Last March, it was announced that Ross Stevens, the founder and CEO of Stone Ridge Holdings Group, committed $100 million to the United States Olympic & Paralympic Committee (USOPC). The donation will allow Olympians and Paralympians to receive $200,000 for each Olympic or Paralympic Games that they compete in.
A recent Wall Street Journal article about the plan has brought renewed attention to people who either missed the news, or forgot about it, ahead of next month’s Winter Olympics, where the new $200,000 reward will go into effect.
The $200,000 is split into two payouts, $100,000 each. The first payout of $100,000 occurs 20 years after their qualifying games, of when they reach age 45, which ever is later. The second $100,000 payout comes in a form of life insurance that is given to the Olympian/Paralympian’s family or beneficiary that they choose.
The $200,000 is for each individual Games that the athlete participates in. If they make two Olympic/Paralympic Games, they get $400,000.
The money has been said to be restricted to athletes who make less than $1 million per year. This means that for example, NHL and NBA players that make more than $1 million will not receive the payments.
From a financial perspective, it is important to note that today’s value of $100,000 is not $100,000 in 20 years. Using the Federal Reserve’s 2% inflation target, a future value of $100,000 20 years from now is only $67,297 today. If the average inflation level is 3% over the next 20 years, that number falls to $55,000.
The $200,000 payment becomes more relevant in context of the Enhanced Games, where many athletes have cited the six-figure base salaries as part of their motivation for signing on. Across all sports, there are seven Americans signed on to the Enhanced Games. Most of those athletes are past their primes, and with the exception of Fred Kerley, most were unlikely to qualify for the next Olympic Games in 2028.
The bottom line is that these payments are beneficial but do not immediately inject $100,000 into the athlete’s banks today. The more immediate impact that the payments can have is that Olympians and Paralympians can now worry less about saving for retirement, i.e. if an athlete had been putting 15% into retirement, if they choose, they could lower that number today as they know they will have the $100,000 payout 20 years down the road (or at age 45).
And I suppose they can decrease the amount they are paying for term life insurance?
The net present value of $100k received in 20 years, assuming a 5% discount rate, is about $38k. It’s harder to determine the NPV of the life insurance, but if you assume they live 60 more years, it’s about $5k. If you adjust the rate or the length of time, the current value will shift a little. No matter what your assumptions are, it’s a lot less than $200k. That said, it’s nice to see them trying.
We would all do a service to the sport and quite frankly the athletes if we quit treating the conglomerate as a commercial affair. Humanity enjoys a spectrum of “personal” pleasures, but they all do not rise to an ever growing economic power.
It may not be fair, but it is free. Hype, like all the other emotional products of the heart, have a short shelf life. There will always be a standard of time, and improvements to make.
It is one thing to test your God-given abilities, quite another to expect remuneration for something everyone else is perfectly capable. What market can you carve out from that?
At maturity, if you find something that you lack, perhaps you made… Read more »
Some life insurance policies you can take a loan out against. I’m not too well read on the subject, but, if this one is structured as such, then it might not be a better benefit than some people are describing. Pretty sure repayment on these loans are “somewhat optional”, where the beneficiary receives no payment if not paid back.
Edit: it might be a better benefit than …
a plan to stop paying US olympians and paralympians $200k coincidentally kicks in the month after next
Cody Miller dislikes this news.
I think the us swim people should use it to support the now not the past or death. Us is in need for the money not dead people or the past. One hundred thousand to a 45 aged past Olympian is nice but not necessary. These Olympian s I’m sure would rather invest in the future of the sport not the past.
what’s the purpose of the 100K when deceased portion?
Also, no one who has been to e.g. Paris will get it?