“By the time they have been retired for two years, 78 percent of former NFL players have gone bankrupt or are under financial stress; within five years of retirement, an estimated 60 percent of former NBA players are broke.”
– Sports Illustrated
Last night it seemed like the whole entire world was watching the ESPN show 30 for 30, which tackled the topic of pro athletes who have gone broke or filed for bankruptcy. I know some financial advisors who deal with NFL players, new and old and former. In many cases, they almost have to take on a parental role, especially as they get drafted out of college and can’t wait to go down to Myrtle Beach to get some dumbass slogan tattooed across their chest or whatever. There are calls at 2 in the morning about transferring money from one account to another, heavy-duty scoldings about jewelry purchases and frank discussions about how many cars a person actually needs to own at the same time.
Anyway, if you catch the ESPN doc, it was pretty amazing, if only for the sheer ubiquity of broke athletes – even star players with long careers who’ve made more than $30 million aren’t immune.
What happens to these guys is pretty obvious, it always seems like the same story, involving one or some of the below components:
1. Athlete overstimates the length of what his playing career will be. Then gets released or has a dire injury.
2. Athlete allows four or five of his boys from the neighborhood become a freeloading entourage. Once the money’s gone, so are his friends.
3. Athlete mistakenly assumes that success on the field guarantees success in the business world, buys car dealerships, car washes, restaurants, night clubs and backs his idiot family and friends in their own half-baked ventures.
4. Athlete signs over power of attorney to a scumbag or an incompetent because he just doesn’t feel like “dealing with this shit” and by “shit” he means his own future. Scumbag abuses trust and steals, swindles or loses the money in ill-conceived investments.
5. Athlete signs away rights and royalties to unscrupulous agents, managers, promoters early in his career when trinkets and a small amount of money dazzle him. Later, he finds out what he’s given up once it’s too late.
6. Lawsuits, divorces, child support, alimony and illness strike – huge expenses that were inconceivable to the 23-year-old who was nailing chicks three at a time in a hot tub ten years earlier.
Anyway, these are the typical pitfalls and 99 times out of 100 the broke athlete has made at least one of these mistakes. I’m not sure that it can ever be prevented given the de-emphasis on education our colleges are guilty of when it comes to their athletes. After all, colleges are businesses that cater to the check-writing alumni and the only thing the alumni care about is winning football and basketball games. The athletes are kept in the dark rather than taught the basics and many of them have grown up in an environment where money management just isn’t a topic of discussion.
So expect more of this.
More about ‘Broke’ on 30 for 30 here: ESPN