Our special guest today is Toms Skujiņš. Toms is a professional cyclist, an avid podcast listener, and a white coat investor. Toms races at the highest level and is currently the best cyclist in Latvia in two disciplines. He's been the Latvian national time trial champion and the national road race champion twice. He's been the Latvian cyclist of the year four times. And my guess is he is going to win again this year.

Toms has completed the Tour de France four times. He has raced in most of the biggest races in the world. Last year, he nearly won a stage at the Tour de France. He's won the polka dot jersey there several days as the best climber. This year, he was in the lead group until late in the race, in what I considered the best race of the year in ultra-muddy Paris–Roubaix. Toms is also an Olympian, competing in both the road race and the time trial this year in Tokyo.

 

Toms Skujiņš — Professional Cyclist and White Coat Investor

Earlier this year, Toms sent me a “thank you” email for the podcast. He said,

“I just finished listening to the latest Milestones to Millionaires episode #16, and I wanted to send a small email to thank you for what you are doing. I'm actually not a doctor nor is my spouse, but I'm a professional cyclist riding on Trek–Segafredo and I married an American. Even though a lot of things you teach do not apply to me, they do give me ideas, understanding, and inspiration on how to manage my future and the very overwhelming US tax system that as a non-American seems a little insane. There are quite a few similarities in professions that I've found and truly just wanted to say thank you for all the info you give out.”

I was floored when I received this email, because I am a huge cycling fan and I knew exactly who Toms was. I have been looking forward to getting him on the podcast for a number of months now. I hope you enjoy this interview as much as I did.

Toms, welcome to the podcast. You're having a wonderful career. Today we're going to talk about the finances of professional athletes and, specifically, cyclists. But before we do that, give me just a minute to fanboy a little more and ask a few questions about your season. What was your favorite race this year?

“Like you said, Roubaix, it was definitely one of the highlights. It was my first one ever. And I think it was an addition a lot of people will remember, but at the same time, Olympics don't happen that often. And Tokyo, in general, Japan, is super nice and it's always nice to go there. I think for me that trumps Roubaix, but just personal experience. Also, I have to mention Worlds this year, which was in the heart of cycling in Belgium and was kind of like riding through a stadium. If road cycling ever had a stadium, it was there for sure.”

Yeah. It was pretty impressive how many people turned out for that race, for sure. What's your biggest goal in cycling? If you could accomplish one major goal, what would it be?

“That's a really hard question just because sometimes dreams are goals and goals turn into dreams or one way or the other, because obviously I don't think I'll ever win the Tour de France because that's just not what my genes will allow me. But if I was to retire at the LA Olympics in 2028, then I would call it a very successful career, for sure.”

Awesome. Let's talk about Paris–Roubaix. A lot of people in the US that listen to this podcast don't know a lot about this race. But this is a race that has a number of segments, approximately 30 segments of cobbles, big old stones you have to race your bike over. And this year it was raining all night and into the beginning of the race. And so, all these cobbles were covered in mud. You were doing great in the race with 80 kilometers to go, in the first time doing this race where experience really matters. With 80 kilometers to go, you were in the lead group of just 19 riders out of the original 200 or so. Then you guys hit cobble sector 17, a four-star section of cobblestones covered in mud. As near as I can tell, someone punctured, there was a crash, the whole group splintered, never to come back together again. I'd love to hear what happened in your words in that race if you remember that moment when it blew up.

“I mean, that race in general is crazy, but as you said this year, just with the mud it went up a notch. Personally, the problem was that I had a really bad stomach and I actually didn't necessarily get dropped because of not being able to ride as fast. But I just had to do a pit stop on the roadside. And luckily, the team car was not too far, so I even got some toilet paper. But that happens when there's so much mud and cow manure on the road that you're going to ingest it eventually. Yeah, it really depends on when your stomach's going to give out, if it's going to give out. And in my case, unfortunately that was the moment when we were still less than 20 guys left in a great spot, but when you got to go, you got to go.”

Yeah, that reminds me of a moment in the Giro a few years ago when the leader of the race had to pull off to the side of the road and drop them just to go right there. There's definitely a lot of difficulty in cycling sometimes when you combine it with biology and a six-hour race.

When you got into pro cycling, what surprised you the most?

“I think what surprised me the most was just how much logistics go into one team. Because one team is 30 riders, we probably have triple the amount of staff behind the 30 riders with directors, mechanics, people doing logistics, people planning trips, people planning camps, coaches, chefs, nutritionists, and so on. You see only eight riders starting the tour, but behind those eight is a whole lot of people that actually make that happen.”

 

Professional Cyclist Salaries 

Well, it's a financial podcast. We better cover some financial material. Now compared to football—whether we're talking about real football, as you know it in Europe, or American football—cycling is a relatively low-budget sport. The richest team in cycling has an annual budget of just 15 million euros. And for those who aren't familiar with the exchange rate right now, a dollar is about 0.88 euros. By comparison, the New England Patriots football team has half a billion dollars of revenue per year. In the teams in the Tour de France this year, budgets range from 7.5 million to 50 million. Your team Trek–Segafredo has an annual budget of just 14 million euros for all 27 riders, the sports directors, all the support staff, all the bikes and equipment, and all the travel costs. That's not a lot of money.

Can you describe for us the typical salaries for cyclists in each of the following categories? And you can use dollars or euros. But let's talk first about the lowest professional tier, the continental riders. I understand there's not even a minimum salary at that level. Is that right? What do those guys typically get paid?

“Continental riders don't really have a minimum salary. I would still call them amateurs even though they are sometimes even racing with us, because some of those guys, they don't get paid. They do it more for fun, but it is mostly a development level, let's say, where some riders are maybe 18, just out of high school or still in high school. And they obviously don't get any money. But sometimes, maybe the best continental riders will make 15,000-20,000 if they're on a really good continental team that has a really good system under it and have the potential, have a big role in the team, be that a big role where they help the young kids understand cycling or that they're one of the bright stars on the team that will go on to do a lot of good things. But yeah, in general, when I was riding for a continental team, I was riding for nothing.”

And were you actually paying to ride or did they at least cover your costs?

“The system was pretty good. We did get a sort of stipend when we were at camps, and all the equipment and everything was given. At the end of the day, you have zero expenses. Some continental teams even provide a team house so you actually have zero expenses. Maybe they even give you money for food or whatever, but you don't really save up on that.”

Yeah, for sure. The next tier up is the pro continental riders where the minimum salary is about $39,000. Is that what most cyclists at that level make or do a lot of them make more than that?

“Unlike with the continental teams actually, with the pro team, I think they are called, the range is quite big. There are definitely quite a few guys that ride for the minimum amount, but then again, you have big star riders that are over a million dollars, or a million euros. Because those teams also ride at the Tour de France—for example, Arkéa–Samsic is one of the pro continent teams that has done the tour and they definitely have at least two riders that make over a million euros for sure.”

Definitely a big range there. The top tier where you're at is the pro tour. There's a minimum salary here of $47,000. Now obviously the biggest stars make a lot more than that. The top Tour de France general classification riders reportedly make between 2 and 6 million euros a year, but that's only the top 10 or 20 out of 300-500 riders in the Pro Peloton. What does the rest of the Peloton earn as a salary? Say there's a domestic good enough to go to the tour. Obviously, they're not racing to win it, but they're good enough to go to the tour. What type of range of salaries would they see?

“Again, the range is very, very big. And even though maybe average salaries look very good on paper, the average salaries are bumped up by those 20 guys that make over 2 million, because I am 100% positive that there's guys doing the Tour making less than 80,000 euros. I'm sure that every once in a while, there's also someone that is making minimum and going to the Tour just because they are good and the team picked them up for nothing, especially in a year where maybe a team was folding or a few teams were folding. And they had nowhere else to go but to that one team and ride for whatever they can get.”

