Real estate dominates the investment portfolios of top athletes, especially footballers, but experts caution on the risks and stress diversification.
While real estate remains the prime investment choice for top athletes, financial experts are striving to advocate a diversified approach. Yet, these professionals find it challenging to grab athletes› attention, who mostly rely on their peers within the sports domain for financial advice. Notably, many athletes› inclination towards property investments stems from the familiarity and locker room advice from fellow sportsmen.
In the realm of finances, athletes typically exhibit a conservative approach. «Many athletes do enjoy splurging on luxury items like watches and Lamborghinis during their early phases, but as they mature, their focus shifts towards solidifying their wealth,» Jean-Paul Adam, co-founder and executive of the Antwerp-based wealth management firm Accuro, pointed out.
Allure of bricks and mortar
Echoing this sentiment, Dennis Klaster, a sports manager primarily focused on ice skating and football, highlighted the significant allure of real estate investments. He noted, «Top-earning footballers might venture into complex financial instruments, but the majority prefer buying and renting out properties.»
However, solely relying on real estate carries its own set of risks, including potential property devaluation, maintenance costs, defaults on payments, and vacancies. Stijn Huygens, an advisor for business & sports professionals at Van Lanschot Belgium, frequently emphasizes the importance of diversifying investments to his clientele. «At the beginning of their careers, they are more acquainted with real estate than with other investments,” he explained.
Dutch athletes who prefer investing in domestic properties faced major setbacks this year. With the introduction of new regulations, increased taxes, and discouragement from municipalities on buy-to-let properties, the Dutch housing market took a significant hit. «That market has halted abruptly,» said Peter van de Ven, a private banker at Rabobank. He recommended savings deposits as an alternative, highlighting their attractive interest rates.
The draw of familiarity
Adam of Accuro explains the appeal of real estate for athletes, observing that it starts with owning a beautiful home, followed by additional properties for family members and seeing peers make similar decisions. Although real estate investments offer a regular income stream and some inflation protection, experts believe it shouldn’t be the only avenue. Adam commented, «The goal often is to let the wealth generate an income for the rest of their life.» He introduced the concept of «dividendenieren» – relying on dividend stocks for income.
Huygens observed that athletes often operate within a tight-knit community, making it challenging for outside experts to penetrate this trusted circle and offer financial advice. Often, athletes seek guidance from those within their circle, who might have previously served in other roles in the sports domain.
Guided financial path
According to Klaster, proper and professional guidance is crucial for athletes to make informed financial choices. He highlighted the improved financial guidance over the years, resulting in fewer financial mishaps among athletes.
Collaborations, like the one between Rabobank and top sports organisation TeamNL, aim to provide financial guidance to athletes. Reflecting a similar intent, the Dutch collaboration between football association KNVB and ING Private Banking seeks to educate athletes about financial management. Nick Verstappen, director of Business Professionals at ING Private Banking, expressed hopes of intensifying this collaboration.
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