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Who Shares The Fruits Of Naomi Osaka’s Success?

Naomi-Osaka
photo by Kate Tann

While high-performing professional athletes are rarely content to rest on their accomplishments, it is hard to imagine that tennis star Naomi Osaka can feel anything other than satisfied with her current position.

Osaka won the U.S. Open last September, besting the legendary Serena Williams to do so. At age 21, she has won two Grand Slams, is ranked No. 1 in the world by the Women’s Tennis Association and was recently named one of Time’s 100 most influential people of 2019.

I was a tennis player myself, for four years at the University of Rochester. Even though I was far from ever going pro, my background increases my appreciation of Osaka as a player. Accomplishments like hers take not only innate talent, but years of hard work, dedication and training. A lot of Osaka’s early training happened mainly here in South Florida; although she was born in Japan, the country she now represents professionally, she grew up in the United States. South Florida has long been a training ground for hopeful tennis up-and-comers, including the Williams sisters, and Osaka’s family moved here from New York with the goal of tennis stardom in mind.

As the South Florida Sun Sentinel reported, one of Osaka’s former coaches is now suing to enforce a contract Osaka’s father, Leonard Francois, signed on her behalf (and that of her sister Mari) when Naomi was 14 years old. Francois signed a contract with coach Christophe Jean in 2012, leading to two years of instruction for Osaka and her sister. Jean told the Sun Sentinel that the last time he had spoken to Francois, the man had told him to get a lawyer; Jean filed a lawsuit in February.

The Sun Sentinel reported that Jean was not alone. None of the South Florida coaches who had worked with the Osaka girls were paid for their instruction. The family was financially strained at the time and could not have afforded the estimated $40,000 per year necessary for lessons. Some of the coaches have said they were convinced to take on the Osaka girls due to their passion and talent; occasionally Francois did basic work such as pitching tennis balls to students in group lessons in exchange for his daughters’ instruction. While some of the coaches remain fine with the fact that they were never paid, others have expressed disappointment or feel they have been wronged.

Jean says that Francois agreed to pay a deeply discounted fee of $300 per month. After the first month, Francois admitted he couldn’t afford even that and offered to pick up balls during lessons. The 2012 contract between Francois and Jean stipulates that “Both parties agree on a fixed fee of twenty percent or monetary agreement on behalf of Marie (sic) Osaka and Naomi Osaka.” Jean’s lawyer says the contract is legal and binding; the Osaka family attorney disputes this.

None of the coaches who trained the Osakas, including Jean, dispute the fact that the family’s money problems were real at the time. The primary issue is determining what coaches are owed now that Naomi Osaka has so wildly succeeded.

Young athletes need talent and drive, but they also often need a substantial financial investment from their parents or other family members. This reality means that entering into financial deals with coaches and other professionals is often the only practical choice for families of modest means – but doing so can create financial hazards down the road.

Today, Osaka is the top women’s tennis player in the world and has her choice of multi-million-dollar endorsement deals. As a very successful adult, are her earnings at risk due to a contract her father signed seven years ago?

Generally, Florida law allows parents to enter into contracts on their minor children’s behalf for coaches, managers, trainers or agents, subject to certain stipulations. If a contract is solely signed by a minor, it generally is voidable until the minor reaches adulthood; once the minor reaches adulthood, the contract becomes ratified if it remained in force to that point. There are, however, certain sorts of contracts that can gain more legal force, including those pertaining to sports and entertainment. For these exceptions, Florida law allows a circuit court to review and approve contracts signed by a minor. If approved, such contracts can no longer be voided by the minor before he or she reaches adulthood on the grounds of age alone.

Without being privy to the private details in Osaka’s particular dispute, it is impossible to say from the outside whether the contract between Francois and Jean will stand up in court. Given that it is reportedly a single page and Jean is claiming 20% of Osaka’s earnings indefinitely, the legal requirement of sufficient specificity for the agreement to be enforceable may become relevant. But an agreement between a minor athlete’s father and a coach could certainly stand up in Florida courts into that athlete’s adulthood, depending on the details.

The controversy around Osaka’s early training, and what those coaches and trainers are now owed, is a useful reminder that it is important to take steps to protect a young athlete’s earnings even before he or she achieves success. As with child entertainers, young athletes will benefit from clear communication between parents, coaches and other professionals. Any contracts involving the child should be reviewed or prepared by an attorney, and he or she should pay special attention to the long-term effects of the contract should the child become highly successful.

In Osaka’s case, it’s clear she would have benefited from having an attorney involved in drafting the contract between her father and Jean. An attorney likely would have placed limitations on the time period during which Jean could collect 20% of the sisters’ earnings. While even a one-time legal consultation might have been a financial stretch for the family at the time, it would have saved them both time and expense in the long term.

Parents may also want to take steps to protect a minor’s earnings, especially before their child is old enough to hold separate financial accounts. While in Osaka’s case, it may not have mattered, for many young athletes a properly structured trust can ensure that they have access to their earnings once they are old enough to decide how to manage their own affairs. Blocked trusts provide a strong level of protection, but it is important to note they are very inflexible. A blocked trust is administered by a court. Once funds are deposited into the trust, they cannot be removed until the beneficiary reaches age 18 unless the court intervenes. This prevents parents from spending funds within the blocked trust, even for the child’s benefit. In certain situations, it may make sense to allocate some of the child’s income to a blocked trust and to deposit the rest in a separate, more flexible trust that allows for withdrawals under particular circumstances or that imposes age requirements to receive access to portions of the assets.

Alternatively, parents can open a custodial account to allow the child to own the assets directly. A parent, or any other adult, can serve as the custodian until the child reaches the age of majority, either age 18 or 21, depending on the state. The Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act (UTMA) created the groundwork to allow minors to own particular assets through custodial accounts. Custodial accounts can be a simple answer for those intimidated by trust documents, but they do not allow the parent to set up specific requirements or protections that may be helpful depending on the situation and their child’s needs.

The world of professional sports is one in which a person of sufficient talent and drive can wind up in a very different financial situation than the one in which he or she was raised. Parents generally want what is best for their children, and in the case of those with athletic ambitions, they may have to make choices early on that can have significant financial consequences for their children’s future. I wish Osaka the best of luck in her professional endeavors, and I hope a bad business deal her father made when she was only 14 years old does not prove to be a major financial burden going forward. With luck, she can inspire a new generation of kids to pursue their dreams – and their parents to make smart financial choices to protect those kids’ futures.

Client Service Manager Melinda Kibler, who is based in our Fort Lauderdale, Florida headquarters, contributed several chapters to our firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55, including Chapter 5, “Estate Planning;” Chapter 10, “Financing Long-Term Care;” and Chapter 17, “Retiring Abroad.”

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One Response to "Who Shares The Fruits Of Naomi Osaka’s Success?"

  • Carol Kelly
    June 7, 2019 - 10:36 am

    Naomi and her family should settle on a fair amount for each of these coaches. I think her early coaches deserve a settlement if they were not compensated for their services years ago. It was practical to work out a deeply discounted payment plan when the family was financially strained, but it’s unfair for these early coaches who invested time and effort to get no acknowledgement or compensation. Gratitude brings good karma, Naomi!