How's that feel to be on a team when you know there are other people on the team making many multiples of what you're making to feel like you're riding for nothing? Are you just kind of hoping for a better contract the next time you negotiate it at that point?

“Actually, I don't think about it that much. Usually, the salary amount is correlated to the results or your value in the team. You just know that if you prove that you are worth a better contract, that if you are a team player or if you are going to win the Tour de France in two years’ time, then your salary will increase quite considerably. You just want to do your best in order to prove that and hopefully make more money next time.”

Now on a team with 27 or 30 riders, only eight of them go to the Tour. Say for a domestic that's maybe not necessarily good enough to go to the Tour, is not a champion classics rider, is not a champion time trialist. What kind of money do they make? Are most of them typically pretty close to the minimum $47,000?

“I think it would probably be a bit more than that. The very minimum is usually reserved for the young guys coming in, but I'd say the riders that are maybe in the range of the 25 to the 30 in the team ranking, let's say if there was one, they'd probably be around 80,000 to 150,000 euros, I'd say.”

How about the people that aren't the general classification riders? Let's say somebody who gets multiple top-5s, top-10s in the classics, or occasionally wins a time trial? But maybe doesn't even go to the Tour. It’s definitely not a general classification rider but people we've heard of. What kind of incomes do they have?

“Some of the names people would know that are in the top-10 in classics, the range, again, would be very dependent on how old they are, where they're going, which direction their career is progressing, but I'd say between 200,000 and 800,000 maybe.”

Kind of like doctor salaries.

“Yeah. Let's say they're the doctors of the Peloton.”

Now there are other sources of income for cyclists, such as endorsements. Do most pro cyclists get endorsement deals or is that really only the top-5 or top-10 folks?

“Actually, it's very rare for cyclists to get endorsements just because our team has a lot of sponsors and you cannot have an endorsement from a conflicting sponsor. If I'm on Trek–Segafredo and I'm riding Trek bikes, it'd be pretty bad if suddenly I was endorsed by or endorsing Factor bikes or Canyon bikes or whatever else you want to see.”

Now, there are a few people on the Peloton that got into a little bit of trouble in the last month or so, because they were spotted riding bikes that were not the sponsor of the team. How big of a deal is that for them? How much money do you think that decision cost them?

“At the end of the day, it didn't cost them anything, but the team needed to show their sponsors that they're not just letting anyone ride any other bikes. The reason why they were riding bikes is obviously because they're switching teams for next year. And when you switch teams, you already in November usually start riding the new team's bike just because you need to get used to it. And there's always a debate about shouldn't we have contracts that run January 1 until October 31, just because then in November and December, people can already ride their new team bikes and not get into these issues.”

Is it hard to switch bikes like that? To switch to a new brand of bike?

“It really depends. There are some bikes that are easier to switch to, especially if you're going up. It’s always easier to switch to when you're suddenly, ‘Oh, I'm riding way faster.' That’s great. But yeah, there's definitely differences in bikes and it definitely takes some time to get used to it. And it's not just the frame of the bike, but maybe the handle bars are different. Maybe you're changing from SRAM to Shimano or the other way around and those are different. There are some details that are more important than others. And I think sometimes actually even changing pedals is even more difficult than changing a bike frame.”

 

Prize Money for Cyclists 

Let's talk about another source of income for cyclists—prize money. Can you explain how the prize money works? I understand a lot of top riders share a portion of it with the other members of the team in that race. How does that all work?

“There's kind of two ways that it works. One way is where all the prize money at the end of the year gets collected and just spread out through all the riders and also staff. Or the other way, the way we do it, is that from every race we have a certain percentage of the whole prize money that goes to staff. If I'm not mistaken, I think we give to staff 15% and then the rest of the money gets separated into equal parts for all the riders that were at that race. That gives you an incentive to actually help the leader and make sure that he is in the best possible way because when he makes money, you make money.”

All right. Let's talk about money. Do you guys all know what everybody else in the Peloton is making? Is that what you talk about in the Peloton for those 100 kilometers after the break goes away that nobody seems to be doing anything? Or is it a big secret? Is it a taboo topic? How is that in the Peloton?

“It is definitely more secretive than in soccer or football, just because there you see the numbers and everyone knows the numbers. But there's always rumors that flow around and it's like, ‘Yeah, I think this guy is making this much. Oh, have you heard how much this guy's overpaid? Did you hear that this guy is winning the Tour de France and was just riding for pennies?' And blah, blah, blah. There are always some rumors, but no concrete numbers, you never know. And, for sure, people like to spread rumors.”

Now the best value in cyclists this year, as far as how much it cost to buy the cyclist and results, was probably Mark Cavendish, I would guess. What did people think about the value he provided to his team this year? Do they feel like he got ripped off with his contract? Or what did people think about that?

“I think that if he was on any other team, he would have a hard time winning as much. I think that's why Quick-Step could offer him such a low salary because he would make up the money in bonuses or prize money or whatever. But yeah, I don't think on any other team he would win as many races.”

 

Cyclists and Money Management  

He came into a good setup there, especially for the Tour de France. All right. Are cyclists generally good with money since they have to come from a pretty frugal background in the earlier years? Or are they like doctors and spend like they'll be making big bucks for the rest of their life?

“I think it's more likely they spend like they're going to be making the same money their whole life. Unfortunately, that’s how all humans work. They just see the money coming in and they're like, ‘Oh man, this is great. I can spend it all.' But they don't really think about the future. It's definitely a little issue. I’ve seen or heard at least some riders run into financial difficulty that definitely should have been able to retire at the end of their careers. But yeah, I think that’s human nature.”

Yeah. It certainly happens a lot with other athletes. In a lot of ways, athletes and artists are similar to doctors in that they make a lot of money because of some special skill they have or because of a special body of knowledge that they have. And not necessarily because they're good at managing money or because they're good businessmen. What other parallels do you see between athletes and doctors in that way?

“Before I talk about parallels, the biggest difference is that doctors can work until they're 65. Athletes usually cannot unless you're playing chess or shooting or doing something like that. Then, you probably are done at the age of 40. The similarities are, for sure, that you make a lot of money very early on and you're not always sure what to do with it. Luckily, we don't usually have student loans because we're all dummies. Usually, we don't go to college or anything. Some do, but most, like me, do not, really. There are definitely some similarities, but also some big differences that end up changing how you should actually manage your money.”

Now you listen to this podcast, so you have at least some interests in learning finance and learning money. Where did that come from? How did you get interested in learning about finance?

“I grew up with not that much and it was always about saving and making sure that you're not spending on stupid stuff. I always was kind of cautious with money, but then yeah, once I actually started making enough to save as well for something, then I realized that I should make the most of it and make sure I save enough that after I retire, whenever that be, that I don't need to get a job like the next day.”

How does that feel? Despite being a young person, you're about the age a lot of people come out of residency at. You've only got five or 10 years of your career left ahead of you. Do you feel that pressure hanging over your head to save for retirement?

“It's more about just making sure that I'm not wasting money really. It's making sure that I'm using the opportunities I get where I can save. My goal actually, in general, with my career is that if I were to buy a house at the end of my career and not have a mortgage, that'd be great. That's the end all be all. And then I know that I can work whatever work I please, really, and not worry about paying the mortgage every single day.”

When did you realize that you're going to be able to make a living from riding your bike? What did that feel like to know that you could make a living doing something you love?

“Actually, I think that it is fairly recent, just because up until maybe 2018, I was making OK money, but it was never something that I could say, ‘All right, I will put half of what I earn in a savings account or whatever.' It was never that much money to save because I always wanted to make sure that I give myself the best opportunity to progress and spend money on training camps, which is just investing in myself, let's say, before I invest in stocks. It's actually been in the last maybe three, four years that I realized that I might be able, at the end of my career, buy a house and not have to have a mortgage.

