Flagpole Willy wrote:
Former pro wrote:I agree with Jeremy on this one. I ran professionally for many years and the percentages that are taken are crazy.
Here's a breakdown:
agents - 15 % - 20 %
coach - 0 % - 10 %
Uncle Sam - 28 % - 35 % plus your state tax(Jeremy is definitely in the highest)
If the above percentages are correct if Jeremy makes 1 million per he goes home with 300k. I know that's still some good bank but I understand why he's trying to cut costs for services.
Well...
1) By using the worst percentages you provided, Jeremy would take home $350,000, not $300,000, AND...
I see this as greedy pure and simple on Wariner's part.
i think that you'd be able to deduct the fees to your agent and you coach from your income, unless you did no advance tax planning whatsoever.
so you start with 1,000,000 in this example, deduct 20% for agent, so 800,000 left, then 10% for coach, so 700,000 left (10% of 1,000,000, not 10% of 800,000), then apply the tax rate. as discussed before on this site, using your top marginal tax rate to estimate total taxes significantly overestimates taxes. nevertheless, i'll do so for this example for simplicity. wariner is in texas, so he won't have state (income) tax liability on his earnings, for the most part (other states may try to tax him on winnings from meets in those states). so lop off 35% of 700,000, and you end up with $455,000. use a more realistic federal income tax amount and you're probably closer to $500,000.
is it great to think you're making 1,000,000 and actually make 500,000? no. but the shopkeeper or the sole practitioner lawyer or any other businessperson has employee and other expenses. it's the same thing for an athlete. their competition is their "business" and there are costs associated with it - coaching, access to facilities, medical care, etc.
in sum, i'm with FW's last comment. it's greed. and maybe a little misplaced pride (thinking he can do just as well or better on his own). if he struggled last year, i'd understand it. with his recent record of success, i don't understand taking the risk over a relatively small amount of money.