AWM logo
AWM logo
AWM logo
Family OfficeOur TeamWealth PhilosophyInvestment PhilosophyResourcesPodcasts
Get in touch
AWM Wealth Portal
Wealth management system
Schwab Login
Access your investment portfolio
323-940-1339info@awmcap.com
Phoenix, AZ
League
NFL
MLB
PGA
100-Year Family
Career Stage
NIL
Draft
Debut
Rookie Contract
Arbitration
Free Agency
Retirement
Family Office Services
View all
Investing
Tax
Philanthropy
Privacy and protection
Risk management
Family coaching
Life Events
View all
Starting your career
Getting married
Having children
Buying real estate
Retirement
No results found.
More results
Client login
AWM Wealth Portal
Wealth management system
Schwab Login
Access your investment portfolio
Get in touch
A quick note about Schwab
IMPORTANT NOTICE (Required Click-Through Disclosure)
You are now leaving the “AWM Capital” Website and will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with “AWM Capital” or any advisor(s) whose name(s) appears on this Website. “AWM Capital” is independently owned and operated. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with “AWM Capital” under which Schwab provides “AWM Capital” with services related to your account. Schwab does not review the “AWM Capital” Website, and makes no representation regarding the content of the Website. The information contained in the “AWM Capital” Website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.
Continue to Schwab
Family OfficeOur TeamWealth PhilosophyInvestment PhilosophyResourcesPodcasts
Get in touch
AWM Wealth Portal
Wealth management system
Schwab Login
Access your investment portfolio
323-940-1339info@awmcap.com
Phoenix, AZ
League
NFL
MLB
PGA
100-Year Family
Career Stage
NIL
Draft
Debut
Rookie Contract
Arbitration
Free Agency
Retirement
Family Office Services
View all
Investing
Tax
Philanthropy
Privacy and protection
Risk management
Family coaching
Life Events
View all
Starting your career
Getting married
Having children
Buying real estate
Retirement
Get in touch
A quick note about Schwab
IMPORTANT NOTICE (Required Click-Through Disclosure)
You are now leaving the “AWM Capital” Website and will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with “AWM Capital” or any advisor(s) whose name(s) appears on this Website. “AWM Capital” is independently owned and operated. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with “AWM Capital” under which Schwab provides “AWM Capital” with services related to your account. Schwab does not review the “AWM Capital” Website, and makes no representation regarding the content of the Website. The information contained in the “AWM Capital” Website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.
Continue to Schwab
All resources
Article
Article
Article
Tax
February 27, 2025

Negotiating Your Signing Bonus Payment Structure

Negotiating Your Signing Bonus Payment Structure
YouTube
YouTube
Apple Podcasts
Spotify
Professional athletes should carefully consider the tax implications of their signing bonus payout structure, as uneven payments can maximize net income and reduce tax liability.
Erik Averill
Erik Averill
CFP®, CPWA®
Get in touch
Get in touch

Are you familiar with how a signing bonus is paid out? Historically, teams have split the gross amount into two equal payments over two years.

It is a common misperception that the 50/50 payment structure is the only option. Not only is this false, for the majority of players it is also the least advantageous.

As a player, your ultimate goal is not the gross signing bonus amount; rather, it is the net (after-tax) amount. How your signing bonus payout is structured will have the greatest impact on how much money you actually receive.

Which option would you choose if you signed for $2,700,000?

  • Option 1: $2,700,0000 paid in year 1
  • Option 2: $1,350,0000 paid in year 1 & $1,350,000 paid in year 2
  • Option 3: $1,900,000 paid in Year 1 & $800,000 paid in year 2
  • Option 1: The Bonus Is Paid In One Lump Sum – The Worst Option!
    • This is a huge mistake to always accelerate the total amount into the first year. This option neglects the opportunity to take advantage of the graduated tax rates in year two. Ultimately, creating the largest tax liability of all three options.
  • Option 2 versus Option 3
signing-bonus-example.png

From this analysis it is clear that option 3 is the best option with a net-tax savings of $35,000.

Prior to being drafted, analysis should be prepared in order to determine the true value of a potential signing bonus after-tax.

Professional athlete taxes vary greatly depending on a number of factors including the language of your contract, the timing of payment, your itemized deductions and residency. All of these factors come into play when determining how signing bonuses are taxed and no two cases are the same.

Accelerating or deferring the bonus into uneven payments can generally reduce the overall liability, depending on the circumstances.

It’s not what you sign for that matters but what you put in your pocket.

Many families ask, “doesn’t my agent do this?”

