Why Olympic Athletes' Parents Go Broke
As their children win gold medals, bask in the limelight, and pick up lucrative endorsement deals, at least two medalists' parents are facing major financial problems: Gymnast Gabby Douglas's mother, Natalie Hawkins, who filed for bankruptcy, and Ryan Lochte's parents, who are facing foreclosure.
In her bankruptcy filings, Hawkins listed about $80,000 in debt, mostly from a mortgage, according to the AP. Her income is listed at around $30,000, largely from disability benefits and child support. Meanwhile, she has spoken about the high cost of her daughter's training, which involved living away from home for two years.
Lochte's parents, Steven and Ileana Lochte, who are divorced, allegedly stopped paying their mortgage last year and owe over $200,000 on a Florida home. The lender is now suing to foreclose.
It's probably not a coincidence that two stand-out stars from the London Olympics also have parents with serious money woes. Winning a gold medal takes an incredible amount of cash, and parents often shoulder much of that burden. Eric Flaim, four-time Olympian for speed-skating and winner of two silver medals, says that training costs, which include coaching, living expenses, travel, and practice facilities can easily exceed $100,000 a year. (That doesn't include the cost of lost earnings for parents or athletes, who often have to uproot themselves to focus exclusively on their sport.)
For a young athlete like Douglas, that financial burden falls largely on her parents' shoulders. For an adult like Lochte, who is now old enough, and wealthy enough, to fund his own training, his athletic pursuits are less of a financial burden on his parents, but they undoubtedly made sacrifices during his earlier years.
And now that their children are stars, the parents of Douglas and Lochte might find that the tables have turned, and that money is flowing towards them, instead of away from them. Lochte has said that his parents specifically told him not to get involved with helping them financially and to instead focus on his races; perhaps now that they have concluded, he will offer to share some of his lucrative endorsement proceeds. (He certainly seems to be able to afford it with his flashy displays of $25,000 grills and custom-made sneakers.)
Lochte has been able to support himself with his sport for some time; for Douglas, this territory is brand-new. She's already appearing on a cereal box (Corn Flakes) and other deals are forthcoming; according to reports, she's set to bring in $10 million or more in the coming years. And at 16, her career is far from over. Douglas is still in competition mode and hasn't spoken out yet about what she plans to do with the money, but given her closeness to her family and the sacrifices they have made for her, it's likely she'll be sharing some of that cash with her mom.
As a group, Olympians tend to be more financial secure than average: A survey of past and present Olympians by TD Ameritrade, an official Team USA sponsor, found that Olympians are more likely to have a regular savings habit and more likely to save or invest any windfalls received than other Americans. Over two-thirds of Olympians surveyed said they save for the future and most described themselves as financially stable.
Flaim, who is now a financial adviser with Ameriprise Financial Services in Portsmouth, New Hampshire, urges all Olympians, whether they'll be supporting their parents or not, to develop a rigorous financial plan that takes into account their long-term goals and savings needs. The earning opportunities athletes have after the Games is brief, he says, and they should leverage them as much as possible while thinking about how to make their money last.
Now, after the thrill of watching their children compete in front of the world is over, parents like Lochte's and Douglas's will have to return home to deal with far more mundane issues, including how to recover from bankruptcy and stave off a foreclosure.
Twitter: @alphaconsumer
