Olympics Archives - Lazy Man and Money

I have to start this article with a few disclaimers.

1. I haven’t watched much of the Olympics this year… probably about 3-4 hours total. I know there are people who watch more than that each day. They can tell you all the details about each Olympian’s life to a degree that I can not.

2. There are some obvious winners when it comes to the Olympics (See: Bolt, Phelps, etc.).

3. Every country is likely to have a different economic system for coaches, athletes, etc. The examples I found are mostly about the United States, but I wanted to make this article a little broader.

Behind the obvious winners it seems to me that there’s a lot of losers when it comes to the Olympics.

Losers: The Athletes

There’s no shortage of stories about Olympic athletes having financial difficulty. Here’s what Money Magazine wrote about cyclist Bobby Lea:

“Actually, for Lea, cycling has been less like a pot of gold than a money pit. The most he’s ever earned in a year is $32,500. He has $10,000 in the bank, zero retirement savings, and $19,400 in credit card debt. His parents have spent tens of thousands of dollars supporting his efforts…”

If that isn’t bad enough, Lea’s only experience in the workplace is making subs when he was 17. There’s potential for endorsements, but they aren’t a strong possibility for his type of cycling. Coaching is always an option too.

Need another example? The Wired writes: It’s Really Hard to Make Money as an Olympian.

Finally, this Washington Post article gives a more aggregate view:

“There is no comprehensive data on U.S. Olympic athlete pay, but information collected by a nonprofit last year from 150 track and field athletes ranked in the top 10 in the country in their events found an average income of $16,553.”

And let’s not getting into the topic of taxing gold medals.

Losers: The Athletes’ Parents

It’s one thing for the athletes to not get paid an income, but we should consider the parents as well. The Bobby Lea story above explained that his parents have spent tens of thousands to support him, but they aren’t alone.

Back in 2012, one of my favorite writers, Kimberly Palmer wrote Why Olympic Athletes’ Parents Go Broke“… Gymnast Gabby Douglas’s mother, Natalie Hawkins, who filed for bankruptcy, and Ryan Lochte’s parents, who are facing foreclosure”

Obviously, these Olympians have been successful enough to more than cover the financial problems of their parents. However, there’s just a handful of these famous names who make the big money. As the article explains further, the costs of training can be as high as $100,000 a year. (Though the Wired article shows it can be a more “reasonable” $20,000 range number for runners and swimmers.)

Losers: The Host City

I remember Boston was bidding for the Olympics and the locals were praying that they didn’t get it. It became a big political fight. Why?

As Five Thirty Eight writes, Hosting The Olympics Is A Terrible Investment. From the article:

“The 2014 Winter Games in Sochi blew their budget by 289 percent. The 1980 Winter Games in Lake Placid overtopped projections by 324 percent. And the 1976 Games in Montreal ran a staggering 720 percent over projections; the city spent three decades paying down the bill.”

and as one expert, David Goldblatt notes:

“There’s this kind of relentless underestimation of costs, because if anyone knew the real bill at the beginning they would never sign up… people have been getting away with a sort of statistical and accounting murder.”

If there’s a silver-lining to any of this, I’m adding “statistical and accounting murder” to my lexicon. Unfortunately, I’ll be needing to make a lot of use of it.

Winners: The International Olympic Committee and Other Executives

The aforementioned Washington Post article seems to show that the Olympic Executives seem to be making the real money:

“At the very top of ‘the Movement’ sits the International Olympic Committee, a nonprofit run by a ‘volunteer’ president who gets an annual ‘allowance’ of $251,000 and lives rent-free in a five-star hotel and spa in Switzerland.”

Is it just me, or can you hear John Oliver’s voice in your head mimicking the volunteer saying, “No, I need MORE than a quarter million dollars. It must be MORE“?

The article covers a lot more like the USA Swimming Executive Director who makes $854,000 a year. The article focuses largely on groups in the United States that obviously wouldn’t apply to some smaller countries.

A Final Olympic Thought

I’m probably not going to write about the Olympics again this games, so I wanted to get one last thing in. I was searching through my archives and found that 8 years ago, I wrote about the the injustice done to Alicia Sacramone in the 2008 games. At the time, I wrote, “I have to wonder what might become of Alicia Sacramone.”

It seems like she’s done well enough. She is considered one of the most decorated gymnasts in history. She married NFL quarterback, Brady Quinn. Earlier this month, they welcomed their first baby into the world. Let’s end this on a happy note and put her in the Olympic “Win” column as well.

Once again, Kosmo from The Soap Boxers passed a noteworthy news article my way. This article about taxes of Olympians bordered on the ridiculous on Fox News. The title? “The price of gold: Taking first place in Olympics could cost US stars as much as $10G in taxes.”

At first glance it seems like an important article. It would seem to be very, very wrong to tax athletes extra for performing extremely well. However, a brief reading shows that this is making a big deal out of nothing. It seems like the title was created to just to rile people up and get them reading. (I really don’t like this tactic as it leads to disappointment and wasted time. I hope people don’t come away with that after reading my articles).

Here’s what’s going on. When Olympians win a medal they get a cash bonus. The United States, correctly considers this earned income like any other earned income and requires that taxes be paid on it. As Kosmo put it in his email to me, “I’m pro-Olympics, but the basic concept here is a cash award. My cash bonuses are taxed, too.” (Side Note: Kosmo has a very unnatural obsession with the luge.)

The Fox News article also made the point to bring up the most extreme case where someone like Shaun White who has millions in endorsements would find himself in the top tax bracket and a gold (having the highest cash bonus) would have produced the 10K in taxes. Allow me to counter that with a “So what?” Is the average American supposed to be outraged White has to pay $10,000 of taxes for receiving a $25,000 bonus when he’s worth millions and millions? Can’t you think of at least 72,391 other things to get more outraged about?

I thought I’d play devil’s advocate and bring up the point that they represent the country. I asked whether foreign diplomats get tax exemptions (they do) and noted that our family (due to our active duty military status) receives some tax brakes. So maybe there is something to representing the country? Kosmo wisely shot down my off-the-cuff logic by pointing out that the are employed by the government.

In the end, I had to agree, I can’t see any reason why Olympians should get their bonus money tax-free.

Even though I implied previously that Fox News is just creating headlines for attention, it does seem like a politician backs the idea of creating a special exemption for athletes. The article states:

On Tuesday, Texas GOP Rep. Blake Farenthold re-introduced legislation — the “Tax Exemptions for American Medalists (TEAM) Act” – that would exempt U.S. Olympic athletes from paying taxes on the medals and the accompanying money.

“This needless tax illustrates how complicated and burdensome our tax code has become,” he said. “We need a fairer system for all, and eliminating this unnecessary tax burden on our athletes is a good way to start.”

It seems to me that Farenthold is suggesting with this legislation that they should make the tax code even more complex… adding a special exemption to the existing tax code for Olympic athletes. He then takes it a step further and suggests that this is somehow a fairer system. I fail to see how it is fair to give people with physical skills a tax-break, while other talented people such as Bob Costas covering the games wouldn’t get one.

I can’t follow the logic there. Fox News should have challenged Farenthold to explain his logic.