[zck]

> “I do not believe that financial insecurity should stop our nation’s elite athletes from breaking through to new frontiers of excellence,” Stevens said upon the announcement of his gift.

So his goal is to prevent money issues from being a thing getting in the way of athletes achieving. But he has structured it in a way that prevents the money from helping this goal.

> Per the Wall Street Journal, “Half will come 20 years after their first qualifying Olympic appearance or at age 45, whichever comes later. Another $100,000 will be in the form of a guaranteed benefit for their families after they pass away.”

So half of it will never be seen by the athlete. Ever. And the other half will not be seen for at least two decades.

What Olympic athlete is not able to achieve as much because they don't have money decades down the road? Or because their heirs don't have enough money? I might be missing something, but how do these two incredibly-delayed payments help them train now? They can't use money they won't see for 20 or 30 years to hire coaches, buy equipment or pay for track time. They can't buy food or pay rent with money they will never see.

[apparent]

It allows them to "income smooth". They will know they're getting $100k down the road, so they can count on having that money to use for their kids' college or part of their nest egg. In the meantime, they can spend more freely.

As for the gift to their heirs, that also allows them to consume somewhat more freely, instead of purchasing (as much) life insurance. Most young people don't, but people who compete in dangerous sports probably do.

[koolba]

$100K in 20 years is worth about $37K today (20 year STRIPS pay about 5%). Nobody is making long term or short term financial plans based on this. It’s just a nice bonus to honor dedication to a sport.

[fouc]

I would expect that $100K is hedged against inflation though.

[bastawhiz]

I wouldn't bet on a billionaire making sure he's giving even more money away than he promises.

[conductr]

> In the meantime, they can spend more freely

In the meantime, they need income not advice on frugality.

[jychang]

Cash is fungible. Money not spent on kids is money you can spend now.

[conductr]

Time is the issue. Time spent training for Olympics can't necessarily be used to generate an income. The whole premise of this donation is to afford them time, which it doesn't.

FWIW, most athletes are already used to being frugal as they juggle an often expensive training schedule with their personal finances. This is being framed as giving them money to focus on their sport/event during their competitive years.

[rowanG077]

This is a privileged viewpoint that is only true when you actually have cash to spend now.

[zck]

Do you think a 21-year old fencer will be more competitive because of this money? A 17-year old swimmer? A 16-year old gymnast?

[lmm]

If that money is what makes them feel comfortable e.g. dropping out of college to focus on their sport, absolutely.

[PaulDavisThe1st]

Then they are likely fools in more than one way. They might be awesome athletes, and dropping out to pursue their sport might be absolutely the right thing for them to do. But a promise of $100k after age 45 is not the reason.

[readthenotes1]

Not in the amount promised unless they have non positive financial acumen

[maxerickson]

That's like $75 a year of term life insurance for a young healthy person.

[fn-mote]

Not to be too pedantic, but this is not a term life insurance policy. It's a guaranteed benefit, so you should compare it to a "whole" life insurance policy (US terms). I see $500k benefit for $500+/mo, so I guess $100k benefit is $100/mo. Not amazing but not a joke either.

[maxerickson]

I agree that whole is a better comparison to the actual value.

I was responding to the freedom to spend the other poster had in their second paragraph, where I think it's reasonable to look at the insurance that would be better to actually buy.

[justin66]

You make it sound like the word of an eccentric billionaire is as good as a US treasury bond.

[winddude]

lol, what?

[embedding-shape]

> Another $100,000 will be in the form of a guaranteed benefit for their families after they pass away.

> So half of it will never be seen by the athlete

This can't be right, right? I never heard of people "receiving a donation" that you get the promise of now, but will be given to your family once you die, sounds a bit macabre. And as you mention, also pointless, how would that make them "break through new frontiers of excellence" when they may not be able to afford rent while being alive?

[mindslight]

My very rough lay understanding is that life insurance policies can be quite lucrative due to tax-free growth, and the main thing that holds back taking life insurance on arbitrary people as a general investment strategy is that you need to have some plausible reason why you're connected to someone's lifespan. I have to wonder if this whole thing isn't some giant tax dodge based on taking life insurance policies that pay a small amount to the athletes and the bulk back to whatever asset protection vehicle.

[falcor84]

> will be given to your family once you die, sounds a bit macabre.

To me it sounds more than a bit macabre - depending on the familial relations, it would seem like a motive for them to commit suicide in order to provide for their children or for their children to murder them. I can already imagine the memoires being adapted into Netflix shows.

[smileysteve]

Many companies provide a life insurance benefit equal to 50%-150% of annual salary.

If your sport has any mortality or long term risk (concussions, cardiac events) then this could be seen as a nice extra insurance policy.

[pooloo]

Why even question it? Its a donation that no one ever had to make.

