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How to Secure Your Financial Future as a Professional Gamer

Key Takeaways:

Professional gaming careers can be lucrative but short-lived, making smart financial management crucial from the start.
Mastering the intricacies of contracts, taxes, and revenue streams is essential for pro gamers to maximize earnings and avoid costly pitfalls.
Building a sustainable financial future in esports demands a strategic balance between capitalizing on current opportunities and planning to achieve long-term goals.

The rise of electronic sports (esports) has been nothing short of phenomenal. According to Variety, esports viewership increased a whopping 92% from 2019 to 2023 — with viewers watching more than 2.5 billion hours of esports events last year. Major colleges and universities like Ohio State now offer esports degrees, and brands like Intel, Coca-Cola, and Mastercard are spending millions on esports sponsorships each year.

As a professional gamer, you’re part of this fast-growing industry. But with the thrill of competition and the allure of sponsorships comes the challenge of managing your earnings. Whether you’re streaming on Twitch, competing on the esports circuit, or signing a deal with a major brand, understanding how to manage and maximize your income is crucial.

Making the Right Deal: Stream Play Versus Team Play

As a pro gamer, you’ll likely face a key decision: Should you focus on building your own brand through streaming or join a team? Both options have their pros and cons, and your choice will impact your earnings significantly.

Streaming: Building Your Own Brand

Streaming offers you the opportunity to build a personal brand and connect directly with your audience. Platforms like Twitch and YouTube allow you to monetize your content through ads, subscriptions, and donations. However, it also means you’re responsible for managing your content, marketing yourself, and properly tracking and reporting your earnings.

An additional challenge with streaming is validating that you’re getting the right percentage from platforms like YouTube. Are you confident that your views and ad revenue are being reported accurately? This is where working with a financial advisor or a business manager can help. They can audit your earnings, verify you’re being paid fairly, and help you optimize your revenue streams.

Joining a Team: Stability with a Salary

Joining an esports team can provide a steady salary and the chance to compete at the highest levels. Teams often handle sponsorships, brand deals, and the logistics of competition, allowing you to focus solely on your gameplay. However, the trade-off is that you may have less control over your brand, and the team may take a cut of your earnings from sponsorships or tournament winnings.

Before signing with a team, it’s critical to have a lawyer review your contract. They can help you understand the terms, such as how much of your earnings the team will take, what happens if you leave the team, and what other obligations you may have. Remember, a contract that seems straightforward can contain clauses that significantly impact your income and career.

Navigating Taxes in Professional Gaming and Esports

As you start earning from your gaming career, taxes are one of the first challenges you’ll face. Your earnings — whether from streaming, sponsorships, or tournament winnings — are all taxable. It’s essential to understand how taxes work in both the country/locality where you live, as well as any jurisdictions where you earn money.

Domestic Taxes: Earning Income Across the U.S.

In the United States, professional gamers are often subject to what’s known as the “jock tax.” Originally designed for athletes, this tax rule applies to individuals who earn income in states where they do not reside. Today, the rule extends beyond athletes to include high-income earners like entertainers and competitive gamers. The tax is typically based on the number of “duty days” you spend in a state for income-generating activities.

For example, if you live in Illinois and come to California for a tournament, California can tax you on that income — even if you’re only there for a few days. Enforcement of the “jock tax” varies by state and locality, and whether you are taxed may depend on how much you earn (the more you make, the more likely you are to be taxed). Because of varying state and local tax rules, you may end up owing taxes in multiple states and localities depending on where you compete and earn income.

Additionally, if you’re selling merchandise or other products as part of your brand, you’ll also need to be aware of sales tax obligations. Depending on where your customers are located, you may be responsible for collecting and remitting sales tax to different states and localities. Each jurisdiction has its own rules, and failing to comply with them could result in penalties or back taxes.

International Taxes: Considerations for Global Gamers

With esports growing globally, you might earn pro-gaming income from multiple countries — each with its own tax rules. For example, if you win a tournament in South Korea or get sponsorship from a European company, you may owe taxes in those countries. You also need to report all foreign income to your home country, adding complexity to your taxes.

Here are some considerations to keep in mind when managing international taxes:

Double taxation: To avoid paying taxes in two countries on the same income, you can use options like exclusions or foreign tax credits (FTCs). Tax treaties between some countries can also reduce your tax burden. But not all countries have treaties, and claiming these credits can involve complex filings and detailed records. Knowing your options and understanding how to apply them can help you manage your taxes strategically and minimize what you owe across borders.
Withholding taxes: Various countries impose a withholding obligation on certain types of revenue streams. This means, before you receive your earnings, the country may withhold a portion of your taxes. The rate varies depending on the type of income and local tax laws.
Intellectual property (IP): Savvy professional gamers are cognizant of IP such as copyrights and trademarks, as well as name image and likeness (NIL). Whether revenue streams like photoshoots, appearances, speaking engagements, and even your social media presence are compensated as “services” or a “right of use” can influence taxation in various countries. Having clear contracts that appropriately define income classes can help you best manage taxation and protect your rights.

Given the complexity of both domestic and international tax laws, it’s wise to consult with a tax team familiar with the esports industry. They can help you navigate multistate and international tax rules, take advantage of deductions and credits, and structure your finances in a way that minimizes your tax burden across multiple jurisdictions.

5 Common Financial Pitfalls Pro Gamers Should Avoid

In the fast-paced world of esports and professional gaming, it’s easy to get caught up in the excitement and make decisions that could hurt your financial future. Here are a few pitfalls to watch out for:

1. Don’t Rush into Contracts

It’s tempting to sign the first deal that comes your way, especially when there’s a significant amount of money involved. But taking your time to understand the terms of the contract can save you from potential headaches down the line. Work with legal and financial advisors to review any offers before you sign.

2. Watch Out for Hidden Costs

Some deals come with hidden costs that can eat into your earnings. For example, if a team covers your living expenses but then deducts those costs from your winnings you could end up with much less than you expected. Always ask for a detailed breakdown of any expenses and how they will be handled.

3. Budget for the Long Haul

Esports careers can be short — a recent Washington Post headline read “Esports stars have shorter careers than NFL players” — with the peak years often occurring in your early 20s. This makes budgeting and saving for the future even more important.

