Yahoo Finance Here's the advice NHL draft picks get on how to manage the sudden rush of money
A lucrative entry-level NHL contract isn't a ticket to spend lavishly, one advisor says
For this year's generation of NHL prospects, getting drafted not only means their big break into professional hockey, it most often comes with a significant financial windfall at a very young age.
Sylvain Brisebois knows first hand the dangers of mismanaging that large sum of money. The senior portfolio manager at BMO Private Wealth works directly with young hockey players, most of whom were recently drafted into the NHL, and with coaching staff.
The maximum salary for a three-year entry-level deal this year is $950,000, a tidy sum for any teen. But for top prospects such as Connor Bedard or Adam Fantilli, there could be huge signing bonuses of up to $2.5 million per season.
The 2023 NHL Draft begins on Wednesday in Nashville. Draft-eligible players are between the ages of 18 and 21.
The reality is that not all players who are drafted will go on to a career like Pittsburgh Penguins captain Sidney Crosby or the Edmonton Oilers' Connor McDavid, with multi-year contracts worth $100 million, or more in Crosby's case.
"The bulk of hockey players play for four or five years and then they end up in Europe and then they bounce between NHL and AHL. It's very different from the storyline that we see on TV of very successful athletes so we remind them of that reality," Brisebois said in an interview.
There's a "very big question mark" after that three-year entry-level contract, he adds, with little visibility into their future earnings compared to non-athletes who might be in more stable-earning jobs such as a teacher, healthcare worker or accountant, for example.
"You can be a wealthy 20 year old, but you're not wealthy to start spending without limits for the rest of your life," he said.
Biggest financial traps to avoid
Education on "Finance 101" and awareness of financial traps are the first topics Brisebois covers with young pro athletes, he says.
Some of the biggest money pitfalls he wants his clients to avoid are expensive cars, homes, cottages and a generally lavish lifestyle.
Being in the NHL can come with a lot of social pressure to keep up with a certain lifestyle on the road and in the off-season, Brisebois says.
It's the "keeping up with the Joneses" pressure, he adds. Everything from the restaurants the players dine at while travelling, the parties they attend, the clothes they buy and the personal trips during the summer months can unduly influence a player's spending habits.
But he also says athletes who sign lucrative contracts can be targets for various business investment opportunities, dubious or not, and that those requests for money might even come from family members or friends.
In 2014, then-Columbus Blue Jackets defenseman Jack Johnson made headlines for filing for bankruptcy after his parents took out $15 million in high-interest loans under his name. Johnson had signed his power of attorney to his mother, who then made terrible financial decisions under bad advice from an advisor.
It was a difficult reminder of the need to protect wealth from bad actors, even one's own parents.
"Agents of No"
It's because of unfortunate stories such as Johnson's that Brisebois suggests young athletes surround themselves with what he calls "agents of no."
These are a strong team of advisors, lawyers and accountants who athletes can turn to to help shield their wealth from being spent and invested poorly.
"We're the ones that turn down that crazy business venture in the Caribbean, and we're the ones who tell Uncle Bob that throwing half a million dollars into that restaurant is not a top priority for young athletes and probably that $250,000 Ferrari shouldn't be the first car that you get when you sign a contract," he said.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
Download the Yahoo Finance app, available for Apple and Android.
