We all hear about it when a professional athlete is declared bankrupt. After all, when it comes to sports stars and money, we tend to focus on how much their contract is worth and how much they lost. Unfortunately, there is no shortage of examples of the latter.
In 2003 Mike Tyson squandered $300m and filed for bankruptcy in a bid to resolve his financial problemsAnd former England and Liverpool goalkeeper David James had to sell his football memorabilia after hitting financial troubles in November last year.
Research published in the Journal of Judgement and Decision Making revealed that athletes place more emphasis on the present, a “winner-take-all” mindset that could impede attempts at investment for the future.
NFL cornerback turned investment firm CEO Eugene Profit once said: “The whole idea of being invincible and ‘it’s never going to end’ kind of makes you have a much higher propensity to take risk.
However, their financial woes are often no fault of their own. Think Goldilocks. Athletes trust too much or too little, and this can be a problem. Numerous stars have been duped and taken advantage of by people they trusted. This was highlighted by the latest but most common exampled of NHLColumbus Blue Jackets star Jack Johnson going bankrupt due to hisparents borrowing millions in his name.
This is something that former football player Louis Saha feels strongly about. Together with old friend Patrice Arnera, Saha has launched an exclusive social network for elite stars, which will redistribute ten per cent of its profit to charity organisations selected by its members and help promote philanthropy via a dedicated group.
Many youngsters who play football at the top level have a hard time managing their money and making the most of the revenue streams that are available to them,” said Saha. You need to understand the pressure that players are under. All the time it’s about getting fitter, stronger, more efficient in front of the goal, you dont think about anything else. You dont have time to think about investments and taxes and there are just so many propositions thrown at you all the time.
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He admitted that the business model was based around his own experiences.
“I bought a motorcycle,” he said. “I didn’t even have a license. But at one point I had so many injuries that I was forced to think about what I would do if my career ended. I want to help other sportsmen so they dont end up losing everything.
The social platform, called Axis Stars, will enable players, clubs, sponsors and agents to connect in a secure environment. It also acts as a virtual department store and one-stop shop . Here, athletes will be able to view the latest brand products and discuss topics such as endorsements and sponsorships with each other.
This level of interaction is one of the reasons why the co-founders decided to centre the idea around social media.
IT expert Arnera explained: We wanted to find a solution that they can keep coming back to for advice in a way that feels natural to them.
He also added that the platform would be free for athletes. The business will take a 1.5 per cent commission on deals done through the site and will also charge 250 as a listing fee for financial advisers.
The core goal of the platform, however, is to protect athletes from third parties intent on using their money and promoting better deals, though they do not negotiate on anyone’s behalf.
Due to the young age that athletes often start playing at, their lack of financial knowledge leads to bankruptcy. For further perspective, Chelsea star Didier Drogba, among those already signed up to Axis Stars, started his football career late at the age of 21 only three years after the average pupil finishes school.
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Some agents will use this to their advantage and persuade players to make poor financial decisions,” said Saha. We’re trying to create a filter to get rid of the negative influences. We want a cleaner environment so positive business relationships can happen.
With so much emphasis placed on the platform only being for athletes, Saha mentioned that they had to rigorously check members who were signing up.
“In one week we had 500 people claiming to be [Lionel] Messi,” he said. “And there’s only one Messi. We spend a lot of time checking the identity of the people who register.”
On the tech side, Arnera suggested that no one had attempted to build this kind platform outside of the corporate world before.
Most of the systems we looked at were initially designed for a single corporate entity so to create one that could handle multiple users was tricky, but necessary to provide sufficient levels of protection. When Louis and I came up with the Axis Stars idea, it was important to select a robust technology offering bulletproof confidentiality and security. Salesforce.com and Apttus are the best solutions that I have worked with in my career and were ideal candidates. We wanted the strongest and safest vehicle to carry our value proposition for our members, and we have achieved this by deploying these existing platforms in a unique way that has never been done before.
Axis Stars is designed to not only help active professional players and athletes but also those in their post-career.
Saha said: The aim is to help drastically reduce the terrifying statistics which show that around 50 per cent of sports professionals go bankrupt after retirement. I am more proud of this incredible project than all of my achievements on the pitch.
When it came to finance for the business, Saha explained that he was using his savings for Axis Stars.
So many people ask players for money, Im not going to do that,” he said. I want my friends to trust me. The only investment I want from them is to try the platform.
He added: Now I am meeting investors, which is strange for me. Before, everyone came to me with the proposition and now I am the salesman.