4. Prioritize Needs Over Wants

When the money starts rolling in, it can be tempting to splurge on the latest gear or a luxury lifestyle. But remember, this income may not last forever. Prioritize saving and investing your money wisely. Work with a financial advisor to create a budget that accounts for your current needs and future goals.

5. Plan for a Sustainable Future

Consider how your current earnings can help you achieve your long-term goals. Whether you want to invest in a new business, save for retirement, or buy a home, planning ahead is key. This is where having a solid financial plan and the right advice can make all the difference.

Level Up Your Financial Strategy

Managing your finances as a pro gamer can be overwhelming, especially when you’re focused on winning and building your brand. That’s why having experienced professionals in your corner can make all the difference. Working with a team of advisors — whether it’s a tax professional, lawyer, or financial planner — can give you the peace of mind to focus on your game knowing your finances are in good hands.

How MGO Can Help

We know the unique challenges you face as a professional gamer. From reviewing contracts to navigating international taxes, we’re here to help you maximize your earnings and secure your financial future. Before you sign any deal or make a financial decision, talk to our Entertainment, Sports, and Media team.

3 Game-Changing Financial Tips for Student Athletes Scoring NIL Deals

Executive Summary:

Name, image, and likeness (NIL) deals offer athletes exciting opportunities, but also potential pitfalls if not approached strategically.
Athletes should educate themselves on taxes, carefully review contracts, and budget with long-term security in mind.
With guidance on financial obligations, agreements, and smart money management, athletes can maximize NIL benefits while safeguarding their futures.

You are a talented young athlete with a growing public profile. You’ve just been offered a Name, Image, and Likeness (NIL) deal, an opportunity that can put some extra money in your pocket or even, in some cases, make a more profound impact on your financial life. It’s an exhilarating time, but it’s also crucial to approach this new chapter with the right knowledge and mindset.

New Division I NIL Disclosure and Assistance Rules

The Division I Board of Directors recently made some notable updates to its NIL rules, which went into effect on August 1, 2024. Key changes include:

Increased NIL assistance: Schools are now permitted to assist student-athletes in identifying NIL opportunities and facilitating deals with third parties, provided the athlete discloses their NIL arrangements. While schools can help, student-athletes maintain full control over the terms of their agreements.
Expanded disclosure requirements: To receive NIL-related support from their school, student-athletes must disclose any NIL agreement valued at $600 or more within 30 days of signing the contract. This applies to both current and prospective student-athletes.
New NIL reporting platform: The NCAA has launched NIL Assist, a mobile-friendly platform that streamlines NIL disclosure, provides educational resources, and allows student-athletes to review service providers.
Post-eligibility insurance: The NCAA has also introduced post-eligibility insurance for all divisions, covering injuries sustained during participation in college athletics for up to two years after graduation. This includes up to $25,000 for mental health services.

These changes are designed to provide student-athletes with increased NIL-related support and flexibility while maintaining fairness and clarity in the ever-evolving NIL landscape.

Three Essential Financial “Plays” Every NIL Athlete Needs to Know

Whether you’re a college or high-school athlete, or the trusted advisor to a young athlete, here are three critical actions you should take to avoid common financial pitfalls associated with NIL deals.

1. Recognize Your Tax Obligation

One of the first hurdles you’ll encounter in the world of NIL deals is taxes. It’s essential to understand that the money you earn from these deals is subject to taxation. Many young athletes overlook this, often because they’ve never had to deal with taxes before.

To avoid potential financial trouble down the road, consider these steps:

Educate Yourself: Young athletes receiving payments from NIL deals are responsible for paying taxes on that income just like professional athletes. Take the time to learn about taxes, especially how they apply to your earnings. Understanding the basics of taxation will empower you to make informed decisions.
Consult a Tax Professional: Before signing any NIL agreement, consult with an experienced accountant, tax advisor, or business manager. They can help you calculate your tax obligations, identify potential deductions, and develop a tax strategy tailored to your situation. Along with ensuring any federal, state, and local taxes you owe are paid on time (avoiding penalties), a tax professional can also help you navigate more complex situations – such as earning income across multiple states.
Practice Smart Spending: Resist the urge to splurge on electronics, clothes, or cars as soon as the money starts rolling in. Create a budget that considers your future tax payments, living expenses, and financial goals. Staying disciplined with your spending is key to long-term financial success.

2. Execute Agreements Cautiously

Navigating NIL deals can be tricky. There are various state laws and school policies to consider, along with a number of legal “gotchas” to avoid. Here’s how you can safeguard your interests:

Seek Legal Advice: Before signing any NIL agreement, engage a lawyer with experience negotiating NIL and brand endorsements for athletes. An attorney with expertise in sports contracts can help you navigate the important terms in an NIL deal, such as money, exclusivity, length of the agreement, how the brand can use your name, image, and likeness, and an athlete’s delivery requirements. An experienced attorney will help you spot potential pitfalls and ensure the agreement aligns with your long-term goals.
Beware of “Standard” or Simplistic Agreements: When someone refers to a contract as “standard” or provides an overly simplified agreement, that should throw up a red flag. All it takes is the slightest language in your agreement to give a company unfettered rights to use your name, likeness and image in ways you never intended.
Follow Regulations: An experienced advisor will help you navigate specific laws and policies set by your state, school, and the NCAA regarding NIL deals. For example, you cannot share photos or videos in your team uniform with logos from other brands without first getting permission from your school or the brands.

3. Budget Wisely for the Long Term

While newfound wealth can be exhilarating, it’s crucial to manage your finances wisely:

Prioritize Needs Over Wants: When it comes to spending, prioritize essential needs over extravagant wants. Understand this financial windfall may be a one-time occurrence, so focus on building a secure future rather than indulging in immediate gratification.
Future-Proof Your Earnings: Instead of assuming this is a continuous stream of income, treat each deal as if it were your last. Create a budget that accounts for potential future earnings and uncertainties, ensuring you’re prepared for any scenario.
Explore Tax Mitigation Strategies: Consider tax mitigation strategies, such as retirement planning and deferral opportunities, to minimize your tax burden. Consulting a financial advisor can help you explore these options.

