Alexandre Bilodeau becomes the first Canadian Olympian to win a gold medal on Canadian soil after finishing first in the men's moguls on Cypress Mountain during the Vancouver 2010 Olympics.
Alexandre Bilodeau captivated Canadians during the Vancouver Olympics, but translating that new-found adoration into lucrative endorsements, sponsorship dollars and long-term financial security could end up being trickier than his 23-second gold-medal mogul run.
Sports marketing agents say the latest batch of Olympic stars, like Mr. Bilodeau, skeleton racer Jon Montgomery, and ice dancers Tessa Virtue and Scott Moir, could score endorsement deals with contracts ranging from $25,000 to $50,000 a year.
Sponsors typically provide athletes with badly needed financial aid or equipment while they train and compete. However, once an athlete has won a medal, companies can ask them to peddle their products in profitable endorsement deals.
Heading into the Olympics, Montreal native Mr. Bilodeau, 22, was sponsored by paper-maker Cascades Inc. and KPMG LLP, where his father is a tax accountant. Since then, Mr. Bilodeau has been approached with numerous new endorsement offers from companies looking to cash in on Canada's first gold medal on home soil.
Because not all athletes are able to turn the podium into payoff, the challenge lies first in securing those deals and then setting up a financial plan to ensure the money lasts longer than the glow of one single Olympics.
Royal Bank of Canada - which provides wealth management and banking for athletes in hockey, golf, baseball, football, basketball, soccer and other sports - has these five financial planning tips for medal winners:
1. Get an agent to negotiate sponsorships on your behalf - and soon. Begin negotiations as soon as possible, while excitement about the Olympics is fresh. Make sure you have a professional looking out for your interests.
2. Get professional financial advice to ensure you aren't paying more tax than you have to. You'll need creative tax planning advice to structure any funding and sponsorship agreements so more money stays in your pocket. For example, this might include setting up an amateur athletic trust fund (which, due to changes to the Income Tax Act in 2008, increases the ability of amateur athletes to defer tax on income from endorsements and sponsorships. For more information, click here.
3. Manage your spending to make it last. It might be tempting to upgrade your lifestyle immediately, especially with all the media attention. But make a financial plan that includes budgeting so you can stay on track and make your dollars last.
4. Consider the impact of foreign exchange and how to protect yourself. As you negotiate sponsorships, make sure you consider what currency you will be paid in and where you will live and train. A significant fluctuation between the U.S. and Canadian dollar could mean a dramatic change in your lifestyle. Get professional advice on how to protect yourself through forward exchange contracts and other hedging strategies.
5. Protect yourself and your assets from lawsuits. Athletes should consider strategies to protect themselves from creditors, such as setting up a domestic or foreign trust.