The journey to becoming a professional athlete is exciting – and challenging.
After declaring their eligibility for the NFL or NBA drafts, athletes face rigorous training sessions, grueling team workouts, in-depth interviews with prospective employers, and extensive travel throughout the country – all before being drafted by a team that’s likely in a different city from where they live.
It’s an exhausting process. And expensive, too.
Young athletes (or their families) may not be easily able to afford the financial investment required to launch their career. Complicating this is the reality that players may not have earned money through paying jobs during their college years due to their heavy athletic and academic responsibilities.
But, it doesn’t stop there. Once their eligibility ends, players may no longer be eligible for their school’s meal plan, and may have to start paying back the cost of their disability policy. Perhaps they’ll need a car or housing, too.
Our Global Sports & Entertainment (GSE) group offers lending options through Morgan Stanley Commercial Financial Services LLC to help athletes navigate their path to their first signing bonus or professional paycheck. Pre-draft loans are available to players projected to be selected in higher rounds of the draft, with post-draft loans available for individuals actually taken in those rounds.
The loans typically represent 5-10% of the athlete’s signing bonus. Amounts generally range between $60,000 - $150,000 with an indicative interest rate of 7.28%.1
These unsecured, short-term loans are meant to cover expenses generated in the months immediately preceding and following the draft. The money can be used for meals, rent, utilities, travel costs, training expenses, and more at the player’s discretion. (Funds cannot be used to purchase securities.)
This can be a better alternative than seeking funding through other sources, or maxing out higher rate credit cards.
It’s easy to get started. A GSE director will meet with the athlete to assess their needs, and provide initial direction. If the player is approved for the loan, they’ll open a brokerage account with Morgan Stanley Smith Barney LLC, and the money will be directly deposited into the account. Athletes aren’t required to deposit any other funds into the account, such as their signing bonus.
Once the loan has been funded, players will have access to our debit card, mobile app, and bill pay– all at no cost. The only expense associated with our loan program is the interest payments on the loan.
While athletes may become a GSE client, they’re not required to develop an advisory relationship with us. A player can simply partner with GSE to help finance their path to the NFL or NBA. Other than paying back the loan, there are no other conditions attached.
Athletes also can take advantage of our financial education program.
Designed for their unique life, it empowers them to deal with current and future situations by covering relevant topics such as budgeting, spending, credit, debt, cash flow, establishing financial boundaries, preparing for the unexpected, and dealing with sudden wealth.
A disconcerting percentage of professional athletes file for bankruptcy after their playing career ends. Morgan Stanley is committed to changing that narrative. Our financial literacy program promotes this initiative by instilling sound money management principles in athletes at a young age that can last the rest of their lives.
Additionally, players have the option of teaming up with GSE directors who have significant experience advising sports and entertainment professionals about wealth planning. The directors can provide practical, real-world guidance for emerging talent, as well as their families.
Even if an athlete just wants to talk with us to get a second opinion about their options, we’re here to help.
It’s all part of our mission to give back to the sports and entertainment community by providing the skills and knowledge to help athletes make smart choices about their finances. We want athletes to not only think about today, but tomorrow, too.
Interested in learning more about our pre- and post-draft loan program? Connect today with a GSE director near you.