Have you ever wondered what it would be like to be making millions of dollars every year? Have you ever dreamt of being one of the greatest athletes in the world with thousands of people and little kids looking up to you? This is a reality for thousands of people competing across our country. In 2012, there were around 5,000 athletes in the four largest sports (baseball, basketball, football, and hockey) and many of them pull six figure salaries every year (NGPF). But the secret that is not commonly talked about amongst sports viewers is how many of these great athletes end up with nothing after they retire. A study done by sports illustrated found that 78 percent of National Football League players were broke or in financial ruin after only two years of retirement, and that 60 percent of MLB players went broke after five years (TORRE, 2015). Professional athletes make millions of dollars every year, yet so many end up going broke and with nothing left, but it can all be prevented.
These great athletes bring in so much money but because they live such ravish lifestyles, many of them run out of money within a very short amount of time after retiring. And because they wasted their college careers by only focusing their time on their respective sports, they do not have any type of education to be able to go out and find another job to start making money again.
With billions of dollars being brought in between the four biggest US sports leagues, millions of people look up to these athletes, yet so few realize how frequently these idles run out of money when they are making so much more than their average viewer does. If so many people who watch these people on TV can make it by with a fraction of the money that the people they are watching are making, then why do these athletes go broke?
Many people see these great athletes as role models because of their high level of play. All across the country, kids of all ages compete in many different sports, so naturally they would look up to the best athletes in their sport. Because so many youth look up to these athletes, these pro’s should be more careful with how they spend their money and make their investments. When millions of eyes are watching you every second of your career, you have to make sure to set a good example.
The loss these players face could easily be prevented by simply saving their money. Many of the players who do lose it all are normally the ones making six figure salaries. That is, the more money a player makes, the better chance of them running out. These athletes are drawn in more more money in ten years or so than most people will ever have in their entire life. They would never have to work another day in their life if they could just find a way to set the money aside and continue to live their life the way they have been. Also, many of the high salary sports players decide to invest in a financial advisor to help them keep track of their money.
Professional athletes face an odd financial situation; they make a lot of money right out of college and then make less money for the rest of their lives. This is almost exactly the opposite of practically every other college graduate. Most people would start by making small amounts of money but then slowly start making more money for the rest of their career. Another way pros differ from their college graduates is in that they only have a much shorter amount of time to produce a living. Where a regular job career may last up to 50 years, a professional athlete generally plays for less than ten years. Also, most athletes do not make it to the age of 40 before retiring, but an average person generally will not be able to retire until after the age of 60. Because of this, professional athletes tend to run out of money after only a few years of retirement. Along with short careers, these great athletes can make more money than an average college graduate will make in a lifetime. The average pay for an NFL player with an average length career will earn 3.2 million dollars (Nisen, 2015). The average American citizen in 2013 makes approximately 54,000 a year (Average, 2015). So the question is, how can these athletes with such a high income run out of money, when the rest of the country can make do with what they earn?
On average 34 percent of NBA player come from a family in poverty (Keating, 2011). As you could imagine, it could be very difficult to come from a family with very little money and then start making millions. This is the problem with many athletes. They were raised with very little, so when they start making so much, they have no money discipline and they spend it all instead of saving it.Along with this idea, many players feel that they need to provide for their family. This seems like a great idea at first, but in actuality, many players will end up with no money left over after trying to provide for an entire family.
An example of a player who came from a family with very little is Lebron James. Lebron is one of the best players in the NBA and some even say he is the greatest to ever play. Lebron James could easily be considered an idol for many youth basketball players but what many people do not know about him is he grew up in an inner city and in poverty. He is a good example of how players can come from nothing, but can also keep ahold of his money. In 2013, Lebron James won the NBA finals MVP and in his speech he stated “I’m LeBron James. From Akron, Ohio. From the inner city. I am not even supposed to be here,” (Manfred, 2013). It is great that someone who is such a big role model to so many people can be a good example, but that is not the case for all.
Even athletes who do not have a grim financial background can find themselves in money trouble simply because of wasting every penny they own. In the case of Vince Young, a retired NFL player, he was signed to a 58 million dollar contract and played for 6 years in the league. After retiring he was known for spending 5,000 dollars a week at the cheesecake factory and buying 120 seats on a commercial airline. After only a few years out of the league, Young is completely out of money and has no way of making more (Murray, 2012).
