The NHL Entry Draft recently wrapped up in Buffalo, and as usual it gave armchair captains a lot to jaw about: “generational talents” at the top, a few surprises down the draft ranks, some blockbuster trades in the background, and, of course, Justin Bieber (!). But amid the hoopla and the manoeuvring and what it might mean to NHL teams’ fortunes, what interests us most about draft day is the impact it has on the draft targets themselves. We have said it before and we’ll say it again: for drafted players and their families, it is a life-changing event.
Obviously, getting drafted gives players a lot to think about and prepare for—prepping for rookie camps, new opportunities afforded by draft status, potentially moving to a new city, and so on. But young players and their families rarely consider deeply an important aspect—perhaps the most important aspect—of preparing for a career in the big leagues: their finances.
Make no mistake: being a first-round pick at the Entry Draft can mean big money. For example, the first-rounders in the class of 2003 featured future stars like Ryan Suter, Zach Parise, Ryan Getzlaf and Eric Staal. By the 2019 season, those 30 first-round picks’ average cumulative salary totalled well more than US$40 million—and all of it was earned by the time they were in their mid-30s. That’s about 100 times the total median Canadian income over the same period. Put another way, it would take a Canadian with an average annual income of CAD$55,000 more than 900 years to earn that much.)
You might think all that money would set a player up for a very comfortable life, and it certainly can. But too often, players have been handed large salaries early in their careers only to find it as much a curse as a blessing, both on and off the ice. What’s the difference between those who thrive over the long term and those who struggle?
We think one big difference is not just the team that chooses the player at the Entry Draft, but also the team the player chooses for himself—the key advisors they choose to have in their corner. These advisors must be able to work together to achieve optimal solutions for players, because the actions of each have profound impacts on the others. What often ends up happening is a lawyer, agent, accountant and other advisors work in siloes—and sometimes at cross purposes. What’s needed is an integrated approach, one that we here at SkateGuard try to foster with the players we support.
Above all, every advisor has to be committed to protecting and focusing on players throughout and after their hockey careers, ensuring that the only sharks and predators they need to worry about are the ones they’ll be playing against in San Jose and Nashville. Whether these relationships are forged through the players’ agent, their families or the players themselves, it is critical that athletes have the team in place when their name is called on draft day.
What does this advisory team look like? Most players will already have a family advisor or an agent; this is necessary, but not sufficient. A good accountant is also a necessity, to help navigate the complicated landscape of state, provincial and federal taxes a pro athlete may encounter. (One common challenge: so-called “jock taxes,” whereby local jurisdictions tax income generated during a player’s away games.) A good lawyer is also a must. NHL player contracts are relatively standard, but endorsement deals are not, and a player needs someone who can sort through the litany of different clauses and covenants in them. A lawyer can also help evaluate the investment opportunities NHL players inevitably field and help ensure their new fortunes don’t go up in smoke.
Finally, young players need an experienced financial advisor who understands the complexities of wealth, and who can formulate a plan to maximize the time they have to monetize their talents. The average NHL career is short (about five years), but with sound financial management it can provide the bedrock for a lifetime of success. A true wealth manager must also be a teacher who can communicate important lessons—such as how to limit the financial impacts of “the entourage effect” and how to keep up (or not) with the profligate spending habits of some colleagues—that will ensure money is left over after the final buzzer sounds.
In short, the path to long-term success in hockey begins before the Entry Draft—with how well players prepare and how smartly they and/or their parents have enlisted the right people to help. Without strong advice, players could find their attention pulled in so many different directions that it begins to affect their on-ice game. At worst, the lack of an integrated support team could lead to squandered opportunity, or to a later life hobbled by financial insecurity and disappointment.
No doubt, the players in this year’s Entry Draft will now be thinking a lot about the team they will be playing for on the ice. But they should be thinking just as much, if not more, about their team off the ice: the advisors we call “Team Me,” who will be playing for them.
