Switching teams can be an exciting opportunity for professional athletes, offering the chance to play at a higher level, earn more money, or simply enjoy a new environment. However, it also comes with significant financial implications that need to be carefully considered. This blog explores the key financial aspects UK athletes should keep in mind when contemplating a team change.

Understanding Contract Terms

When switching teams, the terms of your new contract will be one of the most critical factors in determining your financial future. Contracts can vary significantly in terms of salary, bonuses, signing fees, and other financial incentives. It’s essential to understand exactly what you’re being offered and how it compares to your current deal.

Key elements to consider in a new contract include:

  • Salary: Will the new contract offer a higher base salary, or is it more performance-based?
  • Bonuses: Are there bonuses for specific achievements, such as winning titles or hitting performance targets?
  • Signing Fee: Is there a signing bonus included, and how does it compare to what you’ve received in the past?
  • Length of Contract: How long is the contract, and what are the terms for renegotiation or extension?

We recommend you to get legal advice in this area which is separate and distinct from the services provided by SJP.

Cost of Living Considerations

Switching teams often involves relocating to a new city or even a new country. This can have a significant impact on your cost of living, which in turn affects your overall financial picture. For example, moving from a smaller town to a major city like London can result in higher housing costs, taxes, and living expenses.

Before making the move, it’s important to research the cost of living in your potential new location. This includes housing prices, taxes, utility costs, and other everyday expenses. Understanding these factors will help you determine whether the financial benefits of the new contract outweigh the increased cost of living.

Tax Implications

Changing teams can also have tax implications, particularly if you’re moving to a different country. The UK has specific tax rules for athletes, and moving abroad could complicate your tax situation. It’s essential to understand how your income will be taxed in your new location and whether you’ll still be subject to UK tax on some or all of your earnings.

Consulting with a specialist* tax adviser is crucial when switching teams, if the move involves international relocation. They can help you understand your tax obligations and ensure you’re compliant with both UK and foreign tax laws. This is particularly important if you’re earning income in multiple countries, as it can significantly impact your overall tax liability.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances

*Specialist tax advice is a service which is separate and distinct to the services carried out by Franklyn and St. James’s Place.

The Impact on Sponsorship and Endorsements

Switching teams can also affect your sponsorship and endorsement deals. Some sponsors may have location-specific agreements, meaning they could withdraw or renegotiate their support if you move to a different market. On the other hand, moving to a higher-profile team or league could increase your marketability and lead to new endorsement opportunities.

It’s important to review all your sponsorship contracts before making a move. Check for any clauses that might be triggered by a change in team or location, and discuss the potential impact with your sponsors. If necessary, work with your agent or manager to renegotiate deals or explore new opportunities that align with your new team.

We recommend you to get legal advice in this area which is separate and distinct from the services provided by SJP.

The Importance of Long-Term Planning

While switching teams can offer short-term financial gains, it’s important to consider the long-term impact on your career and financial security. For example, moving to a higher-profile team might offer more immediate income, but it could also come with increased pressure and a shorter career lifespan. Alternatively, switching to a lower-profile team might offer more job security and a longer career.

When making a decision, consider how the move aligns with your long-term financial goals. Will it help you achieve financial independence more quickly, or does it carry risks that could jeopardise your future? By keeping your long-term plan in mind, you can make a more informed decision that supports both your career and financial well-being.

Final Thoughts

Switching teams can be a complex process with significant financial implications. By understanding your new contract, considering the cost of living and tax implications, and reviewing your sponsorship deals, you can make a more informed decision that benefits your financial future. Remember, it’s not just about the immediate financial gains; it’s about how the move fits into your long-term financial plan. With careful planning and the right support, you can navigate the challenges of switching teams and continue to build a secure financial future.