3% A Number That is Not Gross, Its Disgusting
I have eluded to frustration with percentage based fee structure in the current market in sports industry.
Breaking Down 3%: it may seem like a nominal fee until I break this down into real usable numbers
- Coaching and playing is simply what you do to support your family.
- I am coaches wife and I am in charge of our family finances my husband salary has a huge impact on our monthly finances. If you have a pen and paper you may want to follow along and write this down so you can see what 3% actually means to your pocket book.
- Let take $100,000 Gross Salary-that is the salary offered by the institution or pro team before taxes
- The federal tax rate is 10%, 15%, 25%, 28%, 33%, 35%, 39.6% depending on the amount you make after your taxable income. For the purposes of this exercise I am going to use the 33% tax rate.
- State taxes vary. I will use 10% some states may be higher, some lower, and a few states have no state income tax.
6. 5% is an amount you may contribute to a qualified 401K
7. 33% plus 10% plus 5% = 48%
In numbers this means at 100K divided by 12 = 8,333 gross pay
After 48% is deducted your net pay is roughly $4,150
9. Agent Fees of 3% of 100K= 3,000
10. Agent Fees of 4% of 100K = 4,000
Although a 3% fee is defendable on per hour basis for attorney fee on $100,000 contract negotiation. You are almost paying one month salary to your agent.
One Million Dollar
Here’s where is get interesting. Lets do this based on One million dollar deal. You may be saying hey I don’t make one million dollars well over a 2-3 year multi year deal you might make that much.
Here what those numbers look like:
1,000,000 divided 12 = $83,333 per month
after 48% is deducted your net pay = $41,666 month
3% of million is $30,000 4% $40,000 which again is almost one month salary. As a mom of college aged children that amount will be what you will need to pay college tuition.
I do this for a living and that amount just really doesn’t pencil.
At 30,000 a year that is probably your second biggest expense next to housing.
If an attorney charges $500 per hour and average contract negotiation takes 5-15 hours 2500-7500 dollar fees.
This is why my fee structure is a point of difference. If you want a copy of my current yearly fee email me at firstname.lastname@example.org. Please share, subscribe and provide a review on itunes.
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