[Carrok]

“You only get this money if you submit yourself to Christ and living a conservative lifestyle”

Still not worth questioning?

[irishcoffee]

That isn’t a donation.

Also, $donator is making, as far as I know, zero demands. These people would be competing if they had to pay. Actually, most of them do have to pay.

Your analogy is comparing apples-to-sqrt(-1)

[lovich]

If there are stipulations for receiving the money then it is a demand.

If you think the above example isn’t a donation then I don’t see the logic behind seeing this as a donation.

And to be clear, I view it as a donation that is still probably net good, but it’s not a selfless donation. The timeline as well also means it can be clawed back at some point in time.

I’d probably rate it a 2/10 for “goodness” where anything greater than 0 is still good.

[rsanek]

Many, if not most, donations have limits / requirements on what the money can be spent on. That's why it's such a big deal when someone doesn't make such a demand and says the grant is "unrestricted."

[dylan604]

Have you never heard of a trust before? They have all sorts of stipulations depending on what the person creating the trust wants. It's very common for a kid to only get access to their trust when they turn 18 with more access granted at other milestones. It also sounds like a free life insurance policy. Those also only pay out when someone dies.

This doesn't sound macabre at all to me. Sounds more like loophole finding to avoid directly paying the athletes to allow them to keep their amateur status to me.

[embedding-shape]

Yes, I've heard of all of those things, but never used in a way to motive the person who is currently alive.

[dylan604]

A trust that says you don't get access to the rest unless you graduate college isn't meant as motivation? Allowing extra payout for a house only if married? People have put all sorts of limitations on trusts specifically as motivation.

[embedding-shape]

> A trust that says you don't get access to the rest unless you graduate college isn't meant as motivation?

No, a trust that is setup to give your family money when you die, in order to serve as motivation for you to "break through new frontiers of excellence"

[dylan604]

This isn't motivation though. This is a reward for achieving a place on the Olympic team. If this does not continue as a thing past the upcoming Olympics, athletes will still train in hopes of qualifying for the next team. They won't be doing it because this might be available to them. If they qualify, this will just be a bonus.

[ojbyrne]

Amateur status hasn’t been relevant to the Olympics in quite a while.

[coliveira]

This has all the tell signs of a financial lie. I doubt this money will ever materialize. But of course he's immediately receiving the results of the publicity stunt.

[hartator]

Real answer are probably tax benefits for Ross.

He can now report a $100M donation, let it grow for 20 years, pay the actual donation, and pocket the remainder tax free.

[the_sleaze_]

It's called a grantor retained annuity trust (GRAT) and more than beng able to retain the initial investment at the end of a period of time, he would be able to take loans against the principal itself in the meantime (LALs).

However -

> The USPOC currently supports ~4500 athletes, or ~$22,222 each.

Machinations of the uber rich and the morality of them aside, they would've gotten nothing and now they're getting something.

[ex-aws-dude]

But if he retains the money while its growing wouldn't that result in capital gains?

You can't claim a donation while still holding onto the money?

[conductr]

He'll donate to a trust/non-profit he controls that will direct the investment. That allows him to take the tax benefit today and keep the money

[nulbyte]

Not if he controls the funds. Tax deductions are only afforded to contributions if they are charitable and am actual gift. If the contributor benefits, it is bit deductible, and control of donated funds is a benefit, as is the ability to direct funds to a particular person or persons.

[conductr]

Billionaires can financial engineer their way around those types of rules quite easily

[ex-aws-dude]

But once its in a non-profit you can't just take it back out for personal use can you?

[conductr]

No not directly but he can control it. So he can invest in a shell company that invests in other shell companies that buys shares of operating companies.

It’s not like he needs these funds to buy groceries or pay the mortgage. He’s essentially hoarding assets like all billionaires are.

This is a simplistic example for illustration, the actual financial engineering would certainly create much more complexity in order to obscure things for auditors and the like. But the point is that he/his fiduciary is the one controlling it all.

[prawn]

If this individual pulled funding because of a political perspective, is it possible that these recipients lose their future funding if they speak about an issue or act in a particular way?

[winddude]

> So his goal is to prevent money issues from being a thing getting in the way of athletes achieving. But he has structured it in a way that prevents the money from helping this goal.

Yup, the biggest challenge faced by most olympic athletes, and those doing an Olympic campaign, is affording to train, travel, gear, etc, especially in more niche sports, bobsleigh, etc.

[bsder]

> But he has structured it in a way that prevents the money from helping this goal.

I suspect it's worse. It's structured in a way that will probably harm the goal.

The money will go to people who somehow already managed to marshal enough resources to get to the Olympics. Good on you for supporting people after the fact, but by that point money problems have long before winnowed far too many qualified athletes out of the pipeline.

