We constantly hear about their contracts and new movies, usually in the millions, but we rarely hear about their expenses.
But with the millions of dollars being given to high-profile athletes and actors, how glamorous is it really? How much of that is take home? It is really worth it?
According to salary.com, the average professional athlete in the United States only makes $31,954 a year. Of course, that spans across many sports, locations, teams, and divisions.
When we imagine actors and athletes, we imagine:
Highest paid actors in 2014:
- Robert Downey, Jr: $75 million
- Dwayne Johnson: $52 million
- Bradley Cooper: $46 million
Highest paid U.S. athletes in 2015:
Floyd Mayweather (boxing): $300 million
- LeBron James (NBA): $64.8 million
- Kevin Durant (NBA): $54.1 million
Highest paid Canadian athletes in 2014-2015:
- Shea Weber (NHL): $14 million
- Joey Votta (MLB): $12 million
- Steve Nash (NBA): $9 million
For most people, these sound like huge numbers. However, athletes and actors have expenses that most people do not have.
They have agents, managers, extensive travel schedules, assistants, security, and so on, to help them manage everything about their career.
While the average agent only earns between $50K-$60K, the average agent for a Hollywood celebrity can earn anywhere between $200K and $10 million dollars. Agents usually have multiple clients, but with each project they are expected to earn a percentage of the money they earn for their clients (usually between 10-20%).
Actors and actresses also typically have a talent manager along with an agent. The job of the manager is to keep the public relations in check, get interviews, schedule their business matters, etc., and earn around 15-20% of the earnings from their client. I haven’t seen the numbers, but I’m sure Charlie Sheen’s public relations team earns quite a hefty fee.
So for each new Hollywood contract you hear, keep in mind that up to 20% of that is going right to the agent.
Rarely do you see a celebrity out without some kind of bodyguard or security. A personal bodyguard can cost anywhere from $500 to $1,500 per day, while an unarmed driver can cost $350 per day.
This may seem really high, but a lot of high-profile names attract negative attention, so they try to be safe at all costs.
Professional athletes and actors also have a variety deductions including:
- Sports agents fees
- Rehabilitation expenses for injuries (athletes)
- Equipment (athletes)
- Rent when they have to live somewhere they are under contract
- Wardrobes (actors)
Many big-name athletes and actors also need extra security at their houses to keep a border between them and the general public or paparazzi. If they didn’t, they would have hundreds of people at their doors every night asking for a selfie.
You might be wondering: How are they taxed?
The answer: it depends.
U.S. residents must pay U.S. income taxes on all of their income, but non-residents can pay on income they earn here. That could easily get complicated for a non-resident, depending on the country they are coming from.
For a Canadian athlete or actor, the federal tax rate is 29% of taxable income over $138,586 which many of the successful names would fall into.
For an American athlete or actor, the federal tax bracket is over 35% once they hit $411,501 as a single filer.
Then, there are state or province taxes. For many athletes or actors, the individual state and provinces require them to pay taxes if they were filming or competing within their borders.
Glamour, traveling, and lifestyle of these big-name celebrities may seem fun, in the end we all have to pay the piper(s).
But it is up to everyone, no matter his or her reputation, to learn about proper money management.
Hey…we all have bills to pay.