Many of the high paid athletes are so good in college, many will leave before they have even graduated. This is obviously an issue because after they retire they are left with no means of making money other than with brand deals. This just progresses the issue even further. The athletes who do have large prospects in a professional career also tend to spend more time focussing on their sport rather than their school work, so when the sports life falls out, they are left with no education to carry them through the rest of their life.
Athletes also have a high risk of losing their career in a split second. While playing a sport such as football on such a high level, it is not uncommon for players to have injuries, and many of them can put them out of the game forever. If this is the case, and the player has not set money aside for the unknowns of tomorrow, they could be left in a situation where they have to find a new way of obtaining money. Besides injuries, there is always a chance that a player could lose a contract or not have their current one renewed. If this happens and another team does not pick them up, then they are out of a job with nothing they can do about it.
Professional athletes can also lose a lot of money in legal situations such as divorce. Everyone knows that legal fees can drain a ton of money, so it is not surprising that many players can end up growing broke after getting divorced. Along with divorce, child care payments can add up to huge amounts of money that these professional athletes were probably never expecting to have to set aside money for.
One of the biggest ways that professional athletes lose money is through taxes. Nicknamed the “Jock Tax”, players from the three largest sports in the US are subjected to paying income taxes in every state they play (Callahan, 2015). For the NFL, which has the fewest amount of games a season, a team will normally play at least 6 games at an away stadium. But for the other three sports, an NBA and NHL team both play around 82 games a season, and the MLb plays around 162 games, so if you figure about half are away games, and there are stadiums in nearly every state, this income tax could be gigantic.
Hundreds of these great athletes have endorsement deals with companies such as Adidas, Nike, or Wilson, which could bring in even more money for these players, but once an athlete retires, if they are not truly one of the greatest in their sport, their deal is probably going to die. Also, as stated above, players can find their careers ending at any minute between injuries and expired contracts. So just as quickly, their brand deals can end right along with their career.
Many of the issues that cause these great athletes to run out of money can be solved by one simple investment, a financial advisor. These advisors have helped many athletes across all sports save money and watch out for bad deals. Many financial advisors will assist players in looking out for what decisions will have to be made, and what the best path is for them to follow (Who Is Qualified, 2015). Since many professional athletes were raised in poverty and have poor money handling skills, having a financial advisor could help steer their investments and make sure to put money away too have for later in life.
Some have argued that financial advisors are only focused on making themselves money and not actually protecting the interests of their clients. Although this is rare, it can happen, which is why athletes with high incomes need to make sure that they are investing in a reputable advisor. Along with that, they should not be sitting back and letting their advisor do all the work, but they should be apart of what is going on with their money.
Another way professional athletes could prevent losing their wealth is by simply saving it. Many high level players will be making more money than an average person will ever make in their entire lives. If they simply put aside some money to save and have for the rest of their lives, they could easily never work another day in their lives. There are many instances where a professional athlete such as Curt Schilling, a MLB pitcher, who made over 112 million dollars find themselves bankrupt in a matter of years after retiring because of wasteful spending (Callahan, 2015).
A problem with many professional athletes and their money comes into play with their ego. Many professional athletes feel the need to prove to their teammates and all their followers that they have so much money and they can spend it on whatever they want. This, of course, just furthers the issue of them not saving money. If these players could let their ego go and just focus on the long term and not what everyone thinks of them, they would be much better off in the future.
If professional athletes could find ways to set up brand deals with popular companies and keep themselves in good light, it is possible for the athletes to hold on to their deals even beyond their retirement. For instance, Michael Jordan retired in 2003 from the NBA, but because he was such a good athlete and had very few problems, he has been able to continue his brand even to this day with Nike.
Athletes often find themselves in a situation where they have to sell all of their belongings just to be able to pay off their debt. So not only will they have no money, they also will not have anything else left in their life. In the case of Shilling, he had to sell “all that stuff to pay the banks back” and had nothing left, “It sucks” he remarked to boston Globe (Callahan, 2015).
So many professional athletes go broke a year and so much of it can be prevented by simply saving money and investing in smarter things. With theses players having such a following, they should do a better job of keeping everything in line and setting a better example. It is not hard to imagine how easy it would be to live a life with that much money, yet so many who do, cannot hold onto it.
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http://time.com/money/3821404/nfl-players-retire-bankruptcy-life-expectancy/Tags: Okemos High School