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NFL players’ financial advisors look to ‘meet emotion with practicality’ as the 2020 season approaches

Mason Champion, Morgan Stanley Financial Advisor, joins Yahoo Finance's The First Trade with Alexis Christoforous and Brian Sozzi to discuss the financial impact of NFL player's decision to opt-out of the 2020 season. Champion also weighs in on what he's hearing within the sports industry overall.

Video Transcript

BRIAN SOZZI: Some NFL players are opting out of the 2020 NFL season due to concerns over the COVID-19 pandemic. Here to discuss the financial impact of that decision is Mason Champion. He's a financial advisor at Morgan Stanley. Mason, good to speak with you this morning. You directly work with players. Now, break this down for us-- if a player does opt out, what's the financial hit to them?

MASON CHAMPION: Yeah, Brian, I appreciate it. And thank you for having me on the show-- really happy to be here. There are so many questions and literally a mountain of considerations associated with the current NFL season. To your point, opting in-- or opting out of the season has different implications relative to whether a player's high risk or non-risk.

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So as we understand it, if a player is a high risk player and they opt out of the season, they have a $350,000 stipend, and they do receive a credited season for the time missed. If they're non-risk and they opt out, there's $150,000 stipend that requires repayment from future earnings. And they do not acquire an accredited season for this year. And so they have that to consider. And when we put together a wealth plan for a player, when we put together a holistic wealth plan for a player, we have to have those considerations in mind as we stress test portfolios, as we weigh those considerations to see what impact there is to the probability of success inherent to those types of changes.

ALEXIS CHRISTOFOROUS: Mason, what are these players saying to you? I'm sure it's a very emotional decision for them. It's a monetary one, but it's an emotional one. It has to deal with their health and their families as well. What are they saying to you?

MASON CHAMPION: Yeah, absolutely. It is very emotional. And you know, you try to meet emotion with practicality, right? You try to bring facts into circumstances that are otherwise engulfed in worry. And we tend to think that's where planning-- one of the values the planning provides is it kind of provides and delivers some context relative to the decision making process.

So some of those questions-- I mean, what if there's a season? What if there's not a season? What if a player opts out, if they don't opt out? What if they're high risk, or if they're not? What impact does missing accredited season have? What about repaying the stipend? Do I have to do it? What happens to my guaranteed money? What about the non-guaranteed money? What if you go into the season, and it's canceled midseason? What impact does that have for guaranteed versus non-guaranteed money?

And so to your question, like, the players are coming in and their wives are coming in and they have those questions. And they have the associated emotion inherent to those questions. And so what we do is we say, hey, all right, deep breath, let's go into the planning process, and let's walk through your plan. And what we have the capability to do as global sports and entertainment directors at Morgan Stanley is stress test allocations and run what-if scenarios.

So it's not enough to just have a plan, you have to have a plan that kind of incorporates different what-if scenarios. And you have to have the ability to stress test those scenarios relative to their ability to come to fruition. And when you do that and you kind of come in and you say, well, if this happens and that happens, you have a circumstance that has modified your plan from, say, a 93% probability of likelihood to, say, an 85% probability of likelihood-- just making up numbers here, right?

And to the extent that's the case, then we've delivered kind of practical, quantifiable context to an otherwise an emotional moment. And it gives them the ability to make a more informed decision as to what course they want to take. I mean, is that remarkably nerdy? I mean, absolutely, right? But it does bring some context and some clarity and some kind of quantifiable, measurable potential impact to a situation that's otherwise kind of engulfed in a wall of worry.

BRIAN SOZZI: Mason, I have about 30 seconds left. I remember talking to some PGA TOUR players last year, and I asked them off camera-- what are you investing in? Their common answer, I don't know. I have someone who handles that. Are these players showing more interest in their money? And what's your best investment tip to them right now? So many of them invest in real estate, but that's a big ticket purchase, costs a lot of money upfront.

MASON CHAMPION: Yeah. So I understand that. And I'm a longtime member of the PGA of America myself. So I appreciate that-- appreciate that question. You know, players should be reminded that they are a business, right? And to the extent that they can invest within themselves-- the time the dedication, the discipline, the resources, financial and otherwise-- into their own journey, then they're going to be well prepared.

And so that involves managing cash flow, living low to the ground, saving aggressively, and investing with prudence. To the extent that they can do that, right, especially the save aggressively part, right, then they're going to be better off for it. They're going to be able to weigh their investments within their allocation from the perspective of not chasing a fast buck, but rather making a prudent and well-informed investment decision.