The New Avery Rule

[Ozy_Flame]

Not that the article was about this, but I can't imagine how much a divorce would cost with making money like that. And if children are involved.

[Lucky23]

I wish I was an NHL player, and had this to worry about.

[Lord Carnage]

He has apparently updated the article so the 25% is agent and management fees... not sure the difference, or what management fees entail though.

[IGGYFORMVP]

If anything this article made me want to punch him in the face even more than I did before. What a self centered ###### canoe.

[Tron_fdc]

Off the top of my head a one million/yr salary looks a lot more like 50% take home, not 5%.

IRS tax brackets are here
http://www.forbes.com/sites/kellyphi...unts-and-more/

Avery is in the 39.6% bracket, as would almost all NHL players.

Agent fees are deducted from his income, but he still pays the 40% tax on his take home after agent fees. Agent fees are not 25%. NBA and NFL cap their fees around 4%, NHL has no cap but 25% sounds VERY unreasonable. He also says in the first paragraph that he lost 3% on his first signing bonus to an agent.....and suddenly he's paying 25% when he signs a larger contract? I will assume 10% is more in line.

Escrow is like a trust fund. I can't find exact payout numbers, but the owners haven't kept 100% funds put into it, ever. If the rate is 20% I would be shocked to see a 10% hold back. Let's use 10% net.

So the actual shake down looks like this on a 1 million salary:

Gross: $1 000 000.00
Agent: $100 000.00 (high side, 10%)
Escrow: $200 000.00 (20%)
Net before tax: $700 000.00

Inc Tax$ 280 000.00 (40% of $700k)

Take home: $420 000.00

When the Escrow fund is paid back I would assume you pay the 40% tax when you receive your Escrow cheque. So that's $100k less 10% (agent fee) so $90k @ 40% so $54k take home.

On a 1 million salary, after 10% Escrow refund and 10% agent fee player X takes home $474k, or 47%.

Now my numbers may be off, but they're not 5% take home vs 47% take home off.

NHL players are not poor.

[nfotiu]

Originally Posted by IGGYFORMVP

If anything this article made me want to punch him in the face even more than I did before. What a self centered ###### canoe.

I don't know about that. The overall intent he is trying to make seems somewhat reasonable and is his attempt at pointing out some of the mistakes he made and giving advice on how to better manage your money.

Once he started talking numbers though, that whole message is lost in the ridiculous of his calculations. If I am reading it right, his conclusion is that you don't get to keep much of your salary anyway and are just going to blow it anyway. So just save your per diem and you'll be set when you are done.

I sure hope no young athletes who spent too much time playing hockey and not enough time playing school, read this and take that advice.

[united]

I presume by management fees he is including:

Someone to file his taxes. Athletes have complex taxes due to two countries and multiple provinces/states of which many have different rules, and some with jock taxes which may or may not be deductible. All this means whoever files the taxes charges a large amount, and as they are usually hired by the agent, they pay a premium on top of it.

Insurance. It's pricey for a pro athlete and is usually set up by the agent, again causing them to pay a premium.

Financial advisors/managers. Again, usually hired by the agent with a premium.

Off season training/skill development. A couple thousand dollars a month usually and if the agent sets it up, a premium on top of the cost.

Also, agent fees are usually agreed on the gross salary not net, so in actual money they are higher than the quoted percent. I've heard ranges from 1% for easy negotiations (entry-level for example) to 6%, but 25% is absurd. Players can always take the Ovechkin path and not use an agent, however.

Even accounting for all that, I still don't see how you could end up paying 25% unless you're totally naive.

[genetic_phreek]

Was there ever a "Sean Avery is no good" thread?

[d_phaneuf]

outside the weird math on his take home the thing that stood out most was how the Rangers treat their players

I wonder what if anything other teams do like that

I assume in a cap league that for the bigger market teams it can be an edge over another

and if he's saying NYR treat their players best, LA/DET/DAL are behind at (or were) least

[nieuwy-89]

Originally Posted by Huntingwhale

I like that website. They have cool articles.

Very cool site. Logan Couture's article about the best centres in the NHL is very insightful. Thanks for the find OP.

[FlamesAddiction]

I think Avery's math is quite fuzzy there, but I think the overall message is a good one for young players. It's quite amazing how often people who "strike it rich" often end up becoming poor because of bad financial decisions.

[Stay Golden]

Oh boo hoo for you Sean.

[Pliddy]

The numbers might be a little skewed, but I do remember reading an article (and for the life of me I cannot remember where) that stated since Obama started his tax the rich campaign ( I have no stake in US politics so I am not sure how valid that is) professional athletes are being taxed in excess of 55% in certain states and provinces, California and Quebec. If your management fees are based on your gross, I could see how your 3 million per season could not add up to as much money as you think.


Avery is still a prick though

[GreenLantern2814]

The point of the article was a way to use your free per diem money and help set aside extra cash whenever you can. Because while I'm sure he kept more than 5% of his career earnings, I'm also sure there are a lot of things that can bleed a pro athlete dry.

But because it's Avery, I guess we should all pretend he can't make valid points about anything ever.

[Matata]

I bet Avery was bled dry by employing a rediculous entourage and is now making excuses.

[GioforPM]

Step one: Do not cut your career short by being a huge doofus.

[getbak]

He doesn't mention all the salary he forfeited due to fines and suspensions for being a moron. I wonder what that added up to during his career?

[The Yen Man]

Come on Sean, that's simple high school math. He didn't think of running the numbers by his finance buddy before publishing those? Whatever message he was trying to convey in his article is lost by that one paragraph.

[Resolute 14]

FWIW, I have never heard of escrow going to 20%. The league has taken as much as 12-13% at various points, I believe, but more often than not, the escrow kept by the league was in the 6-9% range in the years they kept it.

An overlooked part of Avery's escrow claim is how it demonstrates just how brainwashed the players are by the union: "Sometimes, they use the players’ cash to help small-market teams." Sorry Sean, but that isn't "the players' cash". When you played, you players were entitled to 57% of HRR. Escrow was the mechanism by which the players share and the owners share were kept in balance. Therefore, the money the league kept from escrow was their cash all along, not yours.


At any rate, I think Avery's discussion of his early spending is probably more common than most think. People who come into money suddenly tend to blow it easily, and in the cases of people falling into mega-rich circles - and top level pro athletes would qualify - it is easy to get caught in a situation of trying to keep up with the Jones'.

But his argument that a player who retires at 25 has to make his hockey earnings last "50-60 years" is hilariously awful.

What I love the most about this article is how Avery accidentally got it exactly right. Every young player should be getting two things: 1. a quality money manager (where some of that management fee % would go) and 2. should be putting some percentage away for future savings.

[Robbob]

Originally Posted by The Yen Man

Come on Sean, that's simple high school math. He didn't think of running the numbers by his finance buddy before publishing those? Whatever message he was trying to convey in his article is lost by that one paragraph.

At 25% he can't afford his finance buddy anymore.