Financial Services

Financial Services Detail

1. ESTABLISH A WILL

On the date that an athlete becomes a professional athlete he needs to establish a will. It is of the utmost importance that from the very first day that he signs his professional contract and/or begins to accumulate wealth there should be legal documentation of his intentions in distribution of his assets to his heirs. This is a necessary document in the event something should happen to him on or off the playing field. Therefore, this is the first step we suggest our athletes complete.

2. ESTABLISH DISABILITY INSURANCE

For our clients whose contracts are not guaranteed or are partially guaranteed we strongly advise that they purchase disability insurance. We assist each client in establishing a disability policy that is tailored to the individual player's needs. Even in the case of a guaranteed contract we will look at the possibility of purchasing disability insurance to cover the client's future value in his sport with the emphasis increasing as the contract matures.

All of the client's disability insurance work is done through an outside licensed insurance representative.

There is never a fee sharing agreement with any outside service

3. ESTABLISH LIFE INSURANCE

Depending on each player's contract, some of the contract receipts may be guaranteed against death. But in some cases they are not. In these cases it is necessary to obtain adequate life insurance. We will assist the player in securing life insurance based upon his insurable interest as a professional athlete.

To establish this policy we will tailor the life insurance policy, whether it would be a whole life or a term policy, based upon the terms of his contract. Through an outside licensed representative, a life insurance policy is tailored to the athletes needs. This is usually accomplished with Term Insurance*, Permanent Insurance** or a mixture of both (see details below).

Again, there is never a fee sharing agreement with any outside agent.

*Term Insurance - Protection for a defined period of time. The cost of insurance increases as person gets older.

**Permanent Insurance - Protection design for a longer period of time, in theory for life. Generally speaking, the cost remains constant. Additionally, there is a tax deferred savings component (cash value). The down side to this insurance is a surrender penalty for early termination.

4. COMPLETE W-4 INFORMATION FOR THE TEAM (federal and state)

Completing a W-4 is a very important process in a professional athlete's business. Based upon the federal rates, we will determine what the tax liability will be for each individual player. Also, factored into this formula is the state taxes attributed to each team based on location. Further, each year new states are making players withhold taxes for income that is earned in their state. We can assist the team in withholding the proper amount of taxes based upon federal, state or states that are now requiring backup withholding.

5. TAX PLANNING (federal and state)

With the athlete turning professional and now earning a substantial income, he also gets to experience the frustration of paying federal income tax. As this frustration sets in each athlete must understand the importance that should be placed upon this issue. No one "wants" to pay taxes, but we must always see that the proper tax liability is paid and paid on a timely basis. We will sit down with each player and explain the importance of taxation based on his individual situation. How the receipts for his contract flow to his 1040 and which deductions he can properly deduct. After we establish taxable income we explore the tax liability and how this tax is paid. The last thing that anyone wants to experience is an internal revenue service audit. Because of this, AAI Sports, Inc. takes a very conservative approach to the player's tax liabilities. This is an issue that is so important to us that we hire an outside CPA to work with us to prepare and review all athletes' tax returns.

Additionally, there are tax strategies that must constantly be reviewed. With assistance of the team and league, we have in the past shifted income from one year to another (in the case of rate changes). Another question, should a contact be signed and/or negotiated in one state rather than another? We always review the residency issue of each player, from a state tax standpoint.

6. ESTABLISH A BUDGET

BUDGET....the six-letter word that can make or break a professional career (financially speaking).

We believe that it is important to establish a budget from day one and make projections for the duration of the contract. We usually plan on the first contract being the only contract. We can report monthly, with a variance report, comparing actual to budgeted expenditures. Additionally, we recommend at least an annual review in writing face to face with our clients.

With most teams paying during the season, the budget prepares the athlete for those months when they do not receive a check.

7. ESTABLISH BANKING RELATIONSHIP (i.e. accounts, loans)

A bank account is essential to ensure proper documentation for tax purposes.

However, a banking relationship usually goes further than a mere bank account. The athlete may decide to purchase a home and or a car in which a good banking relationship is essential. We assist the athlete in securing the proper documentation for a mortgage loan, automobile loan and or a consumer loan.

If a relationship is established, documentation can be simplified, and explanations of the professional athlete can be minimized. We feel that a good banking relationship can have a great impact on life after sports (i.e. establishment of a business).

8. ESTABLISH A CUSTOM SET OF INDIVIDUAL ACCOUNTING RECORDS

Accurate accounting records are an essential component in compiling an individual's tax return. We at AAI Sports, Inc. provide a monthly general ledger, which will be backed up by all transactions incurred during the month. This general ledger will be reviewed on a monthly basis. All checks, invoices and cash receipts that are received will be filed with check copies and receipt copies. Each individual bank account will be reconciled on a monthly basis. Cash reports will be available at an athlete's request. Any individual may request an up to the minute cash report on his respective account. The books that we establish and maintain for the athlete are always the property of the athlete and are open for his inspection at any time. The athlete may visit and review any of the documentation that we provide for him without an appointment.

Examples of the accounting records follow. This is a service that is provided upon the request of the athlete at an additional charge.

9. ASSIST IN ESTABLISHMENT OF RETIREMENT PLAN

During our budgeting process one of the things that we emphasize is retirement. Basically, we lean toward a conservative approach for all retirement funds which, in most circumstances, do not produce the highest yields; but at the same time they are very seldom placed at risk. We like to know that the funds that we have assisted an athlete in investing are always secure and hopefully, in most cases are backed up by the US government.

Our philosophy is to always know that the athlete's money is secure and look for the most advantageous return and greatest yield he can receive with the least amount of risk.

10. ASSIST IN MAJOR PURCHASES (upon your request)

We have assisted in major purchases in the past as follows:

A. Home purchase or lease negotiation

B. Oversee construction of:
1) New home - including lot purchase, review of plans, selection of builder or general contractor, furniture and interior design, mortgage placement (permanent & interim). Implement drawings and lien release. Also provide complete accounting of all expenditures.
2) Home for parents - same as above
3) Retail construction - remodeling of a business

C. Vehicle purchase & financing

11. ASSIST IN INVESTMENTS (T-bills, muni-bonds, CD's)

We can assist an athlete in his investments. As always, we like to take a conservative approach to investments. The day the athlete signs his pro contract he will begin to receive investment opportunities from a multitude of people. His name and salary information will be published and the investment community will always be knocking at his door. Therefore, it is usually to the athlete's best interest to let us or someone he trusts review these investment opportunities.

We do not select specific investment opportunities for athletes. We simply outline the athlete's objectives for investments, then we will relay those objectives to outside licensed advisers. There is never a fee charged for this service.

12. ASSIST IN PERSONAL MATTERS:

A. Establish residency - As previously discussed, there are tax advantages for being a resident in certain states. Therefore, we suggest the following steps:
1.Obtain a drivers license in that state.
2.Register to vote in that state.
3.Register your auto in that state.

B. Prenuptial Agreements - When marriage becomes an issue, we can advise and assist the client in considering a prenuptial agreement. This is a subject that should be broached early and carefully.

13. MAINTAIN A DAILY CALENDAR OF ATHLETES ACTIVITIES

See example that follows:

14. SCHEDULE APPEARANCES

As a professional athlete you will be in demand to make certain appearances, i.e., card shows, autograph signings, store openings, speeches, etc. AAI Sports, Inc. will negotiate the contract, including fees, for these appearances as well as coordinate the air and ground travel, accommodations, and other logistics. We will approach you with the appearance request for your approval and, upon that approval, add that event to your calendar. We will constantly remind you of your commitments and make sure all the procedures are handled in a timely manner.