Make the Most of Your NIL Opportunities

The legalization of NIL in college and high school sports represents an exciting shift for young athletes. It can offer game-changing money, enabling you to take care of your financial needs, along with building your brand for future growth. But with great success also comes great responsibility. Even professional athletes who’ve reached the highest pinnacles of their respective sports can end up without the financial resources they need if they don’t plan ahead.

The good news is by recognizing the potential pitfalls and seeking professional guidance early in your NIL journey, you can better position yourself for long-term financial success. Remember, it’s not just about profiting from your name, image, and likeness today, but also securing your financial future for tomorrow.

How We Can Help:

Our Entertainment, Sports, and Media practice understands the unique challenges athletes face at all stages of their financial journey. Whether you need assistance with tax planning, contract negotiations, or financial strategy, we’re here to guide you toward a successful future in the world of sports and NIL.

This article was co-authored by Leron E. Rogers, Partner at Fox Rothschild LLP.

5 Essential Tips for Entertainers from a Leading Business Manager

Key Takeaways:

Navigate the unique financial challenges of the entertainment industry with a solid strategy tailored to your diverse income streams and career goals.

Master budgeting and maintain open communication with your business manager to create stability and prevent potential issues before they occur.

Prepare for financial unpredictability and leverage your brand strategically to maximize long-term success.

In the entertainment industry, where the spotlight often shines brightly but unpredictably, managing your finances can feel like walking a tightrope. Whether you’re an actor, producer, director, or writer, the nature of your income is unique — often fluctuating with the ebb and flow of projects, endorsements, and creative ventures.

As you navigate this complex landscape, having a solid financial strategy becomes crucial. Here are top tips to help you maximize your earnings, plan for the future, and maintain financial stability:

1. Understand Your Income Streams

In today’s entertainment industry, your income is likely coming from multiple sources — acting gigs, endorsement deals, social media partnerships, and more. It’s essential to have a clear understanding of where your money is coming from and how it’s being managed.

Different income streams often involve different representatives, each focused on a specific aspect of your career. You might have an agent handling your film and TV roles, another for endorsements, and yet another for book deals or modeling contracts. This diversification offers incredible opportunities but also requires careful management. The first step in securing your financial future is knowing exactly who is managing each income stream and how those funds are being handled.

When you understand your income sources, you can better plan and project your financial future. This foresight is especially critical in an industry where income is not always consistent.

2. Master the Art of Budgeting

Unlike a traditional job where you receive a steady paycheck, your earnings can be unpredictable, often arriving in large sums at irregular intervals. This means budgeting is not just important — it’s essential for your financial well-being.

When a major payday comes in, it’s easy to feel flush with cash. But remember, that money often needs to last until your next project. A key part of effective budgeting is stretching your income to cover your expenses over an extended period so you can live comfortably between jobs. This might involve setting aside a portion for savings, investing in long-term financial goals, or simply making sure you have enough to cover day-to-day expenses without stress.

Effective budgeting also means being realistic about your spending. It’s tempting to see a million-dollar deal as a windfall, but after commissions, taxes, and other expenses, that sum shrinks significantly. Understanding the difference between gross and net income is vital, and a good business manager will help you navigate these waters so you can avoid overspending based on inflated expectations.

3. Prioritize Open Communication

Financial management in the entertainment industry isn’t just about numbers; it’s about trust and communication. You’re not just hiring a business manager, you’re bringing on a team that should be in lockstep with you — understanding your goals, lifestyle, and the unique challenges of your career.

Open communication with your business manager through regular check-ins, updates, and transparent reporting will keep you on the same page so vital information doesn’t slip through the cracks. This is especially important when your financial situation changes — whether you’ve taken on a new project, invested in a new venture, or simply have questions about your spending.

A proactive approach to communication also means that your business manager should be alert to any potential financial issues before they become problems. For instance, if your spending starts to increase unexpectedly, it’s essential to address it immediately, adjusting your budget or planning for additional income sources to maintain financial balance.

4. Plan for the Unpredictable

In the entertainment industry, no two careers are alike, and neither are the financial challenges you’ll face. Whether it’s an unexpected tax bill, a dip in income, or a sudden opportunity that requires quick financial maneuvering, you need to be prepared for anything.

Your business manager should help you anticipate these challenges, providing guidance on everything from tax planning to estate management. Annual financial reviews are a great way to stay on top of your financial health, allowing you to adjust your plans as your career evolves.

For A-list talent with significant wealth, this planning might also include customized reporting and detailed management of a diverse portfolio — from real estate to investments in startups or other ventures. The goal is to keep you informed and confident in your financial decisions, no matter how complex your financial landscape may be.

5. Leverage Your Brand

Today’s entertainment landscape offers more opportunities than ever for you to build and leverage your brand. From creating your own content to partnering with brands, the potential for income is vast. However, with these opportunities comes the need for strategic management.

Whether you’re considering launching a product line, investing in a startup, or simply increasing your social media presence, your business manager should help you evaluate these opportunities so they align with your long-term financial goals.

There is also a lot of equity to be found in authenticity today. Invest in and promote what you’re passionate about. This authenticity not only resonates with your audience but also increases the value of your brand.

Creating Financial Stability in the Entertainment Industry

Your career is unique. So are your financial needs. With the right guidance and a clear plan, you can navigate the complexities of the entertainment industry and focus on what you do best — creating and performing — knowing your financial future is secure.

How MGO Can Help

Our dedicated Entertainment, Sports, and Media team provides customized business management services to leading and up-and-coming talent in the entertainment industry. We work closely with you to stretch your earnings, plan for the future, and manage your diverse revenue streams.

Reach out to our team today to find out how our personalized approach can help align your financial goals with your lifestyle so you can focus on your craft.

Charting Your Financial Path Beyond the Game

Key Takeaways:

Many professional athletes go on to achieve even greater financial success in their lives after sports through pro-active financial planning and capitalizing on post-career opportunities.
Having the right financial advisory team is crucial for transitioning athletes to make smart money decisions across areas like investments, business ventures, taxes, estate planning, and risk management.
With proper guidance, athletes can turn their playing careers into lifelong financial stability and growth through entrepreneurship, investments, and other lucrative second careers.

