The beautiful, the strong, and the successful: These three adjectives are commonly used to describe star athletes nationwide, whose appearances fatten their bank accounts with millions of dollars multiple times per year. Whether it’s talent or a lifetime of training, famous athletes rapidly become household names for their prowess and riches. However, the heights of wealth are a precarious place to be in – and falling down hurts.
The latest hit series from HBO, Ballers, shows a seemingly whimsical story: a former star footballer turned financial adviser picks new clients – his colleagues from the field, busy hemorrhaging money to hangers-on, luxurious lifestyle, and plenty of poor financial decisions. As whimsical and hilarious as it may appear, it is the unfortunate reality for a great many sportsmen.
Just how many? Across the three largest sports leagues in the United States – NBA, NFL, and Major League Baseball – you can expect that within two years of retirement, roughly four in five players will wind up in major financial trouble or outright bankruptcy. After five years from retirement, three out of five will have burned through the money they earned during their career.
Of course, when star athletes lose millions it’s not limited to just basketball, baseball, or football. It happens regardless of sport discipline, with one of the most high profile examples of financial failure being the Iron Mike. Though he earned close to $400 million over the course of his career, he wound up declaring bankruptcy in 2003. As it turns out, Siberian tigers, six figure jewelry, and mansions in Vegas are not a sound investment strategy.
There are a variety of factors that contribute to such a high incidence of financial failure among the high earners. Key among them is misguided confidence – excellence in sports does not automatically mean excellence in management, finances, or judging character. Athletes tend to trust the wrong people with their money with disturbing regularity. The result? Disreputable financial managers cost 78 NFL players over $42 million dollars between 1999 and 2003 alone.
That being said, it’s not difficult to understand why they chose to thrust people who make great promises, but ultimately fail to deliver. Finances are complicated and formulating a sound strategy for long term survival requires a lot of thought and familiarizing yourself with a lot of arcane-sounding terms and mechanisms. Faced with this prospect many choose to sidestep the issue altogether and pass responsibility along.
Though the extreme numbers might make these problems look like they only apply to the rich and famous, they are a very real concern for you and your finances, regardless of how many figures you need to write down your annual income. Treat the stories of bankrupt stars as advice. Consider how much money you really need to spend to get what you need and make the most of it. Don’t overestimate your ability to understand finances and ask professionals for advice.
And when you do ask for advice, never trust someone based purely on instinct, family ties, or friends’ recommendations. Devote time to explore your options and pick someone who’s truly the best – rather than simply claiming to one.
At Van Horn Law Group, we understand mismanagement of money happens, even if you aren’t a star athelete. We are here to help you find financial freedom from debt, and it starts with a free case evaluation with our attorney.
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