Athletes Inc.

who were the biggest winners in professional sports last year?

Perhaps Tom Brady, who notched another Super Bowl victory and Stephen Curry who helped lead the Golden State Warriors to an NBA championship. But if you want to know who scored financially, it’s a slightly different roster.

The 100 highest earning athletes collectively made $3.11 billion in 2017, according to Forbes. The highest paid athletes, actors, and entertainers rival or surpass many top CEOs.

Soccer star Cristiano Ronaldo topped the list with $93 million ($58 million salary and bonuses and $35 million endorsements), a little less than Elon Musk’s roughly $100 million, according to Forbes. LeBron James earned $86.2 million ($31.2 million salary and bonuses and $55 million for endorsements) followed by Lionel Messi at $80 million. Roger Federer made $64 million and Ken Durant grossed $60.6 million. He was followed by Rory McIlroy and Andrew Luck at $50 million and NBA champion Stephen Curry at $47.3 million.

It’s no surprise that sports can be big business. While some athletes, actors, and entertainers score big in their bank account, they tend to turn to advisors to keep and multiply that cash. Accountants are the hidden figures in the business of professional sports and entertainment, helping manage the money.

“It’s very different in multiple senses. The career path isn’t so linear. If you’re a lawyer and start as an associate and get promoted, each year your income typically goes up,” said Craig Manzino, partner in charge of the business management group at Manhattan-based Prager Metis. “It’s pretty constant and steady and you potentially have an employer who pays your benefits.”

Advising athletes, actors, and other entertainers typically entails more than just crunching numbers. “As a former baseball player, I know how athletes think,” says Tom Archer, who leads The Archer Financial Group, which works with about 200 professional athletes. “And I want to do everything to help and protect them.”

The Revenue Roller Coaster

Career uncertainty, and potential brevity, in sports and entertainment changes how advisers approach clients. Athletes, actors, and entertainers’ income stream can turn from a financial flood to a dry gulch. “When you get into athletics and entertainment, the income is more of a roller coaster with highs and lows,” Manzino says. “The planning becomes complicated. You don’t just put money into a 401(k). You have a much shorter career span or a career plan that is choppier.”

Athletes face uncertainty due to the possibility of injury that can end a career. Baseball teams often guarantee contracts backed by insurance policies secured by the team.  “You still have to pay him in baseball. The team takes out disability insurance,” Archer said. “Football guarantees a few years if anything. When you make money in football, you have to put it away right away.”

Manzino said the preferred “investment vehicles” are different, since they don’t want required annual payments, due to varying annual income. “You have to understand that these people might not have the time horizon that a typical person has,” Manzino said. “They might need the money sooner, because their career might not last.” Accountants for these clients often favor annuities that generate regular income rather than stock market risk. Athletes often buy “loss of value” insurance in the last year or opt out year of a contract. If they’re injured, they can lose a big portion of their income the following year. This policy pays if an injury leads to a lower contact.


Many people commute, but in the entertainment industry, the office is often a different venue or stadium in a different state each day. And that can mean a patchwork of state taxes, based on the state where income is earned. “Athletes and entertainers are taxed in every state they work in,” Manzino said. Top athletes and entertainers can earn more from endorsements and other sources of income than from their team. “They receive income from multiple sources,” Manzino said, “whether it’s licensing their name, autograph signing, or memorabilia.”

In addition to dealing with income from different sources, in different states, accountants need to figure out how to handle costs that might relate to business. Agents, cooks, chauffeurs, and makeup artists can’t necessarily be taken as deductions by individuals, although they may be legitimate costs. “They need to incur expenses in their career that a typical employee at a professional level doesn’t incur,” Manzino said. “The tax code isn’t necessarily favorable to writing off those expenses. In the new tax code, you can’t write off any of those expenses,”

A performer may pay an agent a ten percent fee: e.g. $100,000 on $1 million. That’s no longer deductible on personal income taxes, although in the past, it might have been. “Even under the old law, due to the alternative minimum tax, these weren’t deducted,” says Manzino. “The tax code creates a disadvantage for athletes and entertainers who incur lots of costs to make their money.”