As a professional athlete, you’ve spent years honing your skills, building your career, and making a name for yourself. But what happens when the final whistle blows and your playing days are behind you?

The good news is many athletes move on to highly successful and lucrative ventures after their time in sports — some even making more money than they did during their athletic careers. With the right financial support and strategic planning, you can be one of them.

From Athlete to Entrepreneur: Maximizing Post-Career Opportunities

The transition to life after sports can be incredibly rewarding, opening doors to new and exciting opportunities. Many professional athletes have not only avoided the financial pitfalls often associated with post-career life but have also thrived financially.

Here are a few notable examples of athletes who’ve achieved significant financial success with their second careers:

Kenny Smith

Kenny “The Jet” Smith played 10 years in the National Basketball Association (NBA), winning back-to-back championships with the Houston Rockets in 1994 and 1995. While Smith made just under $12 million over his playing years, as an analyst on the Inside the NBA alongside Ernie Johnson, Charles Barkley, and Shaquille O’Neal, Smith reportedly takes home $16 million per year.

Maria Sharapova

While Sharapova earned over $300 million during a career where she became just the tenth woman to win all four major championships, she retired at the young age of 32 in 2020. Since that time, she has established herself as an investor and entrepreneur — working with health and wellness brands like Therabody and Tonal — while also serving on the board of directors for luxury fashion house Moncler Group.

Derek Jeter

Jeter played 20 seasons at shortstop for the New York Yankees, winning 5 World Series titles before retiring in 2014. After earning over $265 million in MLB salary, Jeter went on to found Jeter Publishing with Simon & Schuster and the media company The Players’ Tribune in 2014, which publishes first-person stories from athletes. From 2017, he became part-owner and CEO of the Miami Marlins.

David Beckham

Playing 21 seasons of professional soccer for teams like Manchester United, Real Madrid, the LA Galaxy, Beckham racked up league titles and millions in contract dollars. Retiring in 2013, he transitioned into a successful business career — starting the management company DB Ventures and collaborating with brands like HUGO BOSS. In 2018, Beckham brought Major League Soccer to Miami as co-owner of Inter Miami CF.

These examples demonstrate the wealth creation potential that exists long after an athletic career ends. Of course, it’s not just about what you do after your playing days are over; it’s also about what you do with your money.

The Role of Financial Advisors in Your Post-Career Success

The right financial advisors can help you navigate the complex financial landscape, assisting you to make smart decisions that will benefit you in the long term. Here are some key areas where advisors can support you:

Investment Planning

Post-career, it’s essential to make your money work for you. Financial advisors can help you develop a diversified investment portfolio tailored to your risk tolerance and long-term goals. This could include stocks, bonds, real estate, and business ventures.

Business Ventures

Many athletes transition into entrepreneurship. Advisors can provide invaluable support in evaluating business opportunities, developing business plans, and managing your ventures. Whether you’re interested in starting a restaurant, a retail chain, or a tech startup, having the right guidance can make all the difference.

Tax Planning

High earnings often come with complex tax obligations. A financial advisor can help you navigate these complexities, enabling you to take advantage of tax-saving opportunities and stay compliant with regulations.

Estate Planning

Protecting your wealth for future generations is crucial. Advisors can assist you in creating an estate plan that distributes your assets according to your wishes, minimizing tax liabilities and providing for your loved ones.

Retirement Planning

Even if you’re transitioning into a second career, planning for retirement is essential. Advisors can help you set up retirement accounts, plan for long-term care, and establish a steady income stream throughout your retirement years.

Risk Management

Life is unpredictable, and managing risk is a crucial part of any financial plan. Advisors can help you select the right insurance policies and develop strategies to protect your assets against unforeseen events.

Taking the Next Step in Your Post-Playing Journey

Transitioning from a professional athlete to a successful entrepreneur, broadcaster, coach, or executive is not just a dream; it’s a reality for many who have walked in your shoes. With strategic planning and the right financial support, you can turn your athletic success into lifelong financial stability and growth.

Remember, the game doesn’t end when you leave the field; it simply evolves. Embrace the opportunities ahead and put the right team in place to guide you through every step of your post-career journey.

How We Can Help

Our dedicated Entertainment, Sports, and Media team has extensive experience guiding professional athletes through all phases of their career journeys. We offer comprehensive financial services tailored to help you achieve continued success. Reach out to our team today to discuss how we can support your post-career goals.

How Much Is $1 Million Really Worth for Professional Athletes?

Key Takeaways:

Pro athletes typically only take home around 50% of their contract value after taxes and fees.
Additionally, most professional sports leagues pay athletes only part of the year, creating variability in income.
While contract values may seem high, thoughtful financial planning is necessary to make money last.

A lifetime of training, hard work, and performance has earned you elite earning potential. While the headline numbers are eye-popping, it’s important to understand what you’re actually taking home.

Taxes and fees will vary, but generally professional athletes take home approximately 50% of contract value — and that’s before deducting rent/lease costs, living expenses, and support for family and friends. If you picture your salary as several piles of stacked bills, half those piles immediately get taken away before any of it even reaches your hands.

The example below shows that for an athlete with an annual salary of $1 million, once you pay federal taxes, state and local taxes, agent’s fees, and put money into a 401K for retirement, you’re left with a little over $534K. Divide that up over 12 months of the year and that contract million becomes $44K/month to cover all your expenses for that year.

That’s no small amount of money — but if you’re also shelling out high dollar amounts for a home (or homes), cars, clothing, jewelry, travel, nights out, loans to friends, etc., or you run into one of these common pro athlete financial pitfalls, it can dwindle much quicker than you expect.

Pro Athletes Don’t Receive Paychecks Year-Round

Most professional leagues pay athletes during the season, which means large in-season checks — but no reliable income the rest of the year.

For example: NFL players are paid in 36 pay periods across the year starting in September, leaving three months of the year where they are not receiving a paycheck. In the NBA, most players are paid twice a month throughout the regular season (November-April).

This variable cycle of paychecks makes it necessary to know when and how much money is coming, how to treat expenses like travel and training, and how to plan for major purchases to avoid financial issues.