Which can be a big deal in Europe. A lot of houses are really expensive over there. There are a few countries where there are 50-year mortgages, so that's no small feat. Now is there any financial education and training aimed at cyclists or are they pretty much on their own?

“It's pretty bad actually. There is definitely not that much financial education that goes toward cyclists. And I think that's also the reason why cyclists are so easy spending with their money. There are some guides, some people that try to guide. And actually, last year they started a pro cyclist foundation, which is with intent of helping cyclists manage their money but also just guide them in general and help younger guys in the US, let's say, go abroad and have some guidance and know what they are doing. And so, that's kind of the first thing that really has come up that will help guide cyclists on the right path, be that with mental wellbeing or financial wellbeing or whatever.”

That's good. The National Football League here in the US has a similar program. When rookies come in, they have to go to a class. I think it's a week where they basically are taught some basics of finance and they're hoping to keep them from being taken advantage of by agents or financial professionals or their friends or whatever. Now doctors tend to feel like they have a target on their back. Like there are financial professional salesmen that are aiming at them, that they're trying to take advantage of them and their incomes. Are there financial professionals out there trying to take advantage of young cyclists that are making good money?

“Yeah, for sure. All cyclists have agents and some are better than others. As some are fairly protective and actually help riders with financial decisions. And there's definitely some that want to line their pockets with as much money as they can.”

 

Contracts and Agents in Professional Cycling 

Let's talk about contract negotiations. Do you ever get involved, or do you just let your agent take care of it? Are the negotiations adversarial, or are they relatively friendly? How does that work?

“I think I've been fairly lucky up until now with the teams I've been riding for. It's always been in a friendly manner, and it's always been a good relationship. Always the negotiations are fair. And especially now with Trek. Because Trek, the company is so involved that they make sure they hire the people that actually care, and they take care of their people. Like my last contract, I actually negotiated myself, sort of. But there was not much negotiation. I was just happy that they would re-sign me with all that was going on in the world. But in general, the general manager is very fair to us and then you know that you're valued in the team and that is always nice. So, you hope that you can stay.”

What's an agent's cut? How does an agent get paid? Do they get 10% of the contract? How does the agent get paid?

“My agent, Andrew, has always helped me with contracts. And even at this meeting, he helped me set up logistically. And he told me what to expect and whatnot, but the cut usually ranges from let's say 3%-10%.”

Now, you race all over the world. In a given year, you might race in 12 or 15 countries. How many different countries do you have to pay taxes in?

“Well, we actually pay taxes in the country we reside in. That's kind of the way Europe works. I know in the States it's a lot more complicated. I've heard people pay taxes in how many games they play, which is just insanity. But wherever you reside, you pay taxes.”

And your residence is in Latvia? Where's your residence right now?

“My residence since last year actually is in Andorra. We started slowly moving over there. I never spent enough time in Latvia to actually be there enough. And the winters there are pretty bad. Like right now there's quite a bit of snow already. And last year there was snow all the way until April where you're already racing all the biggest races. So, it's not the best training ground. So that's kind of why I've moved out of the country for a while now.”

I was just in Andorra for the first time in my life a couple of weeks ago. I should have emailed you and seen if you were there at the time. Beautiful place, incredible place. It's really different from going across the border from rural Spain or rural France in Andorra. It's an impressive little place and there are tons of tax benefits of living there. Is that why a lot of cyclists live in Andorra aside from the fact that there are all these great mountain passes to climb there?

“The tax benefits are definitely a help as well. And that's why a lot of cyclists move to Monaco because there is zero tax there. So, you're spending money elsewhere. You're spending money on your apartment, but yeah, at least you're not paying any income tax. But Andorra, it's still very low taxes and that definitely helps but also the way residency works. Right now, for example, one of the reasons we moved to Andorra is just because it was easier for me to get residency and thus my wife to get residency there. Because obviously as an  American, you can only spend a certain amount of days, but now that we're married, getting residency there for both of us was pretty simple and they were very open about it. That’s also why we moved there. And she loves snow. She actually grew up in Colorado. First time we drove up, she was actually already crying because of the amount of snow that was there. And she was so happy that she could finally ski again.

It looks like the skiing there is great. We got out of the country during the first snow actually. We went over while it was snowing, to get out of the country a few weeks ago. And you could see all the awesome ski terrain up there. So, it looks like a great place for skiing.

 

Saving for Retirement and Investing as a Professional Cyclist 

How do you save for retirement? Does Trek offer a 401(k) or something similar? Or are you just kind of on your own to go find your own investments?

“It is very much on your own just because, even though Trek is a US-based company, my salary comes from Belgium because that's where the headquarters of the team is. Just because Belgium is way easier to get to every race and so on. There's a service course there with all the extra bikes and extra buses and extra cars and whatnot. But most of the cyclists are also self-employed, which means that you have to take care of your own insurance. You have to take care of paying your own taxes. The employer doesn't pay your taxes for you. And that’s kind of why it's always on you to decide what you want to do with your money. And that's why people like spending their money.”

What options do you have as a European to invest? Do you invest in mutual funds? What do you typically do?

“The options actually are pretty similar to the US. However, they are usually a bit more expensive in management fees. It is always hard to find something that's good. Actually, saving for retirement in Latvia is really hard just because the market is so small and people are not that well educated. The system needs some revision, and luckily it is going that way and, luckily, it's getting better. And now the fees are way smaller and you are actually making money as when you retire, you take out more than you've put in. But it used to not be that way 10 years ago.”

That's good to hear that's improving. What does retirement look like for you? What do you plan to do after you retire from cycling? You're a big fan of potatoes. Are you going to start a potato farm or where do you go from this after you leave pro cycling?

“Well, the first decision for us was always, where are we going to live? And it will be the USA, just because Abby's very close with her family. And it's definitely a lot easier for me to integrate into the US than for her to integrate into Latvia. The language is quite complicated to begin with so that would be a huge step for her to manage. But as I was talking about, the dream scenario is having a house paid down and not actually having to work a full-time job. If I want to, sure, why not? But I would really like to take my kids to school and pick them up and be at their recitals and be at their football games or whatever, and just be fairly involved in their lives and not have to work every single day 9-5 in an office in closed doors.”

It sounds like you're a real FIRE proponent. Financial Independence, Retire Early. You talk exactly like these people that go into tech and then retire at 30 or 40, so they can do whatever they want with their life. It's pretty awesome to see a new pathway through professional sports to that lifestyle.

“I mean, it would be great. I don't know if I'm going to make as much money as they do in tech, but that would be the dream for sure.”

Now, you're not going to have any trouble moving to the US. Your English is spectacular. I assume you grew up speaking English as a second language and learned it in school, or did you just learn it since you left Latvia?

“My first English I learned from watching Cartoon Network as a kid. But in general, yeah, they teach English in school, all through high school. By the end of high school, usually you speak two foreign languages, sometimes three, if you're very keen on languages and want to pursue that. But I definitely got rid of my accent a bit more, even though it's still there. But when I rode for George Hincapie’s team for two years in 2014 and 2015, that's kind of where the accent slowly started fading away, just because I heard more American English and tried to replicate it.”

How many different languages do you give interviews to the press in?

“Well, I could do it in four, but not that many Russian news outlets want to speak to me.”

So Russian. Latvian, I assume.

“Yeah.”

English. What else do you speak?

“English and French.”

French. Very cool. You always wonder when you're looking at people racing. And you wonder if there's probably a few jerks in the Peloton and there's probably some really nice people in the Peloton. I'm not going to ask you about the jerks, but who are the nicest people in the Peloton that people might not realize they're really great, nice people?

