Recognizing that not every returning American Olympic hero has the earning potential of a Michael Phelps or a Gabby Douglas, a popular online pawn service is offering to help Olympic athletes turn their gold medals into quick cash to pay for training expenses, transportation and housing for their family and friends — and even to help pay the taxes they face on the medals they win.
Pawngo.com already offers discounts to a number of professional athletes looking to obtain some ready cash. The website has in the past accepted Super Bowl, NBA championship, and World Series rings as collateral on loans of up to $1 million.
Now, Pawngo, which has loaned about $8 million since opening in June 2011, is extending that offer for Olympians who can’t find sponsors and backers to foot the bill to their travel, training and living expenses.
“Most Olympians are on their own nickel when they’re training,” Pawngo founder and CEO Todd Hills said in a telephone interview. “As I understand it, they were having a hard time just with living expenses, and having a hard time finding sponsorships.”
Pawngo is even promising to lend Olympians more money than their medals are worth — and charge no interest.
“There’s no charge,” Mr. Hills said. “We’re not making money on it. We’re just trying to help these athletes get there to the Olympics and get done what they need to get done.”
“I don’t know where else you can go in America and borrow money for free,” he added.
The issue of the financial burden and tax bite facing American Olympians has gotten the attention of Congress and the Obama administration in recent days. The White House quickly endorsed a proposal floated by Republican Sen. Marco Rubio of Florida to exempt American Olympic athletes from federal taxes on the gold, silver and bronze medals — as well as from the cash bounties the athletes receive for their victories.
The U.S. Olympic Committee doles out $25,000 for each gold medal, $15,000 for silver and $10,000 for bronze. Currently, the IRS treats such honoraria as income and requires the winners to pay standard income tax rates on their cash prizes.
“The president believes that we should support efforts … to ensure that we are doing everything we can to honor and support our Olympic athletes who have volunteered to represent our nation at the Olympic Games,” press secretary Jay Carney told reporters earlier this month. Republican presidential challenger Mitt Romney said through a spokesman he backs the idea as well.
Don’t expect even financially strapped Olympians to completely give up their medals without a fight. Mr. Hills said Pawngo has no intention of tricking these athletes into permanently handing them over.
“We’re not into buying the gold medal,” Mr. Hills said. “But if you’re having a difficult time, we would be happy to loan you money until you get back on your feet. You give us our money back, you get your medal back.”
In fact, Pawngo has never had to resell any of the championship rings or medals the company received as collateral. Mr. Hills pointed out that even if they wanted to take ownership of these medals, they lend out more money than the medals are worth, in many cases, so it wouldn’t be a smart business decision to sell them for less than the athletes will eventually repay.
This sort of a collateral, of course, provides a great incentive for athletes to repay the loans.
“There’s a huge emotional attachment,” Mr. Hills said. “These medals are priceless. They’ve worked for their whole lives for them. I don’t think you can put a dollar amount on these gold medals, silver medals, bronze medals for these athletes.”
Well, actually, you can.
Decorated American swimmer Michael Phelps could get as much as $54,000, just for his 18 gold medals, Mr. Hills estimates, along with about $200 for each silver medal. But “what they’re worth to Michael Phelps and what they’re worth based on the gold market are two different things,” he said. “It’s all about the emotional attachment there.”