Understanding the True Value of Professional Sports Contracts

For pro athletes, it’s easy to be struck by the big number on your contract and believe you’ll never have to think about money again. But the truth is, everybody has to think about money. And the more money you have, the more you have to think about it — especially if you want to make your money (and your lifestyle) last.

The good news is, by being aware of the amount of money that actually goes into your pocket, you can properly budget and plan to both live well in the present and set yourself up for a comfortable financial future.

Need help making your money go the distance? Reach out to MGO Entertainment, Sports, and Media Industry Leader Tony Smalls today.

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Did You Miss the Deadline for Your SBA Shuttered Venue Operators Grant (SVOG) Audit?

Key Takeaways:

The SVOG program distributed billions to assist live venues and operators impacted by COVID-19, with mandatory audits required for recipients of $750,000 or more.
For-profit entities were required to submit SVOG audit packages by the later of nine months after the July 22, 2022, guidance or nine months after their 2022 fiscal year end.
Organizations that missed the deadline should complete their audits immediately, submit them to the SBA, and be prepared to justify any delays.

The Shuttered Venue Operators Grant (SVOG) program provided more than $16 billion in emergency assistance to live venues, performing arts organizations, theatrical producers, museums, movie theaters, and other eligible businesses impacted by the COVID-19 pandemic. Recipients that received $750,000 or more in SVOG funds were required to complete an audit by a third-party auditor.

For for-profit organizations, the deadline for submitting SVOG audits to the Small Business Administration (SBA) was the later of nine months after the release of SVOG For-Profit Guidance Document (which was issued on July 22, 2022) or nine months after the end of the entity’s fiscal year. This means all companies required to submit an SVOG audit should have done so prior to the conclusion of 2023.

If you missed this deadline, here are the key things you need to do:

Complete the audit process immediately if you haven’t already done so. The audits are mandatory for SVOG recipients above the $750,000 threshold.

Submit your completed audit package to the SBA as soon as possible after completion. There is no formal extension or grace period, so submitting late is better than not submitting at all.

Be prepared to justify the late submission and any delays in completing the audit process. The SBA may request an explanation.

Maintain all records and documentation related to your SVOG award and spending for future audits or reviews.

SVOG audits provide accountability for the proper use of these emergency pandemic relief funds. Failure to complete and submit the required audit can potentially result in having to return a portion or all of your SVOG funds received.

If you missed the deadline to complete your SVOG audit, MGO can help. Please contact our team immediately for assistance fulfilling this requirement.

Music Artists: Are You Leaving Royalty Earnings on the Table?

Key Takeaways:

Royalty accounting errors and contractual breaches are widespread in the music industry, likely causing many artists to be underpaid.
A comprehensive royalty audit examines contracts, income sources, expenses, and more to uncover underpayments and leverage for better deals.
Even if no issues are found, an audit provides peace of mind by validating an artist is being compensated properly for their work.

As a music artist, you work tirelessly to create art and build your career. But are you truly being compensated fairly for your creative output?

The sad reality is that royalty accounting errors and contractual breaches are rampant in the music industry, leaving many artists underwhelmed by their royalty statements. Even if you feel like you’re getting paid properly, there’s a strong chance you’re leaving money on the table.

The Prevalence of Royalty Issues

Auditing an artist’s royalty statements nearly always uncovers issues, whether it’s money owed or contractual breaches.

With the complex, multi-layered way music royalties flow these days — from streaming services to publishers to labels — there are numerous potential points of failure where sums can go underreported or uncollected entirely. Add in the many publishing and record labels being sold or merged, and mistakes become extremely common — whether caused by accounting errors, improper/failed registrations, or misinterpreted or ignored contractual language.

Causes of royalty shortfalls include:

Registration issues like incorrect songwriter shares or wrong ISRC (International Standard Recording Code)
Improper royalty rates
Failure to pay bumped royalty rates after recoupment or certified sales levels
Publishers failing to collect from all royalty sources
Expenses improperly deducted from royalty accounts
Uncashed royalty payment checks going unclaimed
Lost/”leaked” revenue in accounting
Improper sample clearances

Even if the dollar amounts seem small at first, contractual breaches can create powerful leverage for artists to escape bad deals, reclaim valuable copyrights, or renegotiate more favorable terms.

“A client came to me when he was trying to sell his catalog. I found a billion streams that his publishing company missed. He would have sold his catalog undervalued,” said royalty expert Dan Sassone.

Uncovering Hidden Revenue Streams

So how can you determine if you’re being paid properly? Embarking on a journey to reclaim lost royalties begins with a thorough examination of your income sources and contractual obligations. By conducting a royalty audit, you can uncover missed opportunities, rectify errors, and ensure compliance with your agreements.

While auditing your royalties is undoubtedly beneficial, the intricacies of the music industry can pose formidable challenges. This is where having a team of knowledgeable professionals on your side becomes invaluable.

Experienced auditors will first comb through your contracts to verify you’re being paid per the agreed rates, bumps, and terms. They’ll check that all income sources (streaming, downloads, broadcasts, etc.) are properly registered and being collected. And they’ll scrutinize deducted expenses line-by-line to validate their accuracy and approval.

This holistic approach can bring to light both overt underpayments and more obscured irregularities that surface-level audits often miss.

Key steps in royalty audits include:

Source Verification – Scrutinize statements from royalty sources and streaming platforms to verify the accuracy of reported earnings. Even major platforms and publishers like Songtrust or BMI can overlook royalties.

Contract Compliance – Compare contractual terms to actual earnings to ensure adherence to agreed-upon rates and conditions. Reviewing your contracts with a fine-tooth comb can reveal inconsistencies between what you’re owed and what you’re receiving, such as incorrect royalty percentages or unreceived bonuses.

Identifying Discrepancies – Cross-reference data to pinpoint discrepancies between reported earnings and expected income. For example, instances of missing streams or incorrect ISRCs can result in significant revenue losses.

How a Royalty Audit Benefits Music Artists

As the industry’s royalty streams grow increasingly complex, taking a guarded stance with your revenue is good business practice. Your gut feeling is a powerful indicator. If you sense that something is off or that you should be earning more, chances are you’re onto something. Even if there aren’t any red flags, it’s still wise to validate you’re getting your full share for the music you brought to life.

