10 Reasons Athletes May Go Broke Include Poor Counsel
1) Gross vs. net: It never fails; when my clients get their first NFL check they call me and say something is wrong. They are floored by how much is taken out for taxes and other deductions. Unfortunately, the shock doesn't resonate long enough. I would say 90% of players have some type of direct deposit or their check gets mailed to their investment advisor and the players never see the net amount. Thus, they think they always are making more money (in gross numbers) than they actually are.
2) It comes too easy and too fast: First it's a college scholarship, cash from uncles during college, advances and stipends from agents and financial advisors. A large signing bonus before the first snap in camp and making a team. When money comes fast and easy for a young man the assumption is life will always be that way. Players can easily develop a false sense of value of themselves. Many think that starting a profitable business or landing a high paying six figure cushy job will be easy after football. Why not, everything else came easy right? Wrong! Players have a rude awaking when they can't even land a coaching job after their career ends and don't properly prepare for starting a second career.
3) The cost of vanity: I tell my friends that if I opened a specialized rim shop serving pro athletes, instead of being an agent, I would be a rich man. The same goes for custom jewelry. Unfortunately, I noticed that many athletes associate wealth with material possession. So they feel like the more they have, the richer they are. I would say 90% of all athletes are getting ripped off on auto and jewelry purchases. I had one client have a watch appraised that he thought was worth over the $20,000 that he paid for it. The appraiser valued it at $1,500. The diamonds he thought he had on the watch weren't real. I did it to teach him a lesson. The obsession to have the latest and greatest toys, the biggest house, the newest car(s) and most expensive clothes is probably the number one wealth killer for professional athletes. As I always say, "rich people have things, wealthy people have investments".
4) Weak financial counsel: What I mean by this is that most financial advisors, accountants and confidants http://www.seahawksauthenticofficialshop.com/BOBBY_WAGNER_SUPER_BOWL_JERSEY.html I met and observed over the years don't have the fortitude to stand up to their clients in fear of losing them. If they ride their clients too hard about spending the athlete may just fire him or her. So they tend not to make the hard calls and put their foot down on spending patterns. For many consultants, it's a race to invest the players' assets before they spend it. Consultants who take their time to educate, communicate and have a way of helping players control spending get an A+ in my book but they are few and far between.
5) Bad investments: There are some intelligent football players who made some really bad investments. The problem is usually compounded when they make a big bet with the majority of their savings on real estate or a business. In addition, many of them sign personal guarantees on loan deals in addition to the investment.
6) Guilt and the family: It's amazing the number of NFL players who come from single parent homes. Many grew up with the help of the entire extended family, who is usually poor. When all resources are shared in helping one another, things are copasetic. However, when the athlete starts earning there is a feeling of guilt and a desire to help those who helped him. Unfortunately, it's never just a one time event. Once the pipeline of fiscal aid is spread about it's hard to turn the faucet off. It's difficult to say "no" to the brother who is about to lose his house or the uncle who is behind on the car payment. There are ways to help the family but there is usually not a realistic plan in place to do so. I have a client who paid off his parent's home loan of $200,000 to find out two years later they refinanced and borrowed $150,000 against the house that was once free and clear of any debt. Of course they got behind again in their payments and Russell Wilson Super Bowl Jersey had little to show for the $150,000 they spent. And of course, my client was upset but he paid it off as well. After all, it's mom and dad.
7) A few more years: Just ask any retired player if he thought he would play at least one or two more years and I promise you 90% would say "yes". In thinking they will play a few more years they feel more money will come that they have earmarked to save.
8) Divorce: 50% gone! When a player retires he goes from having a structured environment (which he has had his whole life), status, fame and a steady income, to trying to figure out how to add value to the household that worked around him and his routine for the last several years. He will struggle with developing a role in his own family, the workplace and society. A lot of athletes get depressed and a near majority of them hideout in a bottle and/or on the golf course. No longer the breadwinner, many wives of NFL players have told me they feel like their husband is another child they have to take care of. Many of these situations end in divorces with no prenuptial in place.
