With the start of another NFL season, I’ve been thinking about an alarming statistic associated with the league: 78% of former NFL players either go bankrupt or experience severe financial distress. This is astounding because the base salary for rookies is $310,000, and this is bumped up to $460,000 after two years. The statistics for NBA players aren’t much cheerier: 60% go bankrupt within five years of retirement.
There are many ways in which individual athletes squander their wealth—e.g., gambling, drugs, prostitutes, bad investments, etc. But what it always comes down to is a lack of self-control. Managing personal finances, no matter how much one earns, demands self-discipline on a sustained level that goes far beyond what is required in the gym or on the field. So when you consider that most NFL and NBA players are coddled and pampered from their early teens (thus handicapping them in their development of self-control), it makes this figure less surprising. Sad and even tragic, yes. But not surprising.
Austin Gravley
Ah, money and professional sports….
It is a crime in society how we pay millions of dollars to people who play sports yet our teachers, police officers, soldiers, and other contributors to society get second fiddle. Doctors, teachers, police officers, soldiers – especially soldiers – should be the ones getting paid the big bucks here, not some guy who plays a sport for entertainment.
And thus I conclude my little rant…
layla
I participated in a conversation related to this one just the other day. Here’s a bit more:
1. If the athlete comes from a financially stable family, he is more likely to properly save/spend/donate his resources, and in the end, not blow it all.
2. Long lost cousins come out of the woodwork when a kid “makes it”, and the athlete ends up buying homes and vehicles for everyone and their brother.
3. Mike Golic has some interesting comments on healthcare (not necessarily related to the current climate) and injuries players sustain while their lives are dedicated to the NFL/NBA/MLB.
One more thing– more than one concussion and your brain is teetering on uselessness.
Christopher L. Schwab
I wonder if the far less coddled, through the trenches approach of the NHL and MLB minor league systems has any impact on long-term personal financial health. MLB would be particularly interesting because of the higher league minimum than the NFL and–probably–the highest league average if you compare top 15 to top 15 (NBA rosters being 15, MLB being 25/40).
peter hawkins
I have been an agent in the NFL, Investment Advisor, CFP as well as banker over the last 35 years. The statistics you quote are real – as is the divorce rate: 80% of all NFL players are divorced within 2 yrs. of retiring from the NFL (NFL players association statistic). What I saw were smart, young men (contrary to popular opinion) who were taken advantage of by friends, family, wives, in-laws, agents, churches, et al.. After the glamour evaporates (quickly), instantaneously after retirement, reality sets in; it is a tough business. No, it is a very tough business. Players don’t stop playing because they no longer want to play. They stop playing because they can’t walk. Financially? After taxes, agent fees (deserved), basic cost of maintaining two residences, you run into friends, old coaches with investment advice (usually bad to awful) and “family” – an equally destructive force. Consider if all of the people you trust wanted not a little, but a big piece of you? The question you pose is not a one size fits all, but the odds of a player coming out financially on top are about the same as coming out injury free.
Liran Cohen
Great Blog!
Our CEO works closely with Professional Athletes of all sports, but the NFL statistic is by far the worst.
He wrote an article that touches up on a few specific points that professional athletes should watch out for.
http://reuvenenterprises.com/blog/?p=22