Key benefits of royalty audits for musicians include:

Receive Compensation – If there is money that you should have been paid, you may be able to recoup some or all of it or negotiate another form of compensation. Through this process, we have helped artists recoup thousands to millions of dollars they might never have realized otherwise.

Gain Peace of Mind – Rest assured knowing that your earnings are being meticulously reviewed and optimized.

Identify Bad Actors – Determine whether discrepancies stem from contractual misunderstandings, administrative errors, or deliberate misconduct.

Support Legal Efforts – If you are involved in a legal dispute or pre-litigation, audit findings can help you address disputes, negotiate settlements, and safeguard your rights in contractual matters.

Take Charge of Your Royalties Today

Whether you’re a chart-topping sensation or an emerging talent, maximizing your earnings from royalties is essential to your long-term financial well-being. By conducting regular royalty audits, you can safeguard your financial interests, mitigate risks, and ensure that every note you play translates into the fair compensation you deserve.

How We Can Help

MGO is one of the only firms to offer in-depth royalty auditing services. Along with looking at payments, we also conduct a meticulous review of contracts, registers, rates, etc., to determine if anything is missing. Don’t leave hard-earned royalty money on the table — reach out to our team today.

5 Financial Pitfalls Athletes Can’t Afford to Ignore

Key Takeaways:

Athletes often face financial challenges despite lucrative careers due to mismanaging money or trusting the wrong people with their finances.
Common risks that threaten athletes’ wealth include entourages, unqualified gatekeepers, and financial short-sightedness.
Solutions to frequently seen financial pitfalls for pro athletes involve setting boundaries, seeking diverse advice, and adopting disciplined budgeting.

It’s an all-too-common story: A talented athlete makes it to the big leagues and scores a life-changing payday only to watch their wealth slip away.

In some cases, it’s the result of overspending or poor financial planning. In other cases — like we recently saw with Los Angeles Dodgers star Shohei Ohtani (you can read MGO Entertainment, Sports, and Media Industry Leader Tony Smalls‘ perspective on that situation in this ESPN article) — it’s trusting the wrong people with access to your finances.

The reason we see the same story play out time and again in the world of professional sports is simple: athletes aren’t trained to look out for red flags or be proactive about protecting their money.

But just as you would prepare for an opponent before a big game or match, you need to be aware of the potential financial pitfalls you may encounter as a professional athlete.

The Five Biggest Dangers to Athletes’ Wealth

The warning signs that an athlete’s wealth is about to take a turn for the worse are easy to spot – because it happens in predictable ways. Lack of experience and betrayals of trust are enough to take down all but the strongest financial foundations. The biggest keys are to understand it can happen to anyone, and take the simple steps to avoid these issues.

1. The Entourage

Friends from the neighborhood latch onto the athlete and live the celebrity life while being a persistent drain on finances and a source of bad ideas. The athlete has promised to “take them out of the neighborhood/poverty,” but forgets that before they can help anyone else, they need to put the oxygen mask on themselves first.

What to do instead: You can turn this potential risk into an asset. Take your crew out of the neighborhood but set them up to thrive. Whether through responsible small business loans, or education and career training, you can rise up together.

2. The Gatekeeper

Far too frequently, a long-time friend or family member lacking financial expertise assumes the role of “The Gatekeeper” for the athlete. This individual often makes ill-informed business choices and monopolizes access to the athlete, shielding their finances from scrutiny and preventing anyone from uncovering potential negative consequences.

What to do instead: Instead of relying on a single gatekeeper, assemble a roundtable of advisors AND meet with them together, as often as you can. Especially as significant financial decisions are being made. Carefully evaluate those you entrust with financial matters, considering both their motivations and competency in making sound financial decisions. If either aspect is lacking, guide them toward improvement or seek out individuals with the necessary qualifications and integrity.

3. The Tantrum

When finally rewarded for the work and discipline required to become a pro, many athletes go through a phase of feeling they deserve anything and everything. When advised not to buy luxury items such as jewelry or cars, the response often is “who the hell are you to tell me what I can or cannot buy!?” Increasingly disastrous financial decisions inevitably follow.

What to do instead: This one is on you. No one will ever truly understand what you’ve endured to achieve success, but you also have to keep one foot on the ground and understand how quickly you could lose everything you’ve worked for. The best path forward is to implement a budget with room to enjoy what you’ve earned that also has controls in place to ensure you’re building an unshakeable foundation for the future.

4. The YES Men

When someone in the athlete’s camp gets fired for not agreeing with a bad decision, the professionals hired to protect their client (like the agent, business manager, or lawyer) may mitigate any conflict with the athlete to avoid getting fired — becoming YES Men. They would rather ride out the impending financial storm rather than tell the athlete what he or she actually needs to hear. Once there are only YES men around, the end is almost certainly near.

What to do instead: Understand how getting different points of view on financial matters helps avoid financial hazards. Get into the habit of asking your team: “What could go wrong with this financial move?” The final decision is always yours, but there is tremendous value in advisors who feel confident sharing financial knowledge and experience, even when you don’t want to hear what you need to hear.

5. Financial Myopia

Athletes can have a defective vision of their financial future. The average career span in the NFL is 3.3 years. In the NBA, it’s 4.5 years. The NHL is 5 years. And MLB is 5.6 years. Sure, pro players may earn a lot of money. But after paying agent’s fees, taxes, and shelling out for a luxury lifestyle, there isn’t much left to support the non-playing years. Some athletes may think they can pull off another miracle in overcoming all odds to maintain their lavish lifestyle, but the most common result is a broke athlete.

What to do instead: Budgeting and planning are the keys here. Just remember it isn’t a “one or the other” situation. With the right mindset and approach, you can still live (relatively) large, while putting away enough to secure a future for yourself and your family. It just takes some self-control and a willingness to make the right decisions.

Overcoming Financial Obstacles by Building a Winning Team

Many athletes come into a level of money at a young age that no one is truly prepared to handle. Lack of experience and betrayals of trust are enough to take down even the strongest financial foundations. This is why it is essential to choose a winning financial team.