The best agents recognize the importance of tax planning and will request the support of a Certified Public Accountant (CPA) who specializes in working with professional athletes. However, agents are equally cautious to keep themselves separate from a player’s financial decisions to avoid any potential conflicts of interest. This puts the responsibility on the player and his family to ensure the tax planning is happening.

Signs That You May Need a Second Opinion

  • Your agent is telling you not to worry about a financial advisor until after the draft
  • Your agent tells you a team will never negotiate the structure of your bonus
  • Your agent tells you a 60/40 split is how you should structure it

In 2016 we have worked with 5 1st Round draft picks and their agents to negotiate the most tax efficient payment structure. It is important to realize that this is one of many factors in the negotiation so there is no guarantee that a team will agree to your ideal structure. However, at a minimum a projection similar to the one above should be presented to you by your agent and CPA® showing that the analysis has been done.

I would highly encourage you to ask for an example of a contract from a player they represented in last year’s draft similar to the one below. This will give you the confidence that your team has the expertise necessary.

Signing-Bonus-Structure.png

‍

Resource text generated based on episode and edited by a human.
Transcript
‍
Share this post

Related articles

View all
Tax

Safe Harbor Withholding: 2025 Edition

How to Let Your Tax Payment Make You Money When Your Salary Jumps
May 1, 2025
NFL
Tax

Chargers Players! You May Be Overpaying Taxes: Check Your Payroll Portal

The Los Angeles Chargers payroll team has a policy to allocate 100% of player wages to the state of California, regardless of the player’s resident state. This may be a costly mistake. If you are not a resident of California, only the wages you earn while physically located in California should be taxable by California.
April 3, 2025
Tax

Athlete Taxes: Safe Harbor Strategy

In this article, we aim to arm you with a strategy that maximizes your dollars – all through managing the timing of your tax payments.
May 4, 2022
Tax

Year-End Tax Planning: Maximizing Your Net Worth

With a few year-end tax planning strategies, you can set yourself up for a much better outcome at tax time.
March 10, 2022
Tax

Tax Write Offs For Athletes

What expenses can athletes write off on their taxes? If you’re like many athletes, this is one of the most confusing parts of filing your income tax return. We're here to help.
February 21, 2022
Tax

What is the Jock Tax? A Guide for Athletes

Although its name suggests otherwise, the jock tax isn’t just for professional athletes. It’s a type of income tax that states impose on nonresidents who earn money while they're visiting.
February 4, 2022
Slide content replaced with CMS collection
Slider replaced with CMS collection
Slider replaced with CMS collection
Slider replaced with CMS collection
Your Family Office

We're here to help you navigate.

Our advisors are ready to serve as your Athlete Family Office.

Get in touchMeet the team
Your Family Office
CTA image of man smiling

We're here to help you navigate.

Our advisors are ready to serve as your Athlete Family Office.

Contact usMeet the team
CTA image of man smiling
Join our newsletter.

The athlete family office.

5227 N 7th St STE 18036 Phoenix, AZ 85014

By subscribing you agree to with our Privacy Policy
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
AWM
Family OfficeWealth PhilosophyClient LoginGet in touch
Resources
ArticlesPodcasts
MLB Draft Podcast
Athlete CEO
PGA Players' Podcast
AWM Insights Podcast
MLB Players' Podcast
100-Year Family Podcast
NFL Players' Podcast
League
NFLMLBPGA100-Year Family
Career Stage
View all
NIL
Draft
Debut
Rookie Contract
Arbitration
Free Agency
Retirement
Life Events
View all
Starting your career
Getting married
Having children
Buying real estate
Retirement
Services
View all
Investing
Tax
Philanthropy
Privacy and protection
Risk management
Family coaching
Venture capital
League benefits
Financial planning
Benefits consulting
Investment advisory
Insurance and benefits
Cash management
Career transition
Retirement planning
Tax compliance and planning
Roth IRA
Real estate advisory
401(k)
Travel and relocation
Estate planning and wealth transfer
Education planning
Family financial support
Bill pay
Business management
Bookkeeping and payroll
Luxury purchase advisory
© 2025 AWM Capital. All rights reserved.
DisclosuresBusiness ContinuityPrivacyForm ADV Part 2AFORM ADV PART 3 (FORM CRS)Site by Snapmarket
Reported data current as of September 26, 2024. All images of people on this page are of employees or stock photos. No compensation was provided for any implied testimonial or endorsement. There are no material conflicts of interest. For stock photos it is not known if these persons are familiar with AWM or would endorse our services.