9) Living above their means: I constantly remind my players that their peers are the people that they graduated college with not the guys in the locker room. Any amount of monies made above your peers should be saved, invested and allocated for future needs. It's okay to live in apartment for three years before buying a house and two cars. However, the locker room becomes the peer group and once many athletes taste the sweet life it's difficult to go backwards.
10) Keeping up with the vets: One phenomenon that hits most rookies is the desire to keep up with the vets. They see how the vets live and usually emulate their life styles. Many vets are into their second contract; usually a large one, but the rooks feel like they need to drive the same cars, wear the same clothes and own similar jewelry. Making all the classic mistakes listed above starts the player off by borrowing from the following year. Once this pattern starts its hard to stop. Many players feel they will get ahead on their next deal that for many may never come. For others, when the next deal does come the degree of spending just increases. One of my former clients just told me his buddy owns a Bentley dealership (in a southeast city) and four NFL players from his market have pre ordered $350,000 cars.
These ten reasons why players go broke are indeed elementary and the only thing that can curtail the pattern is on going education, intervention, and constant counseling of basic life skills.
Terrell OwensEx Bengals wide receiver Terrell Owens has been out of work since 2010 and is struggling to maintain his finances, shelling out $44,600 a month to pay child support for his four children, each by a different mother. In February, it was reported that Owens was facing foreclosure on multiple properties.
Allen IversonAfter the Philadelphia Inquirer reported in 2010 that Iverson was broke "by all accounts except his own," Iverson situation only got worse when his earnings Marshawn Lynch Super Bowl Jersey were garnished by a Georgia judge over an outstanding jewelry bill.
Lenny DykstraWorld Series www.seahawksauthenticofficialshop.com/RICHARD_SHERMAN_SUPER_BOWL_JERSEY.html winning center fielder Lenny Dykstra has had a catalog of money woes since retiring, despite at one time founding a magazine, Player's Club, to provide professional athletes with investment advice. He's filed for Chapter 11 and has been charged with bankruptcy fraud.
Travis HenryEx NFL star Travis Henry was thrown in jail in 2009 for failing to fully pay child support for his nine kids, each by different mothers. On top of cocaine trafficking charges, Henry has spent $250,000 on jewelry alone which he says "ain't a lot."
Mike TysonDespite making between $300 and $500 million during his career, boxing legend Mike Tyson filed for bankruptcy in 2003 due to a number of reasons, including alleged embezzlement from manager by Don King, a $16 million marriage settlement and lavish spending on everything from pet tigers to mansions.
Dorothy HamillGold medal winning figure skater Dorothy Hamill found herself Marshawn Lynch Super Bowl 49 Jersey in financial strife just a few years after purchasing the Ice Capades franchise. After a subsequent poor investment in an Arizona ice rink, she declared bankruptcy in 1994.
Antoine WalkerFormer Boston Celtics star Antoine Walker blew through the $110 million he made playing in the NBA in just about every way conceivable. He spent lavishly on himself, but also is said to have supported up to 70 people during his career, including buying his mother a mansion, donating to charity and buying custom suits for teammates and coaches.
Bjorn BorgSwedish tennis legend Bjorn Borg has had a series of financial woes ever since he abruptly walked out on tennis in 1983 at the age of 26. His company Bjorn Borg Design Group filed for bankruptcy in 1989, and years later Borg attempted to sell his collection of championship trophies to an auction house, though he denies it was because of financial troubles.
Marion JonesMarion Jones, who won five track and field Olympic medals, saw her finances drained primarily due to legal fees associated with allegations of performance enhancing drug abuse and a connection to a checking fraud case. Her $2.5 million house was foreclosed on in 2006, and one year later it was reported her bank account's total balance was down to just $2,000. The year after that she was sentenced to 6 months in prison.
George BestNorthern Ireland soccer player George Best is known as a legend in many parts of the world for his fancy footwork on the field, but not so much for his financial skills. His appetite for spending ultimately led Russell Wilson Super Bowl 49 Jersey to his downfall. "I spent a lot of money on booze, [women], and fast cars. The rest I just squandered," he once told the BBC.