Too often, athletes split responsibilities between team members (frequently friends and family members), allowing them to operate in silos without any oversight. This sets the stage for financial trouble down the line. Instead, you need to build a team of professionals who work together, so you always have a system of checks and balances in place.

Remember, true baller status comes when an athlete can live like a king for a lifetime, not just a couple years. When you build a trusted team, establish a plan, and follow it through, you can live comfortably long after your playing days are over.

How we can help:

With more than 30 years of experience working with athletes, actors, and music artists, our dedicated Entertainment, Sports, and Media team understands the unique financial challenges you face. Our team will help you build a financial foundation to achieve your goals both now and in the future. Reach out to us today to learn more.

How Pro Athletes Choose Winning Financial Teams

Key Takeaways:

Professional athletes need to assemble teams of qualified advisors to properly manage their complex financial affairs, just as successful CEOs build executive teams to run their companies.
The business manager or CFO plays the crucial role of quarterbacking the athlete’s daily financial operations — providing advice, serving as a gatekeeper, and coordinating the overall strategy with other advisors.
Carefully vetting and selecting a highly qualified, ethical business manager is essential, as many professional athletes have fallen victim to mismanaged finances.

As an athlete entering the draft, you are no longer just a player. You are now a professional, paid to play the game you love at the highest level. But along with the title “professional athlete” comes the weight of greater financial responsibility.

The financial profile of a professional athlete more closely resembles a mid-sized, private company than a typical household. While the economics can be exceptional, an alarming number of players lack the support structure necessary to navigate the depth and complexity of their financial requirements.

A professional athlete is the CEO of the brand that bears your name. To ensure the long-term value of that brand, you need to embrace this role and re-imagine your future beyond the playing field.

How to Assemble a Team to Support Your Athletic Career

Six-time NBA champion Michael Jordan once said, “Talent wins games, but teamwork and intelligence win championships.” This is just as true in the business world as it is in the world of professional sports. That’s why the world’s top CEOs make team-building their top priority. The way they approach that process serves as a valuable roadmap for both CEOs and athletes alike.

The Corporate Model

Most businesses share a common structural framework. While details may vary across different industries and global regions, the core elements of the Corporate Model (below) remain consistent. This framework identifies the primary business functions and areas of expertise critical to an organization’s success.

The Corporate Model has been successfully adapted to a wide variety of business categories, evolving as necessary to the unique needs of each organization’s operating environment.

The Hollywood Model

The film and television industry shares many traits with professional sports. The quality of the product is determined largely by the quality of talent in the spotlight — driving significant demand and high salaries for the best actors, directors, writers, etc.

Over the years, Hollywood leaders recognized that many of the same principles of growth and financial governance in the corporate world apply to talent in film and television. This led to the evolution of what we call the Hollywood Model (shown below).

This model identifies the importance of each individual role in the Corporate Model, albeit by different names. For example, the Chief Financial Officer (CFO) becomes the Business Manager, taking the lead on the client’s financial affairs.

The Sports Model

Over the past several decades, the financial lives of professional athletes have become increasingly complex. Salaries, endorsements, appearances, and other sources of income have grown significantly, and so have demands for athletes’ time and attention. However, the average player’s support system has failed to evolve at the same pace. The model below shows how the support team of a typical athlete compares to Corporate Model.

While professional athletes understand the importance of experience, expertise, and teamwork, they often lack a clearly defined model for building their teams off the field. The majority of highly publicized financial failures in professional sports stem from athletes who were either (a) missing key role players on their teams, or (b) trusting important roles to inexperienced or sometimes even unscrupulous acquaintances.

The MGO Model

At MGO, we have been fortunate to work with some of the most successful executives and entrepreneurs in the world — as well as many of the biggest names in sports and entertainment. As a result, we have come to know the traits and practices that drive success across industries.

The MGO Sports Model identifies and defines the roles critical to success — and aligns the work of leading advisors under a common vision. While each role is important, we encourage you to begin with the person who will serve as the quarterback of your daily financial life: your CFO/Business Manager.

Roles and Responsibilities of Your Business Manager

While each member of your team plays a vital role, the CFO/Business Manager is the person with the most tangible daily impact on your financial life.

Here are four ways your CFO/Business Manager contributes to your team:

Quarterback – Your business manager leads your financial operation, responsible for hands-on, real-time execution of the financial plan. This includes establishing budgets, paying bills, and monitoring the expenditures of anyone with access to your accounts or credit cards.

Advisor – Business managers serve as on-call financial advisors, working closely with you on your most important financial decisions — including family estates and trusts, marketing and name, image, likeness (NIL) deals, tax planning (including international tax), major purchases, potential investments, and charitable contributions.

Gatekeeper – High-profile athletes can be targets of investment scams and unwarranted requests for financial support. When these propositions come from friends, family, and former acquaintances, your business manager can serve an important gatekeeper function. By establishing a recognized first point of contact for all financial requests, most questionable requests can be filtered out before they reach you.

Strategist – Your business manager works closely with your entire roundtable of advisors, ensuring that everyone is aligned and working together to implement a common strategy.

Selecting a Trusted Business Manager

Despite the critical role played by CFOs/Business Managers in the financial lives of their clients, most states require no credentials to use the title. As a result, there are people with little or no accounting experience using that title today.

Many of the highly publicized financial challenges in sports and entertainment have stemmed from unqualified and/or unethical advisors serving in the role of business manager for high-profile clients. That’s why we suggest doing your own due diligence before hiring the quarterback of your financial team.

Things to consider when selecting a CFO/Business Manager:

Is the business manager a licensed CPA (certified public accountant)?
Is the business manager’s firm a licensed CPA firm?
What systems and certifications do they have in place to safeguard your money and data privacy?
What services will the CFO/Business Manager provide? For example…
- Financial Planning
- Bill Pay and Cash Management
- Tracking Income/Receivables
- Negotiating/Overseeing Major Purchases
- Overseeing Insurance/Risk Management
- Tax Consulting/Preparation
What types of reports will you receive? (ask to see samples)
How is bill pay managed? How are payment authorizations handled?
Do they have a dedicated staff? Do they have experience with similar clients?

Need Help Navigating the Complexities of Your Financial Journey?

