"Broke"

Tonight I was watching ESPN 30 for 30.  This was a particularly interesting episode because it talked about the finances behind athletes and how many of them spend all of their money and go broke.  This is an overview of the episode.  Many athletes come from poor families that do not deal with large sums of money.  

Sean Salisbury, a former NFL player, said "I made more money in one check than my father made in three years."  This was a man who had grown up with little money and was now given more money in the form of one piece of paper than his father had made in three years.  Athletes just don't know what to do with their money.

When they rise to stardom, they are bombarded with constant business deals and endorsements.  About 1 out of every 30 or 40 of these deals is actually successful where the athlete gets their money back.  Almost all the rest of them fail and all money is lost.  Straight out of college, these athletes do not have experience with money. They hire agents to try to help them with their money, but some of these agents are hindrances.

Agents generally take 10% of a player's contract and sometimes deal with all the money a player obtains.  This means expenses, taxes, insurance, and mortgage.  Unfortunately, many of these agents are scammers.  One agent stole 5 million dollars from one player and did not file his taxes so the IRS knocked on his door asking for 1 million dollars.

In order to prevent this, agents hire financial managers to help them create a budget.  Although financial advisors are more reliable, some are still scammers.  Michael Vick's financial advisor was running a ponzi scheme from her house and Vick was out 6 million dollars.  Athletes are naive and with the rapid increase in salary over the recent decades, athletes have more money to spend.

The word "Broke" refers to the fact that 3/4 of NFL players are under financial stress or have gone bankrupt two years after they retired.  This stat is amazing.  These players cannot stop spending and when their career ends, they have no source of revenue.

Due to player's egos, they always want to have more than their counterpart.  This is why many athletes wear chains and bling bling to demonstrate their worth.  It is a matter of "anything you can do, I can do better".  Athletes are spending upwards of 1 million dollars on jewelry alone.

In these times, many people only worry about money and will do illegal things to take advantage of the naive.  America needs to better educate young athletes about the dangers of the financial world.  Athletes need to budget their money and not feel the need to spend compulsively.  The average NFL career length is 3.5 years.  Players that spend their money between paychecks will be broke the second they retire.  Obviously it is up to the players to make smart financial decisions but with all the media attention, it's tough not to show off the money you have.  Players need to worry about their own money with the help of others instead of others doing the work for the players.  Otherwise the bankruptcy will continue.  The American identity values fame and fortune, but not when it leads to bankruptcy.

Why do you think agents steal money illegally from the players?  How do you think players can manage their money better?  And why do you think they have this urge to spend all their money?  Please leave comments below.

And in the words of the great Biggie Smalls, "Mo Money, Mo Problems"