Financial managers a hit with prosBY SONG JI-HOON
In professional sports, annual salaries in excess of 100 million won ($91,000) have become common.
According to data from the Korea Baseball Organization, the average salary - excluding foreign players - is 193.25 million won.
With the rising popularity of professional baseball, there are 140 players who earn 100 million won or more a year, with Kim Tae-kyun of the Hanwha Eagles the highest paid at 1.5 billion.
Salary statistics for the nation’s top football league tell a similar story. According to the K-League, the average salary is 193 million won per year, with Jeonbuk Hyundai Motors striker Lee Dong-gook the best paid at 1.14 billion won.
While players still focus on how to make more money, many are paying an equal amount of attention to how much they spend and save.
The traditional strategy was to invest in real estate. Stars like Park Chan-ho, Lee Seung-yuop, Park Ji-sung, Ki Sung-yueng and Seo Jang-hoon built or bought buildings from which they collect rent.
But with the slowdown of the economy and a sluggish real estate market, more stars are seeking help from financial consultants to manage their money.
“Not only for athletes, but for salarymen, it is very dangerous to think, ‘I’ll spend what I want to spend and then invest the rest,’” says Park Kwang-soo, a director at PCA Life. “It’s best to have a diverse portfolio of savings, insurance, stocks and real estate.”
However, he believes financial management of players should be different from that of regular salarymen because sports careers typically last 20 years at the most.
“Athletes’ salary levels can change a lot depending on their performance, and they retire around the age of 40,” he says. “Athletes can make the same amount of money in a short period that salarymen earn in their lifetime, so spending and investments should be managed with care.”
Park, 40, played football at Yonsei University, but serious knee injuries ended his career. So he changed his major and has become a well-known financial consultant for sports figures.
His clients include top footballers Lee Chung-yong, Lee Keun-ho and Kwak Tae-hwi as well as Incheon United FC coach Kim Do-hoon and Korea Under-17 national football team coach Choi Jin-cheul. Basketball players Park Ji-hyun, Choi Jin-soo and Ki Seung-ho also use his services.
Park recommends that professional athletes’ money management should be based on the “4-3-2-1 rule.”
Number 4 means players should limit their living expenses - including education costs - to no more than 40 percent of their income.
“It’s not right to double your spending just because your salary doubles,” he says. “Players would have a hard time reducing their spending if they face a salary cut or are forced to retire.”
Park says the “3” means players should save 30 percent of their income as a contingency fund for near-term expenses, such as marriage, injury and coaching or training.
Number 2 means 20 percent of income should be saved for retirement. Park points out that players will need money when their children get married or go to school, and pension insurance can be helpful.
The remaining 10 percent of income should be set aside for the unexpected, such as accidents.
However, Park adds that the “4-3-2-1” rule is not set in stone. It should be adjusted to best fit the situations of individual players, but the overall structure should remain intact.
“Lee Chung-yong is in his mid-20s, but since he got married early, he won’t need so much for short-term spending, so I shifted some funds to his retirement,” he says. “As for Lee Dong-gook, he has a wife and five children, so I suggested that he should buy insurance to guarantee funds for his family.”
Park urges caution when considering investing in real estate, as it requires a large amount of money.
“It’s not a bad idea to buy property, but not if the price is too high,” he says. “Buying buildings usually involves bank loans, and that makes it hard to react when unexpected situations occur.”