Sports Division

Allen Tharp, Judith Hamilton, and Louie Wong
Hamilton Tharp, LLP Sports Division

In 1981, Hamilton Tharp, LLP made a strategic decision that the accounting and financial programs we had designed for entrepreneurs and wealthy individuals were ideally suited for the professional athlete. Since that time, the firm has built relationships with professional athletes in the National Football League, Major League Baseball, the National Basketball Association, National Hockey League and both men and women professional volleyball associations. Additionally, we have continued to represent players after their athletic careers and have among our clients a number of coaches, television personalities, and business owners. Since our firm has worked with professional athletes in California, we are frequently contacted by agents and other accounting firms for assistance with California taxation issues. Additionally, we have experience with athletes playing for teams outside of the U.S. and can provide calculations for the impact of foreign taxes and related credits.

Our primary goal in working with professional athletes is to assist them in reaching their financial objectives. Because many colleges do not have the resources available or expertise of helping an athlete choose a financial advisor, many athletes do not get sound advice early enough in their careers. We believe that by working with our firm early on, an athlete can get the best that we offer in order to address the following issues:

Budgeting and Cash Flow projections: We have developed several models for professional athletes which help them understand the relatively short period of high income earnings and the need for investments. Our goal is to accumulate wealth for the athlete to allow for transition into a second career while maintaining lifestyle and family security.

Selection of Investment Advisors: Our firm does not serve as an investment advisor; however, we have worked with many of the best investment advisors in the country and are in a unique position to help the athlete develop a program for carefully evaluating and interviewing advisors in order to select advisors who are experienced, respected and best suited for the athlete. Our firm can then track and monitor performance as well as provide a built-in "check-and-balance" approach to overall financial security.

Residency Analysis: In the sixteen years we have been providing services to professional athletes, we have developed unique expertise in choice of residency. There are many steps to take in order to ensure residency in the state chosen; however, we have been able to establish residency for some clients in tax free states which has resulted in significant savings.

Financial Analysis During Contract Negotiation: Very few agents have the training in financial and tax analysis that is comparable with the members of our firm. Thus, during the course of the contract negotiation, we are in a unique position to offer an important perspective on the tax and cash flow considerations of a contract offer. We are regularly asked to evaluate contract packages for our clients, and have developed a computer model that compares alternative contract scenarios in a comprehensive manner. Thus, we feel we are a great complement to an agent in the negotiation of the athlete's playing contract.

Off-the-Field Income Analysis and Planning: Working with agents and sports marketing companies, we have developed tax advantaged techniques which allow us to defer taxes by establishing retirement programs as well as payment of fees to family members when appropriate.

Charitable Foundation Analysis: In 1985, we were one of the first firms to set up and receive exempt status for the foundation of one of our professional athletes. Although now a popular technique with many athletes, our pioneer efforts in this area have resulted in models and 100% favorable determinations from tax authorities.

Multi-State Tax Preparation: We are the experts! We now prepare state taxes in almost every state and know how to minimize this ever-growing tax burden for our sports clients. By developing an overall plan in our residency analysis, we follow up on an annual basis to determine compliance with residence requirements. Several of our clients have saved hundreds of thousands of state tax dollars by following our recommendations. Although this is not possible in every case, we have the know-how to make sure our clients are paying the least amount of state tax possible. Three of our CPA’s were a part of the panel discussion for the San Diego Tax Institute’s "State Taxation of Professional Athletes and Entertainers."

The Financial Line-up is a quarterly publication which addresses financial and tax issues in sports. If you would like to subscribe to this publication, please contact info@ht2cpa.com.