MGO’s dedicated Entertainment, Sports, and Media team understands the unique challenges athletes face and provides tailored solutions that align with your goals. Reach out to us today to learn how we can help you achieve financial success beyond the field.

6 Financial Strategies to Hit a High Note with Your International Tour

Key Takeaways:

International touring is experiencing a significant resurgence following the challenges of the COVID-19 pandemic, presenting lucrative opportunities for music artists to expand their reach globally.
However, navigating the financial landscape of international tours involves addressing complex challenges — including understanding tax implications across borders and managing soaring production and travel costs.
To maximize profitability and minimize financial risks, artists should take strategic steps, such as meticulous tour itinerary planning, thorough contract reviews by financial and legal professionals, and strategic budgeting to optimize expenses.

If you’re a music artist, it’s hard to look back on 2023 and not want to head out on tour in 2024. After the COVID-19 pandemic put a serious damper on touring, the concert business has come roaring back to life.

In 2022, the top 100 worldwide tours grossed an (at the time) record-setting $6.28 million. Then along came 2023, which — led by the highest grossing global concert tour of all time, Taylor Swift’s Eras Tour, and Beyoncé’s blockbuster Renaissance World Tour — blew 2022 out of the water, grossing an astronomic $9.17 billion.

With both attendance and average ticket prices up, more artists are seeing the value of touring around the globe. But amidst the excitement for international tours also lies a maze of financial considerations. Understanding and strategizing around these intricacies is essential to maximize your earnings.

Six Strategic Financial Tips to Maximize Your International Tour Profitability

For musicians and managers, it’s crucial to get a handle on all touring costs — factoring in local pricing and taxation — and how they will impact your net earnings.

To increase the likelihood of financial success and minimize surprises, take these steps:

1. Prepare for tax implications across borders

When you embark on an international tour, taxation is not confined to a single jurisdiction. Every country, region, and municipality you visit becomes a potential tax obligation with varying rates, regulations, and exemptions. Many countries also require non-resident entertainers to pay withholding taxes on income earned within their borders.

Furthermore, the existence of income tax treaties between countries adds another layer of complexity. These treaties aim to prevent double taxation and often provide relief for touring artists. However, navigating these treaties requires careful consideration and knowledge in international tax law.

The bottom line: Understand what your tax obligations will look like before you head out on tour.

2. Plan your tour itinerary with local costs in mind

When mapping out your tour, think beyond venues and audiences. Consider both the tax implications and the regional pricing dynamics (production costs, hotels, labor, etc.) of each destination.

You should also map out an efficient tour route that minimizes transportation costs. Lock in inflexible dates like festivals first, then route other dates logically. Avoid crisscrossing to reduce travel, and analyze the various costs of transportation such as renting tour buses compared to repeated flights.

3. Have a financial professional review your contract

While it’s standard to have a lawyer review a contract, you should also have your touring contract reviewed from a financial perspective.

Consult experienced professionals who can arm you with firsthand knowledge of the touring process and insights from countless past negotiations. They can assess whether your rate accounts for all overhead costs like production, transportation, personnel, etc., so you get the monetary return you deserve.

You also want professionals on your side who are familiar with income tax treaties and local regulations to minimize tax liabilities and maximize earnings as you perform in different jurisdictions.

4. Budget to keep your travel costs in check

While international tours can be a major moneymaker, international production and shipping costs have soared. Additionally, travel costs like plane tickets, baggage fees, gas, visas, accommodations, and ground transportation for you and your team can really cut into your profitability.

Jeremy Young, senior director of sales for Cast & Crew Live Entertainment, notes: “We’ve noticed from the payroll coming in from tours of all sizes, that their international tours seem to be shorter than they were prior to COVID. This is most likely attributed to the demand domestically still being very high, along with increasing (international) travel costs and other logistical obstacles created by the pandemic.”

The scale of your show affects staffing needs like dancers, audio/lighting engineers, and security. Hiring multi-disciplined staff who can fulfill several roles can save on flights, hotels, per diems, and salaries. You can also consider hiring local crews in each city (while still accounting for visas/work permits).

The key to managing travel costs is proper planning and budgeting to keep your expenses from exceeding your earnings.

5. Maintain a meticulous record of your expenditures

Touring expenses can add up quickly, but they can also provide valuable tax deductions down the line. From meals to marketing, keep detailed records of all your expenditures — and where you spent them.

Recording expenses in accounting software helps to better track and manage data. Understanding deduction rules in each jurisdiction can help minimize your tax burden.

Insider Tip: The Internal Revenue Service (IRS) recently announced plans to conduct audits on corporate jet usage, particularly focusing on personal use, as part of a broader effort to ensure high-income groups fulfill their tax responsibilities. As you plan your global itinerary, stay informed about potential tax implications related to personal use of corporate jets or similar assets that could impact eligibility for certain business deductions.

6. Be mindful when monetizing your merchandise

Merchandise sales can be a lucrative revenue stream for touring artists — with many artists making a high percentage of their income from merch. But to get the most from your merchandise, you need to think strategically.

Here are a few areas to consider:

Shipping – The decision whether to ship merchandise ahead of you or have it fulfilled at your destination country depends on several factors — including logistics, costs, fees, convenience, and risk management.
Pricing – When determining pricing for your merchandise, consider factors such as production costs, shipping expenses, and local pricing dynamics. Research pricing trends in each international market and adjust prices accordingly to reflect local demand and purchasing power.
Taxes – Before selling merchandise in each international destination, familiarize yourself with local regulations and tax laws governing merchandise sales. Different countries may have varying requirements for business permits, sales taxes, and import/export duties.

Orchestrating Your Financial Success

Embarking on a global tour is exciting, but not without its financial challenges.

Consulting with professionals before heading out on your tour can help you avoid potential pitfalls. Appropriate planning, record keeping, and a savvy strategy can minimize taxes and better position you and your team to maximize take-home profit.

At MGO, our International Tax and Entertainment, Sports, and Media (ESM) teams are dedicated to helping artists like you navigate the financial complexities of touring. With our knowledge and guidance, you can harmonize your strategies so your international tour hits all the right notes—both artistically and financially. Reach out to us today to learn more.