earnings by occupation underlines that the highly-paid heroes of news broadcasts are rare, even among the small subset of the population who actually become successful athletes. Because of the stars’ rarity, they attract a lot of attention from media and from people aspiring to emulate their success. Only the lucky few make a living from playing sport.

Price of success
What about the high cost of becoming a successful athlete in the first place? While some sports, such as football, may have relatively low entry costs – perhaps a football, some friends, and a pair of training shoes – a budding star must invest in travelling to more competitions, better kit, regular coaching, and additional medical and health expenses.

It can cost upwards of six figures to become an Olympic-level athlete – yet prize money for medal winners is only in the tens of thousands, as this article reveals. The Fiscal Times breaks down potential training costs in seven expensive Olympic disciplines: shooting, sailing, equestrian, archery, swimming, fencing and gymnastics.

Even for the high-profile, sponsorship may not cover all the costs involved. Olympic sportspeople often need to hold down a “normal” job to make ends meet as well.

Short careers
And obviously, many successful sports people only stay on top of their game for a few years, when they're within a relatively narrow age band. Often, the stars may struggle in many ways after they retire from sport. It can be tempting to simply assume the Matthew effect: “to all those who have, even more will be given”. This idea in sociology alludes to a Gospel of Matthew saying that the already-rich will always get richer – but it isn’t always true, as this paper suggests.

Health versus wealth
In football, top-class players are rarely older than 40; often a footballer’s performance peak is around age 31. The same is true for many Olympic sports, as this Washington Post Games age chart shows.

Most of us need to keep earning and doing well in our jobs. Accidents and injuries can put any of us out of work for long periods, and we all get older – with health risks typically increasing during our lifetimes. But an athlete must try to stay on the very top of his or her game; he or she may need to actually be better than rivals in his or her discipline to keep earnings up. Specialist sports insurance can be very expensive too.

What happens then?
For ex-sportspeople, there are high rates of personal bankruptcy. When others were studying, future sports heroes may have been training hard on the pitch, so some retire without a plan or even an education, and as a result earn only small amounts for the rest of their life. A few may become coaches of other athletes, but typically these roles are not highly paid.

The tiny number of ex-players that do very well and remain in the public eye, like David Beckham, can skew our perceptions. Steady earnings over the longer term can add up to a better lifetime result, when all factors are considered.

eZonomics team
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