Categories: Bankruptcy

Broke Ballers and Filing for Bankruptcy

You don’t need me to tell you how many talented sports stars have earned multimillion dollar salaries and then, sometimes even before their career was over, ended up filing for bankruptcy. A 2009 article in Sports Illustrated estimated that 78 percent of NFL players and 60 percent of NBA players file for bankruptcy within five years of retirement. It can certainly seem that the money is never going to end, but in truth a career in sports takes an incredible toll on one’s health, with football players bearing the brunt of injuries – including concussions leading to Chronic Traumatic Encephalopathy.

Add to this a culture in which rookies are encouraged to spend for extravagant food and drink in order to impress each other, as well as veteran players, women, and other celebrities. There are also the expectations of family and friends that the player will take care of them, as they see themselves as having taken care of the player during his childhood and school years. There is also the failure during the high school and college years to encourage any type of financial literacy to young athletes on the career track.

They trust their managers, they trust their agents, they trust their family, and they trust their friends. In addition to living beyond their means, the promiscuity can lead to multiple actions of child support from multiple women. All of these factor leaves athletes in a uniquely vulnerable position with regard to learning bad spending habits, and failing through a lack of financial literacy and caution to protect themselves. As Danny Schayes, a career NBA player from 1981 to 1999, is quoted as saying, “Guys go broke because they surround themselves with people who help them go broke.”

However, important steps are being taken to help entertainers and athletes manage their finances and save for the future. Morgan Stanley formed their Global Sports and Entertainment Division to help young players understand the long game. It’s easy to think when you’re young that the money and the game will go on forever. Morgan Stanley recruited senior players to reach out to these younger players and put a face on the future. Drew Hawkins, who heads up the unit, works former pro athletes Antoine Walker and Bart Scott to bring the message home to younger players. Starting at the college level, Hawkins and his team of senior athletes reach out to younger players who are most likely to go pro and begin teaching financial literacy. He also reaches out to entertainers, who often make spectacular sums of money only to lose it in many of the same ways.

Financial education should not start just before you hit the big time, it should be a part of your education from the time you are a young child. The failure of schools to teach students critical reasoning and financial literacyleads to serious consequences down the road. Instead of arguing about Common Core, AP studies, and what kind of religious instruction to allow in schools, we need to add life skills that will serve students as they grow into adulthood – whether or not they’re playing for the Heat.

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About Chad Van Horn

Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn

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