“There are definitely quite a few really nice guys in the Peloton, but if I have to go with some big names, then I would say Bernard is actually a super nice guy. Primož Roglič is also a super nice guy. And the latest Tour winner Tadej [Pogacar] is also very, very nice. They all seem fairly down earth. They don't think that they're better than every single one of us that are riding next to them. They're just good humans.”

What do you guys talk about in the Peloton when you're riding along at 40 kilometers an hour? I always see people just chatting it up. What are you talking about?

“Like you said, sometimes just rumors, talk about contracts and stuff. Sometimes it's like high school talk of, ‘Oh, did you see this guy that did this and this?' Or ‘Did you see he's dating this and this now?' Sometimes we're just like children. At the same time, there's obviously some car talk, some fancy watch talks, and where people spend their money talk.”

Just a group of people like anybody else.

“Yeah. Pretty much.”

More Information Here:

The FIRE Movement: How to Reach Financial Independence and Retire Early

Best Retirement Savings Plans for Self-Employed

 

Advice from Toms — Do Something Close to Your Heart

Awesome. Well, you've got the ear of 30,000-40,000 high earners like yourself. Most of them are doctors, but many of them are not. What have we not talked about today that you think they should know?

“Well, I think we covered a lot and you cover a lot in every single podcast. But I think that people sometimes forget that you don't want to just be spending your life making money. You actually want to do something that is close to your heart. I wouldn't be cycling just for the money, for sure. I'd find some other way to make enough to live off. But I think it's worth doing what you love and even, let's say, saving the money from what you're doing, just so either you can do it more or you can do it more on your terms. Just because even though you're loving what you're doing right now, maybe it's going to change and you'll want to spend more time with your family or you want to maybe try something else. I'd suggest everyone to think about saving enough money, that they can be their own boss and just make sure that they are actually doing what they want.”

Great advice. This has been wonderful chatting with you. It's really fun to get an insider's view of a sport I've been watching for a long time. And I sure appreciate you reaching out to us and getting involved with the podcast. Toms Skujiņš, we are grateful for you and congratulations on your success, both in cycling and in life and with your finances. And thanks for coming on the podcast.

“Thank you for having me. Thank you for all that you do. I'll keep listening for sure.”

Well, thank you for indulging me and coming along on that interview. The fun part about having your own podcast is you get to interview whoever you want, as long as you can talk them into coming on the podcast. And so, a lot of times that means I get to talk to someone that I just really want to talk to. That was really fun for me. I hope you enjoyed it as well. It's a scary thing to be a professional athlete. As a professional athlete, you're a commodity in some ways, and you get traded around. That happens in cycling, as well.

And as much as doctors don't like being bossed around by their employers, hospitals, groups, whatever, imagine if you could just be out of work because they don't want you anymore. I think there's a lot of pressure in being a professional athlete and a lot of need to manage your money well, because you really don't know when that income stream is going to end. Lots of similarities with medicine, as well. But certainly a few differences too.

More Information Here:

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Student Loan Refinancing

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Just go to whitecoatinvestor.com/student-loan-refinancing. You can refinance your student loans, you get the cash back, and you also get free Fire Your Financial Advisor if you go through those links and refinance more than $60,000 in loans. The free course offer is valid for loan applications submitted from May 1, 2021 through January 31, 2022. The course must be claimed within 90 days of loan disbursement. If you're already a customer of one of our partners, you may need to refi with a new partner in order to be identified as a WCI reader and be eligible for the free course.

 

Milestones to Millionaire

#47 – Millionaire Military Officer

From this millionaire military officer we learn the importance of being consistent and having a plan. Follow the plan. As long as it is reasonable, you will be successful. It can be simple. No need to make it complex. Save adequately and invest reasonably and you too can be a millionaire.


Sponsor: StudentLoanAdvice.com

 

Quote of the Day

Our quote comes from Lance Armstrong who said,

“It's liberation independence, your first set of wheels. A bike is freedom to roam without rules and without adults.”

I know that's the way I felt when I had a bike as a kid riding around my neighborhood. It seems like kids are a little more supervised these days but not necessarily in good ways. Sometimes it was good to be out there by ourselves, roaming the neighborhood in our bike gangs, if you will.

 

Full Transcript

Transcription – WCI – 244

Intro:
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dahle.

Dr. Jim Dahle:
This is White Coat Investor podcast number 244 – The finances of professional cyclists.

Dr. Jim Dahle:
studentloanadvice.com is a White Coat Investor company created to help doctors, dentists and other high earners tackle and defeat their student debt. Let a professional guide you through the best options to manage your loans will save you hours of research and stress and potentially save hundreds to thousands of dollars with your custom student loan plan. Book a consultation with Andrew Paulsen, the lead student loan consultant and co-founder of studentloanadvice.com today.

Dr. Jim Dahle:
All right, welcome back to the podcast. New year, new you, right? Let me give some accountability. It's time when we're setting goals for the year. Our financial goal for last year was to do our estate planning.

Dr. Jim Dahle:
And as I record this on December 2nd, I'm pleased to announce that we actually did our financial goal. We signed our will and formed a trust, etc. I just signed this morning. I'm proud to say we've accomplished our financial goal for the year. I hope you are also able to accomplish yours for 2021, and that you're setting one as well for 2022.

Dr. Jim Dahle:
Thanks so much for what you do by the way. It's another year, another year of practicing medicine for a lot of you. And another year in the pandemic. We will soon be into our third year of this pandemic. And although in some respects it's winding down, in others it isn't. Thanks for putting up with it and for persevering even those of you who aren't in medicine. It's a lot of hassle to try to live your life a little bit differently to reduce risk for yourselves and others. So, thanks for doing that.

Dr. Jim Dahle:
Our quote of the day today is from Lance Armstrong. He said, “It's liberation independence, your first set of wheels. A bike is freedom to roam without rules and without adults”. And I know that's the way I felt when I had a bike as a kid riding around my neighborhood. It seems like kids are a little more supervised these days but not necessarily in good ways. Sometimes it was good to be out there by ourselves, roaming the neighborhood in our bike gangs, if you will.

Dr. Jim Dahle:
We want you to be successful. We're giving anyone who refinances more than $60,000 in student loans through the WCI links free access to our flagship online course Fire Your Financial Advisor, a step-by-step guide to create your own financial plan.

Dr. Jim Dahle:
If your goal for this year is to get your financial plan and your goal is also to refinance your student loans, this is a great opportunity for you. You get the amazing cash rebates that we've negotiated, plus another $799 in value. That's what the course costs. Join more than 5,000 other professionals who've created their own financial plan with the help of the White Coat Investor.

Dr. Jim Dahle:
Just go to whitecoatinvestor.com/student-loan-refinancing. You can refinance your student loans, you get the cash back, you also get free Fire Your Financial Advisor if you go through those links and refinance more than $60,000 in loans.

Dr. Jim Dahle:
Now I got to read the fine print here. My COO says I have to. The free course offer is valid for loan applications submitted from May 1st, 2021 through January 31st, 2022. The course must be claimed within 90 days of loan disbursement. If you're already a customer of one of our partners, you may need to refi with a new partner in order to be identified as a WCI reader and be eligible for the free course.

Dr. Jim Dahle:
All right, now we're through that. We have an awesome guest today that I have been looking forward to getting on the podcast for a number of months this year. I mentioned him earlier in the year. Let's get him on the line.

Dr. Jim Dahle:
Our special guest today is Toms Skujiņš. Toms is a professional cyclist, an avid podcast listener and a White Coat Investor. Earlier this year, he sent me a “thank you” email for the podcast. He said, ““I just finished listening to the latest Milestones to Millionaires episode number 16, and I wanted to send a small email to thank you for what you are doing. I'm actually not a doctor nor is my spouse, but I'm a professional cyclist riding on Trek–Segafredo and I married an American.