Lebron James Inc.

Accountants often help celebrities set up corporations to loan out their services, They then can take deductions as a business that they couldn’t as individuals. But that involves more than just putting an “inc.” after Lebron James’ name. “More athletes and entertainers are being pushed to forming corporations,” says Manzino. “You now have to have the accounting and bookkeeping functions of a corporation and that corporation might operate in multiple states or countries.”

The performer becomes an employee of their corporation, pays their own payroll taxes, obtains their own worker’s compensation and disability and registers that corporation in every state where they work. “In order to not lose deductions, they have to form corporations to provide services,” Manzino said. “The accounting and finances become more complicated than a typical employee.

While teams typically pay an athlete directly, television stations often pay an actor’s corporation instead of the individual. “The effective use of a loan out corporation is usually a necessity for successful celebrities,” Russ Alan Prince wrote in Forbes.

Manzino said being a celebrity’s accountant and dealing with loan out corporations is a specialty. “You need someone versed in these areas, someone who can act as an outsourced CFO for this entity,” he said.

Strictly Confidential

Due to the nomadic nature of entertainers careers, advising them can mean going on the road. Archer does half of his meetings in his New York offices and others in Florida, California, Chicago, Detroit, St. Louis, Cincinnati and elsewhere. “We do it off-season or we travel, whatever fits the client’s schedule. The off-season is the ideal time to do this,” says Archer. “Where they live and play. Sometimes we meet in their clubhouses, their hotel. Mostly, we meet at their home or their office.”

Entertainers often go home to Florida, the Sunshine State, with no income tax. Many more are likely to move there.  “A lot live in Florida, because there is no state income tax. Many more people are moving out of New York, because of taxes,” Archer said. “Previously, one could deduct [an unlimited amount of] state income tax against federal. Now that’s been eliminated.”

Accountants often know the details of celebrities’ lives, including things even tabloids can’t uncover. “You work with them on a deeper level than a typical accountant. You’re not just a historian putting together paper from the prior year,” Manzino said. “You’re more involved in a day to day level and a proactive member of the team.” A CPA who may help lead a “family office” for the entertainer might know when a client is pregnant or dating before it’s public.

After a Major League Baseball pitcher got hit in the head by a baseball, his parents asked Archer to set up a disability policy. “He got scared,” Archer said. “I got him a policy in three days.” Financial advisors also often control the cash, protecting players and performers from impulse buys. “A lot of times, we have money go into a trust. A client will know he’s terrible with money,” Archer said. “For anything to happen, you have to check. You can stop them from losing a fortune.” 

Just saying “no”

Financial advisors often literally have to sign off on purchases, providing a wall against waste or at least an additional step in spending. “We’re the ones who actually pay the bills,” Manzino said. “They’re in charge, but they use us to protect them from something they shouldn’t do.” If someone wants to buy a plane, the CPA might advise on how and whether to and help negotiate and handle tax credits. “It’s managing an entire business,” says Manzino.

People who are suddenly successful – and sometimes very young – also can be susceptible to spending lavishly. “They hear stories about guys blowing it,” Archer said. “A lot of these guys have entourages. A lot are smart enough to understand they have to put money away and protect their body’s longevity. So they try to stay in great shape.” Athletes can get carried away, in which case the financial advisor can suggest restraint that helps preserve riches. “I had an athlete call me. He wanted to spend $26 million on an engagement ring,” Archer said. “I talked him out of it. You have to be careful with clients. You say, ‘Listen, Let’s have a meeting.”

When athletes retire, financial advisors can matter as much as during their heyday. Some go into broadcasting or the real estate business like Roger Staubach. Former New York Islanders star Bobby Nystrom works for Kinloch Consulting, an employee-benefit consulting and property casualty firm. “They use their contacts in the sports world to go into a different business, whether it’s selling cars, insurance, financial management, coaching, motivational speaking or broadcasting,” Archer said. Advising athletes after they retire is about preserving assets, and sometimes. advising about life as well as income. “They’re not bringing in millions of dollars every year,” Archer said. “They have to learn to live on a budget.”