That kid from Moab would be an amazing swimmer. That kid from Punxsutawney shoots one hell of a bow. That kid from Tuscaloosa would have a smoking slapshot. None of them have a hope of clearing the initial monetary barriers.

The most effective time to apply resources is when the athletes are young, not done.

[giarc]

>It's structured in a way that will probably harm the goal.

Potentially could also stop others from donating to athletes because they hear this and think "some rich guy already took care of them" not knowing the details.

[nrmitchi]

This has some real "Scott's Tots" energy to it.

[TacticalCoder]

You ask a just question and shouldn't be downvoted.

A friend of mine is an ex-pro tennis player. She's nearing 60 years old now. She's been n 1 in her country and n 2 worldwide in doubles.

And it's not easy for athletes once they age: when they're still young, they make money doing their sport. Then they find other things, often related, to do: for example she trained a world number one for years.

But later on, it gets more difficult: she became a tennis teacher. And the country's sport federation gives her money for quite a few years... But not until 65 years old.

It's precisely later in life that many pro athletes do need money.

Only those at the very, very, very top do make a really good living. For the others, it's hard.

So $100K at 45 is welcome.

P.S: also if you're 100% guaranteed to get $100 K a 45, I'm sure there are way to use that as collateral for borrowing before you're 45. But that may defeat the idea of giving it when they turn 45.

[zck]

Is your argument that, if she knew she was going to get $100,000 in 2010, she would have been number 1 in the world in doubles in 1990? That's how I understand the stated goal of this gift.

[skylurk]

People absolutely do give up their athletic career to start a normal career for better financial security.

[zck]

How many of these normal careers pay a single paycheck of $100k that can't be cashed for twenty years? That's what this offer is.

[skylurk]

I don't think you should think of it as a paycheck.

Delaying a normal career to compete in the olympics will set your career and earning potential back by a few years. This money tries to balance it out a bit.

[zck]

The stated goal is that the money will help people do better in the Olympics. I don't see how it will do that. It might be good to do, but it won't help people perform better.

[saghm]

And now that they're getting $100k in a few decades they still will

[JumpCrisscross]

> half of it will never be seen by the athlete

Guaranteed benefits can be monetized. The gift’s goal is to start building generational wealth. But nothing prevents me from lending one of these athletes $50k today if they give me an LPOA over that death benefit tomorrow (assuming this doesn’t breach any covenants).

[stouset]

$200k is not even remotely close to generational wealth, particularly when structured as $100k 20 years from now and another $100k 50-ish years from now. Those would be worth an estimated $55k and $22k in inflation-adjusted dollars.

It’s a totally different story if those are in a trust which is invested on behalf of the athletes, which pays out the invested value at time of disbursement. But I would be shocked if it were set up that way. Pleasantly shocked but shocked nonetheless.

[JumpCrisscross]

An athlete who competes for a couple seasons would have the down payment for a house in each of those pay-outs. (And be able to, in all likelihood, borrow against it if they needed it earlier.)

[saghm]

Given how old most Olympic athletes are when they debut I'm sure that could be helpful if they don't incur any living expenses for another 2-3 decades afterwards

[stouset]

We have now moved the goalposts from starting to build generational wealth to maybe part of a down payment on a house in a low-demand area in their mid-forties, assuming they have enough income to still qualify for the loan on the property.

This is a great gift to the athletes, don’t get me wrong. There was just no need to oversell it.

[JumpCrisscross]

> moved the goalposts from starting to build generational wealth to maybe part of a down payment on a house in a low-demand area in their mid-forties

On what planet are hundreds of thousands of dollars not generational wealth if played right? You’re talking about sums that are on par with the 401(k)s of retiring union workers.

It’s not riches. But it’s enough to pass along to your heirs. That’s generational wealth.

[stouset]

On the planet where inflation turns $100k into an effective $20k by the time you family sees it.

If your only metric for generational wealth is that the next generation of your family gets it, then sure, tautologically the second amount paid out to your surviving family qualifies. I don’t think most people would consider splitting $20k amongst your heirs to be generational wealth, and I don’t think retiring union workers are a classic generationally-wealthy example that comes to mind for most people.

And again, note that retiring union workers today might hand down a $100k 401(k) to their families. At the time of the athlete’s death ~50 years from now, that number will likely be closer to $500k.

[linehedonist]

Is there any guarantee he will actually pay out in 20 years? Is this money going into escrow, or is this just a promise that will be completely forgotten in a couple decades?

[giarc]

Ask Michael Scott how this works out.

[reaperducer]

I might be missing something, but how do these two incredibly-delayed payments help them train now?

They call J.G. Wentworth?

/Worst earworm since 1-877-KARS-4-KIDS

[throwaway439080]

Wow. When I saw the headline, I thought this would be a generous donation so that Olympians wouldn't need to work day jobs to make ends meet, allowing them to focus on training. But... nope...