Dr. Jim Dahle:
Even though a lot of things you teach do not apply to me, they do give me ideas, understanding and inspiration on how to manage my future and the very overwhelming US tax system that as a non-American seems a little insane. There are quite a few similarities in professions that I've found and truly just wanted to say thank you for all the info you give out”.

Dr. Jim Dahle:
So, I get this email and I'm floored, because I'm a big cycling fan. I knew exactly who Toms was even if our podcast producer Cindy didn't. Cycling is much bigger in Europe than it is in the US. And Toms races at the highest level.

Dr. Jim Dahle:
Let me explain. Toms is currently the best cyclist in Latvia and not just one discipline, but two. He's been the Latvian national time trial champion and the national road race champion twice. He's been the Latvian cyclist of the year four times. And my guess is he is going to win again this year.

Dr. Jim Dahle:
He's completed the Tour de France four times. During his career he's mostly raced on American teams, such as Cannondale and Trek–Segafredo. He's raced in most of the biggest races in the world. Last year, he nearly won a stage at the Tour de France. He's won the polka dot jersey there several days as the best climber. This year, he was in the lead group until late in the race, in what I considered the best race of the year in ultra-muddy Paris–Roubaix.

Dr. Jim Dahle:
He is also an Olympian, competing in both the road race and the time trial this year in Tokyo. Most importantly, he rode right by my house on the tour of Utah back in 2014. So, I'm hoping he'll come back for a future edition of that race, even if he remembers that day as a nightmare. Toms welcome to the podcast.

Toms Skujiņš:
Thanks for having me, Jim. And thank you for all the little low down on the results, because sometimes I forget them myself.

Dr. Jim Dahle:
Well, you're doing great. You're having a wonderful career. Today we're going to talk about the finances of professional athletes and specifically cyclists. But before we do that, give me just a minute to fanboy a little more and ask a few questions about your season. What was your favorite race this year?

Toms Skujiņš:
Like you said, Roubaix, it was definitely one of the highlights. It was my first one ever. And I think it was an addition a lot of people will remember, but at the same time, yeah, Olympics don't happen that often. And Tokyo, in general, Japan, is super nice and it's always nice to go there. I think for me that trumps Roubaix, but just personal experience.

Toms Skujiņš:
Also, I got to mention Worlds this year, which was in the heart of cycling in Belgium and was kind of like riding through a stadium. If road cycling ever had a stadium, it was there for sure.

Dr. Jim Dahle:
Yeah. It was pretty impressive how many people turned out for that race, for sure. What's your biggest goal in cycling? If you could accomplish one major goal, what would it be?

Toms Skujiņš:
That's a really hard question just because sometimes dreams are goals and goals turn into dreams or one way or the other, because obviously I don't think I'll ever win the Tour de France because that's just not what my genes will allow me. But if I was to retire at the LA Olympics in 2028, then I would call it a very successful career, for sure.

Dr. Jim Dahle:
Awesome. Let's talk about Paris–Roubaix. A lot of people in the US that listen to this podcast, don't know a lot about this race. But this is a race that has a number of segments, approximately 30 segments of cobbles, big old stones you got to race your bike over.

Dr. Jim Dahle:
And this year it was raining all night and into the beginning of the race. And so, all these cobbles were covered in mud. And you were doing great in the race with 80 kilometers to go, in the first time doing this race where experience really matters. But your first time with 80 kilometers to go, you were in the lead group of just 19 riders out of the original 200 or so. Then you guys hit cobble sector 17, a four-star section of cobble stone's covered in mud.

Dr. Jim Dahle:
As near as I can tell someone punctured, there was a crash, the whole group splintered, never to come back together again. I'd love to hear what happened in your words in that race if you remember that moment when it blew up.

Toms Skujiņš:
Yeah. I mean that race in general is crazy, but as you said this year, just with the mud it went up a notch. Personally, the problem was that I had a really bad stomach and I actually didn't necessarily get dropped because of not being able to ride as fast. But I just had to do a pit stop on the roadside. And luckily, the team car was not too far, so I even got some toilet paper.

Toms Skujiņš:
But that happens when there's so much mud and cow manure on the road that you're going to ingest it eventually. Yeah, it really depends on when your stomach's going to give out, if it's going to give out. And in my case, unfortunately that was the moment when we were still less than 20 guys left in a great spot, but when you got to go, you got to go.

Dr. Jim Dahle:
Yeah, that reminds me of a moment in the Giro a few years ago when the leader of the race had to pull off to the side of the road and drop them just to go right there. There's definitely a lot of difficulty in cycling sometimes when you combine it with biology and a six-hour race.

Dr. Jim Dahle:
When you got into pro cycling, what surprised you the most?

Toms Skujiņš:
I think what surprised me the most was just how much logistics go into one team. Because one team is 30 riders, we probably have tripled the amount of staff behind the 30 riders with directors, mechanics, people doing logistics, people planning trips, people planning camps, coaches, everything, chefs, nutritionists, and so on. You see only eight riders starting the tour, but behind those eight is a whole lot of people that actually make that happen.

Dr. Jim Dahle:
Well, it's a financial podcast. We better cover some financial material. Now compared to football, whether we're talking about real football, as you know it in Europe or American football, cycling is a relatively low budget sport. The richest team in cycling has an annual budget of just 15 million euros. And for those who aren't familiar with the exchange rate right now, a dollar is about 0.88 euros.

Dr. Jim Dahle:
By comparison, the New England Patriots football team has half a billion dollars of revenue per year. In the teams in the Tour de France this year budgets range from 7.5 million to 50 million. Your team Trek–Segafredo has an annual budget of just 14 million euros for all 27 riders, the sports directors, all the support staff, all the bikes and equipment and all the travel costs. That's not a lot of money.

Dr. Jim Dahle:
Can you describe for us the typical salaries for cyclists in each of the following categories? And you can use dollars or euros, whatever. But let's talk first about the lowest professional tier, the continental riders. I understand there's not even a minimum salary at that level. Is that right? What do those guys typically get paid?

Toms Skujiņš:
Yeah, continent riders don't really have a minimum salary. I would still call them amateurs even though they are sometimes even racing with us because some of those guys, yeah, they don't get paid. They do it more for fun, but it is mostly a development level, let's say, where some riders are maybe 18 just out of high school, or still in high school. And they obviously don't get any money.

Toms Skujiņš:
But sometimes, maybe the best continent riders will make 15,000 – 20,000 if they're on a really good continent team that has a really good system under it and have the potential, have a big role in the team, be that a big role where they help the young kids understand cycling or that they're one of the bright stars on the team that will go on to do a lot of good things. But yeah, in general, when I was riding for a continent team, I was riding for nothing.

Dr. Jim Dahle:
And were you actually paying to ride or did they at least cover your costs?

Toms Skujiņš:
The system was pretty good. We did get even sort of stipends when we were at camps, and all the equipment and everything was given. At the end of the day, you have zero expenses. Some continents teams even provide a team house so you actually have zero expenses. Maybe they even give you money for food or whatever, but you don't really save up on that.

Dr. Jim Dahle:
Yeah, for sure. The next tier up is the pro continental riders where the minimum salary is about $39,000. Is that what most cyclists at that level make or do a lot of them make more than that?

Toms Skujiņš:
Unlike with the continent teams actually, with the pro team, I think they are called, the range is quite big. There are definitely quite a few guys that ride for the minimum amount, but then again, you have big star riders that are over a million dollars, or million euros. Because those teams also ride at the Tour de France. For example, Arkéa–Samsic is one of the pro continent teams that has done the tour and they definitely have at least two riders that make over a million euros for sure.

Dr. Jim Dahle:
Yeah. Definitely a big range there. The top tier where you're at is the pro tour. There's a minimum salary here of $47,000. Now obviously the biggest stars make a lot more than that.

