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I don't even have money for a Cheeseburger" Allen Iverson, 11× NBA All Star, 2001 MVP
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I guarantee you, I spent a million dollars on Jewelry" Andre Rison, Super Bowl Champion XXXI
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Too many people spend money they haven't earned to buy things they don't want to impress people they don't like" Will Rogers, American actor
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Mo' money, Mo' problem" Antoine Walker, 3×NBA All Star, NBA Champion (2006, Miami Heat)
What do these athletes have in common? In addition to being highly regarded athlete in their respective sport, they all made a lot of money and blew it all in few years. For most of us, what happened to many athlete and their money is indeed hard to believe. While we're working really hard in our respective lives to get the better of ourselves and make sure our job will protect our family, athletes are living in a completely different world from ours.
The average
professional star athlete in the U.S. will make more in one season than most of
us earn in our entire lives. Here is a sneak peek at how much US athletes from the nation's three biggest and most profitable league (NBA, NFL,MLS) have already earned since and how the average salary in those league looks like:
Nevertheless, most of them are still losing a lot of money despite earning a lot from both their salary and their endorsements contract (take a look at my prior article about it to fully understand the amount of money involved in sport). A recent study from Sport Illustrated underscored this point: As many as 60% percent of US professional basketball and 78% of NFL players faced bankruptcy or serious financial issues within just a few years of retiring.
The question we're all wondering about? Why?... A pro athlete's money is supposed to outlive his career, isn't it? Unfortunately, most players never get that...
The aim of this article is to provide such great explanations about how athletes could blow as much money in a few span of time. We decided to focus our efforts on 3-4 main keys and go in depth to give you some advice to use from.
1) Overspending
Nowadays, more and more young athletes are entering into these league at age 19. They are not really prepared and accustomed to deal with that bunch of money. They're still young and don't even think about money. They just want to play, have fun and make great achievement.
'I went from making $210 a month in college to
roughly $100,000 every two weeks," basketball player Dwyane Wade
said once in an interview with Bloomberg BusinessWeek. What
do I do with that? You feel like, 'I’ve worked for this. I’ve earned this. It’s
mine. You can’t tell me nothing.' That was my mentality early on'.
The pride of personal accomplishment and a desire to enjoy life at the fullest can often lead to over extending oneself of cars, jewelry and houses.
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How Millionaire athletes spend their money
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There's a huge lifetime change. They lack of experience and need to be advised. That's why The leagues have stepped up financial literacy education and other programs aimed at. For instance, the NBA and the NFL stepped up with specific programs, helping rookies entering the leagues with information and resources that enable them to proactively make quality decisions and successfully adapt to the lifestyle and challenges of the NBA.
Players have to adapt themselves not only to the speed and the physicality of the game. They have to adapt their financial behaviour off the court to avoid running into big troubles and weird stuff (Appendix 1). We can't blame them for that. It’s just these guys have a lot more zeroes in their bank account all of a sudden.
2) Financial advisers
With Athletes, there's an extraordinary metamorphosis of financial challenge. Coming off college team, they haven't probably even learned about the basics of budgeting or how to keep up salary. Which then triggers two fatal mistakes:
- Hiring the wrong people as advisers
- Trusting them too far much
According to a recent story from the NFLPA (NFL players association), at east two-thirds players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds. Indeed, disreputable people see athlete's money as very easy to get to. That the advice that’s been given was done to benefit the advisor rather than the athlete.
42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds. Indeed, disreputable people see athlete's money as very easy to get to.
That the
advice that’s been given was done to benefit the advisor rather than the
athlete.
But it's also about family and key influences. When everything's going wrong, we always want to get support from our family to turn things around. They understand our needs, and have always good words to use to allow us getting better. But sometimes, in business stuff, you cannot rely too much on family.
' They hire these people not because of expertise but because they're friends or family. Well, they'll fail' Magic Johnson
Take care of your business and do trust in people who are used to go through financial stuff.
3) Investment failure
Someone could argue about the interest of this part saying that athlete made already a great amount of money to even think about invest their money on future valuable project. So, think again! The average
career span in the NBA, MLB and NFL is 4.8, 5.6 and 3.5 years, respectively: Professionals
in this industry have a small window to make their millions.
In large part because of their lack of background experience in this field, players mostly failed in trying to develop a sustainable business after retiring. When you draw a picture of the situation, it is understandable: You play roughly in between 82 and 162 games a year, you are for most of time away from your family and friends, dealing with contract endorsements, everyone's seeing you as a star, a bright one, and every single kids really want to be like you. You're not paying attention to anything other than playing. And when someone offers you a business plan to open a restaurant, it seems not flashy at all. At all.
But players take things as granted most of the time as well. That's what we call " The Superman syndrome" Here is part of an interview recorded and starred by Billy Corben, director of ESPN 30 for 30 documentary 'Broke' (link below):
'These are
guys coming from a life of being very good at one thing and constantly being
told they're very good, so they think maybe they're just as good at being a
businessman, too'
Assuming that about 50% say they don't want to work after retiring...
Divorce, lack of desire to understand and monitor their investments or unpredictable circumstances could explain as well the blowout of money from athletes. But in my opinion, players are not the only ones to put a focus on. If you were professional athlete, performing in a daily basis and dealing with so much money you ever expect for, would you be able to manage your financial career as good as you want to?
Appendix 1
Appendix 2
Appendix 3
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From stoked to broke*
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