Dr. Jim Dahle:
The top Tour de France general classification riders reportedly make between 2 and 6 million euros a year, but that's only the top 10 or 20 out of 300 to 500 riders in the Pro Peloton. What does the rest of the Peloton earn as a salary? Say there's a domestic good enough to go to the tour. Obviously, they're not racing to win it, but they're good enough to go to the tour. What type of range of salaries would they see?

Toms Skujiņš:
Again, the range is very, very big. And even though maybe average salaries look very good on paper, the average salaries are bumped up by those 20 guys that make over 2 million, because I am 100% positive that there's guys doing the tour making less than 80,000 euros. I'm sure that every once in a while, there's also someone that is making minimum and going to the tour just because they are good and the team picked them up for nothing, especially in a year where maybe a team was folding or a few teams were folding. And they had nowhere else to go, but to that one team and ride for whatever they can get.

Dr. Jim Dahle:
How's that feel to be on a team when you know there's other people on the team making many multiples of what you're making to feel like you're riding for nothing? Are you just kind of hoping for a better contract the next time you negotiate it at that point?

Toms Skujiņš:
Actually, I don't think about it that much. Usually, the salary amount is correlated to the results or your value in the team. You just know that if you prove that you are worth a better contract, that if you are a team player or if you are going to win the Tour de France in two years’ time, then your salary will increase quite considerably. You just want to do your best in order to prove that and hopefully make more money next time.

Dr. Jim Dahle:
Yeah. Now on a team with 27 or 30 riders, only eight of them go to the tour. Say for a domestic that's maybe not necessarily good enough to go to the tour, is not a champion classics rider, is not a champion time trialist. What kind of money do they make? Are most of them typically pretty close to the minimum $47,000?

Toms Skujiņš:
I think it would probably be a bit more than that. The very minimum is usually reserved for the young guys coming in, but I'd say the riders that are maybe in the range of the 25 to the 30 in the team ranking, let's say if there was one, they'd probably be around 80,000 to 150,000 euros, I'd say.

Dr. Jim Dahle:
How about the people that aren't the general classification riders? Let's say somebody who gets multiple top 5s, top 10s in the classics, or occasionally wins a time trial? But maybe doesn't even go to the tour, it’s definitely not a general classification rider but people we've heard of. What kind of incomes do they have?

Toms Skujiņš:
Yeah. Some of the names people would know that are in the top 10 in classics, the range, again, would be very dependent on how old they are, where they're going, which direction their career is progressing, but I'd say between 200,000 and 800,000 maybe.

Dr. Jim Dahle:
Kind of doctor salaries.

Toms Skujiņš:
Yeah. Let's say they're the doctors of the Peloton.

Dr. Jim Dahle:
Now there are other sources of income for cyclists, such as endorsements. Do most pro cyclists get endorsement deals or is that really only the top 5 or 10 folks?

Toms Skujiņš:
Actually, it's very rare for cyclists to get endorsements just because our team has a lot of sponsors and you cannot have an endorsement from a conflicting sponsor. If I'm on Trek–Segafredo and I'm riding Trek bikes, it'd be pretty bad if suddenly I was endorsed by or endorsing Factor bikes or Canyon bikes or whatever else you want to see.

Dr. Jim Dahle:
Now, there are a few people on the Peloton that got a little bit of trouble in the last month or so, because they were spotted riding bikes that were not the sponsor of the team. How big of a deal is that for them? How much money do you think that decision cost them?

Toms Skujiņš:
At the end of the day, it didn't cost them anything, but the team needed to show their sponsors that they're not just letting anyone ride any other bikes. The reason why they were riding bikes is obviously because they're switching teams for next year. And when you switch teams, you already in November usually start riding the new team's bike just because you need to get used to it.

Toms Skujiņš:
And there's always a debate shouldn't we have contracts that run January 1st till October 31st, just because then in November, December, people can already ride their new team bikes and not get into these issues.

Dr. Jim Dahle:
Is it hard to switch bikes like that? To switch to a new brand of bike?

Toms Skujiņš:
It really depends. There are some bikes that are easier to switch to, especially if you're going up. It’s always easier to switch to when you're suddenly, “Oh, I'm riding way faster”. That’s great.

Toms Skujiņš:
But yeah, there's definitely differences in bikes and it definitely takes some time to get used to it. And it's not just the frame of the bike, but maybe the handle bars are different. Maybe you're changing from SRAM to Shimano or the other way around and those are different. There are some details that are more important than others. And I think sometimes actually even changing pedals is even more difficult than changing a bike frame.

Dr. Jim Dahle:
Let's talk about another source of income for cyclists – prize money. Can you explain how the prize money works? I understand a lot of top riders share a portion of it with the other members of the team in that race. How does that all work?

Toms Skujiņš:
There's kind of two ways that it works. One way is where all the prize money at the end of the year gets collected and just spread out through all the riders and also staff. Or the other way, the way we do it is that from every race we have a certain percentage of the whole prize money that goes to staff. If I'm not mistaken, I think we give to staff 15% and then the rest of the money gets separated into equal parts for all the riders that were at that race. That gives you an incentive to actually help the leader and make sure that he is in the best possible way because when he makes money, you make money.

Dr. Jim Dahle:
It's true professionals, right?

Toms Skujiņš:
Yeah.

Dr. Jim Dahle:
All right. Let's talk about money. Do you guys all know what everybody else in the Peloton is making? Is that what you talk about in the Peloton for those 100 kilometers after the break goes away that nobody seems to be doing anything? Or is it a big secret? Is it a taboo topic? How is that in the Peloton?

Toms Skujiņš:
It is definitely more secretive than in soccer or football, just because there you see the numbers and everyone knows the numbers. But there's always rumors that flow around and it's like, “Yeah, I think this guy is making this much. Oh, have you heard how much this guy's overpaid? Did you hear that this guy is winning the Tour de France and was just riding for pennies?” And blah, blah, blah. There are always some rumors, but to no concrete numbers, you never know. And for sure people like to spread rumors.

Dr. Jim Dahle:
Now the best value in cyclists this year, as far as how much it cost to buy the cyclist and results was probably Mark Cavendish, I would guess. What did people think about the value he provided to his team this year? Do they feel like he got ripped off with his contract? Or what did people think about that?

Toms Skujiņš:
I think that if he was on any other team, he would have a hard time winning as much. I think that's why Quick-Step could offer him such a low salary because he would make up the money in bonuses or prize money or whatever. But yeah, I don't think on any other team he would win as many races.

Dr. Jim Dahle:
Yeah, for sure. He came into a good setup there, especially for the Tour de France. All right. Are cyclists generally good with money since they have to come from a pretty frugal background in the earlier years? Or are they like doctors and spend like they'll be making big bucks for the rest of their life?

Toms Skujiņš:
I think it's more likely they spend like they're going to be making the same money their whole life. Unfortunately, that’s how all humans’ work. They just see the money coming in and they're like, “Oh man, this is great. I can spend it all”. But they don't really think about the future. It's definitely a little issue. I’ve seen or heard at least some riders run into financial difficulty that definitely should have been able to retire at the end of their careers. But yeah, I think that’s human nature.

Dr. Jim Dahle:
Yeah. It certainly happens a lot with other athletes. In a lot of ways athletes and artists are similar to doctors in that they make a lot of money because of some special skill they have or because of a special body of knowledge that they have. And not necessarily because they're good at managing money or because they're good businessmen. What other parallels do you see between athletes and doctors in that way?

Toms Skujiņš:
Before I talk about parallels, the biggest difference is that doctors can work until they're 65. Athletes usually cannot unless you're playing chess or shooting or doing something like that, then you probably are done at the age of 40.

Toms Skujiņš:
The similarities are for sure that you make a lot of money very early on and you're not always sure what to do with it. Luckily, we don't usually have student loans because we're all dummies. Usually, we don't go to college or anything. Some do, but most like me do not really. There are definitely some similarities, but also some big differences that end up changing how you should actually manage your money.

Dr. Jim Dahle:
Now you listen to this podcast, so you have at least some interests in learning finance and learning money. Where did that come from? How did you get interested in learning about finance?

Toms Skujiņš:
I grew up with not that much and it was always about saving and making sure that you're not spending on stupid stuff. I always was kind of cautious with money, but then yeah, once I actually started making enough to save as well for something, then I realized that I should make the most of it and make sure I save enough that after I retire, whenever that be, that I don't need to get a job like the next day.

Dr. Jim Dahle:
How does that feel? Knowing if you're like most professional cyclists, you probably only got despite being a young person you're about the age a lot of people come out of residency at. You've only got 5 or 10 years of your career left ahead of you. Do you feel that pressure hanging over your head to save for retirement?

Toms Skujiņš:
It's more about just making sure that I'm not wasting money really. It's making sure that I'm using the opportunities I get where I can save. My goal actually, in general, with my career is that if I were to buy a house at the end of my career and not have a mortgage, that'd be great. That's the end all be all. And then I know that I can work whatever work I please really, and not worry about paying the mortgage every single day.

Dr. Jim Dahle:
Yeah. When did you realize that you're going to be able to make a living from riding your bike and what did that feel like to know that you could make a living doing something you love?

Toms Skujiņš:
Actually, I think that it is fairly recent, just because up until maybe 2018, I was making okay money, but it was never something that I could “All right, I will put half of what I earn in a savings account or whatever”. It was never that much money to save because I always wanted to make sure that I give myself the best opportunity to progress and spend money on training camps, which is just investing in myself, let's say, before I invest in stocks. It's actually been in the last maybe three, four years that I realized that I might be able at the end of my career, buy a house and not have to have a mortgage.

Dr. Jim Dahle:
Yeah. Which can be a big deal in Europe. A lot of houses are really expensive over there. There are a few countries where there's 50-year mortgages, so that's no small feat. Now is there any financial education and training aimed at cyclists or are they pretty much on their own?

Toms Skujiņš:
It's pretty bad actually. There is definitely not that much financial education that goes towards cyclists. And I think that's also the reason why cyclists are so easy spending with their money. There are some guides, some people that try to guide.

Toms Skujiņš:
And actually, last year they started a pro cyclist foundation, which is with intent of helping cyclists manage their money, but also just guide them in general and help younger guys in the US. Let's say, go abroad and have some guidance and know what they are doing.

Toms Skujiņš:
And so, that's kind of the first thing that really has come up that will help guide cyclists on the right path, be that with mental wellbeing or financial wellbeing or whatever.

Dr. Jim Dahle:
That's good. The national football league here in the US has a similar program. When rookies come in, they have to go to this course, this class. I think it's a week where they basically are taught some basics of finance and they're hoping to keep them from being taken advantage of by agents or financial professionals or their friends or whatever.

Dr. Jim Dahle:
Now doctors tend to feel like they've target on their back. Like there are financial professional’s salesmen that are aiming at them that they're trying to take advantage of them and their incomes. Are there financial professionals out there trying to take advantage of young cyclists that are making good money?

Toms Skujiņš:
Yeah, for sure. All cyclists have agents and some are better than others. As some are fairly protective and actually help riders with financial decisions. And there's definitely some that want to align their pockets with as much money as they can.

Dr. Jim Dahle:
Let's talk a little bit about that. Let's talk about contract negotiations. Do you ever get involved or you just let your agent take care of it? Are the negotiations adversarial or are they relatively friendly? How does that work?

Toms Skujiņš:
I think I've been fairly lucky up until now with the teams I've been riding for. And it's always been a friendly manner and it's always been a good relationship. Always the negotiations are fair. And especially now with Trek. Because Trek, the company is so involved, that they make sure they hire the people that actually care, and they take care of their people.

Toms Skujiņš:
Like my last contract, I actually negotiated myself sort of. But there was not much negotiation. I was just happy that they would resign me with all that was going on in the world. But in general, the general manager is very fair to us and then you know that you're valued in the team and that is always nice. So, you hope that you can stay.

Dr. Jim Dahle:
What's an agent's cut? How does an agent get paid? Do they get 10% of the contract? How does the agent get paid?

Toms Skujiņš:
Yeah. My agent, Andrew, has always helped me with contracts. And even at this meeting, he helped me set up logistically. And he told me what to expect and whatnot, but the cut usually ranges from let's say 3% to 10%.

Dr. Jim Dahle:
Now you race all over the world. In a given year, you might race in 12 or 15 countries. How many different countries do you have to pay taxes in?

Toms Skujiņš:
Well, we actually pay taxes in the country we reside in. That's kind of the way Europe works. I know in the states it's a lot more complicated. I've heard people pay taxes in how many games they play, which is just insanity. But wherever you reside, you pay taxes.

Dr. Jim Dahle:
And your residence is in Latvia? Where's your residence right now?

Toms Skujiņš:
My residence since last year actually is in Andorra. We started slowly moving over there. I never spent enough time in Latvia to actually be there enough. And the winters there are pretty bad. Like right now there's quite a bit of snow already. And last year there was snow all the way until April where you're already racing all the biggest races. So, it's not the best training ground. So that's kind of why I've moved out of the country for a while now.

Dr. Jim Dahle:
Now I was just in Andorra for the first time in my life a couple of weeks ago. I should have emailed you and seen if you were there at the time. Beautiful place, incredible place. It's really different from going across the border from rural Spain or rural France in Andorra. It's an impressive little place and there are tons of tax benefits of living there. Is that why a lot of cyclists live in Andorra aside from the fact that there's all these great mountain passes to climb there?

Toms Skujiņš:
Yeah. The tax benefits are definitely a help as well. And that's why a lot of cyclists move to Monaco because there is zero tax there. So, you're spending money elsewhere. You're spending money on your apartment, but yeah, at least you're not paying any income tax.

Toms Skujiņš:
But Andorra, it's still very low taxes and that definitely helps, but also the way residency works. Right now, for example, one of the reasons we moved Andorra is just because it was easier for me to get residency and thus my wife to get residency there.

Toms Skujiņš:
Because obviously as an American, you can only spend a certain amount of days, but now that we're married, getting residency there for both of us was pretty simple and they were very open about it. That’s also why we moved there.

Toms Skujiņš:
And she loves snow. She actually grew up in Colorado. First time we drove up, she was actually already crying because of the amount of snow that was there. And she was so happy that she could finally ski again.

Dr. Jim Dahle:
Yeah. It looks like the skiing there is great. We got out of the country during the first snow actually. We went over while it was snowing, to get out of the country a few weeks ago. And you could see all the awesome ski terrain up there. So, it looks like a great place for skiing.

Dr. Jim Dahle:
How do you save for retirement? Does Trek offer a 401(k) or something similar? Or are you just kind of on your own to go find your own investments?

Toms Skujiņš:
It is very much on your own just because even though Trek is a US based company, my salary comes from Belgium because that's where the headquarters of the team is. Just because Belgium is way easier to get to every race and so on. There's a service course there with all the extra bikes and extra buses and extra cars and whatnot.

Toms Skujiņš:
But most of the cyclists are also self-employed, which means that you have to take care of your own insurance. You have to take care of paying your own taxes, the employer doesn't pay your taxes for you. And that’s kind of why it's always on you to decide what you want to do with your money. And that's why people like spending their money.

Dr. Jim Dahle:
What options do you have as a European to invest? Do you invest in mutual funds? What do you typically do?

Toms Skujiņš:
The options actually are pretty similar to the US. However, they are usually a bit more expensive in management fees. It is always hard to find something that's good. Actually, saving for retirement in Latvia is really hard just because the market is so small and people are not that well educated.

Toms Skujiņš:
The system needs some revision and luckily it is going that way and luckily, it's getting better. And now the fees are way smaller and you are actually making money as when you retire, you take out more than you've put in, but it used to not be that way 10 years ago.

Dr. Jim Dahle:
That's good to hear that's improving. What does retirement look like for you? What do you plan to do after you retire from cycling? You're a big fan of potatoes. Are you going to start a potato farm or where do you go from this after you leave pro cycling?

Toms Skujiņš:
Well, the first decision for us was always, where are we going to live? And it will be the USA, just because Abby's very close with her family. And it's definitely a lot easier for me to integrate into the US than for her to integrate into Latvia. The language is quite complicated to begin with so that would be a huge step for her to manage.

Toms Skujiņš:
But as I was talking about, the dream scenario is having a house paid down and not actually having to work a full-time job. If I want to, sure, why not? But I would really like to take my kids to school and pick them up and be at their recitals and be at their football games or whatever, and just be fairly involved in their lives and not have to work every single day 09:00 to 05:00 in an office in close doors.

Dr. Jim Dahle:
It sounds like you're a real FIRE proponent. Financial Independence Retire Early. You talk exactly like these people that go into tech and then retire at 30 or 40, so they can do whatever they want with their life. It's pretty awesome to see a new pathway through professional sports to that lifestyle.

Toms Skujiņš:
I mean, it would be great. I don't know if I'm going to make as much money as they do in tech, but that would be the dream for sure.

Dr. Jim Dahle:
Now, you're not going to have any trouble moving to the US. Your English is spectacular. I assume you grew up speaking English as a second language and learned it in school or did you just learn it since you left Latvia?

Toms Skujiņš:
My first English I learned from watching Cartoon Network as a kid. But in general, yeah, they teach English in school, all through high school. By the end of high school, usually you speak two foreign languages, sometimes three, if you're very keen on languages and want to pursue that.

Toms Skujiņš:
But I definitely got rid of my accent a bit more, even though it's still there. But when I rode for George Hincapie’s team for two years in 2014 and 2015. That's kind of where the accent slowly started fading away, just because I heard more American English and tried to replicate it sort of.

Dr. Jim Dahle:
How many different languages do you give interviews to the press in?

Toms Skujiņš:
Well, I could do it in four, but not that many Russian news outlets want to speak to me.

Dr. Jim Dahle:
So Russian Latvian, I assume.

Toms Skujiņš:
Yeah.

Dr. Jim Dahle:
English, what else do you speak?

Toms Skujiņš:
English and French.

Dr. Jim Dahle:
French. Okay. Very cool. You always wonder when you're looking at people racing. And you wonder if there's probably a few jerks in the Peloton and there's probably some really nice people in the Peloton. I'm not going to ask you about the jerks, but who are the nicest people in the Peloton that people might not realize they're really great, nice people?

Toms Skujiņš:
There are definitely quite a few really nice guys in the Peloton, but if I have to go with some big names, then I would say Bernard is actually a super nice guy. Primož Roglič is also a super nice guy. And the latest tour winner Tadej is also very, very nice. They all seem fairly down earth. They don't think that they're better than every single one of us that are riding next to them. They're just good humans.

Dr. Jim Dahle:
What do you guys talk about in the Peloton when you're riding along at 40 kilometers an hour? I always see people just chatting it up. What are you talking about?

Toms Skujiņš:
Like you said, sometimes just rumors talk about contracts and stuff. Sometimes it's like high school talk of, “Oh, did you see this guy that did this and this?” Or “Did you see he's dating this and this now?” Sometimes we're just like children. At the same time, there's obviously some car talk, some fancy watch talks and where people spend their money talk.

Dr. Jim Dahle:
Just depends. Just a group of people like anybody else.

Toms Skujiņš:
Yeah. Pretty much.

Dr. Jim Dahle:
Awesome. Well, you've got the ear of 30,000 to 40,000 high earners like yourself. Most of them are doctors, but many of them are not. What have we not talked about today that you think they should know?

Toms Skujiņš:
Well, I think we covered a lot and you cover a lot in every single podcast. But I think that people sometimes forget that you don't want to just be spending your life making money. You actually want to do something that is close to your heart. I wouldn't be cycling just for the money, for sure. I'd find some other way to make enough to live off.

Toms Skujiņš:
But I think it's worth doing what you love and even let's say saving the money, from what you're doing, just so either you can do it more or you can do it more on your terms. Just because even though you're loving what you're doing right now, maybe it's going to change and you'll want to spend more time with your family or you want to maybe try something else.

Toms Skujiņš:
I'd suggest everyone to think about saving enough money, that they can be their own boss and just make sure that they are actually doing what they want.

Dr. Jim Dahle:
Awesome. Great advice. This has been wonderful chatting with you. It's really fun to get an insider's view of a sport I've been watching for a long time. And I sure appreciate you reaching out to us and getting involved with the podcast.

Dr. Jim Dahle:
Toms Skujiņš, we are grateful for you and congratulations on your success, both in cycling and in life and with your finances. And thanks for coming on the podcast.

Toms Skujiņš:
Thank you for having me. Thank you for all that you do. I'll keep listening for sure.

Dr. Jim Dahle:
Well, thank you for indulging me and coming along on that interview. The fun part about having your own podcast is you get to interview whoever you want, as long as you can talk them into coming on the podcast. And so, a lot of times that means I get to talk to someone that I just really want to talk to. And we decided to record it.

Dr. Jim Dahle:
That was really fun for me. I hope you enjoyed it as well. It's a scary thing to be a professional athlete. I was watching Moneyball again the other day. I don't know if you've seen that. This is the one about the Oakland As baseball and really applying economics to the sport of baseball.

Dr. Jim Dahle:
But one of the interesting things about it was just watching them basically fire and trade players. As a professional athlete, you're a commodity in some ways, and you get traded around and that happens in cycling as well.

Dr. Jim Dahle:
And as much as doctors don't like being bossed around by their employers, hospitals, groups, whatever, imagine if you could just be out of work because they don't want you anymore. And so, I think there's a lot of pressure in being a professional athlete and a lot of need to manage your money well, because you really don't know when that income stream is going to end. Lots of similarities with medicine as well. But certainly a few differences too.

Dr. Jim Dahle:
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Dr. Jim Dahle:
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Dr. Jim Dahle:
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Dr. Jim Dahle:
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Dr. Jim Dahle:
So, refinance your student loans if that's right for you. If you're not sure if it's right for you, again, book a consult with Andrew at studentloanadvice.com.

Dr. Jim Dahle:
Thanks to those of you who have left us a five-star review and or told your friends about the podcast. Our most recent one comes from a pulmonary critical care fellow who said “Life changing. I have learned so much from WCI. I have the confidence now to manage my own finances, pay down my debt and invest. I have the insurance protections I know I need and have given myself permission to leave the ones I knew were always unnecessary. I sleep better at night knowing I have the right financial plan in place for my family. Thank you for making my journey to financial literacy both easy and entertaining!”

Dr. Jim Dahle:
Thanks for those kind words. That is our goal. We want you to become financially literate. We want you to be financially disciplined, and we want you to be able to have finances be a blessing in your life rather than a curse.

Dr. Jim Dahle:
You're not going to be financially independent immediately, but just getting on the pathway to getting there relieves a lot of stress in your life. I truly believe that if you get your financial ducks in a row, you're going to be a better partner, you're going to be a better parent, you're going to be a better practitioner.

Dr. Jim Dahle:
Thanks for what you're doing. Make sure you take care of the finances, set your financial goal for the year. I know you can accomplish it.

Dr. Jim Dahle:
Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor podcast.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.