Author Topic: 78% of NFL players file for bankruptcy within 5yrs of retirement.  (Read 6382 times)

KingCoin

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That professional athletes are bad with money comes as no revelation, but these statistics are pretty shocking nonetheless. I guess it underscores the fact that high earning is less important than low spending.

http://www.businessinsider.com/professional-athletes-going-bankrupt-2013-2

mm31

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #1 on: February 28, 2013, 02:17:43 PM »
It's astounding the number of things that can go wrong with athletes and finances. That and the fact that an average career lasts of 3 years (NFL) pose a great challenge.

jdoolin

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #2 on: February 28, 2013, 03:11:14 PM »
So like... where can I apply to be a financial advisor for NBA players?

I'll take on 10 clients and charge 1% of their salary for the duration of their career then I'll call it quits.

KingCoin

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #3 on: February 28, 2013, 03:26:36 PM »
So like... where can I apply to be a financial advisor for NBA players?

I'll take on 10 clients and charge 1% of their salary for the duration of their career then I'll call it quits.

I suspect that most of these guys aren't overly receptive to advice. If you exist in an ultra-competitive alpha-male environment, showing up to practice in a 2007 Corolla would take a serious act of contrarian will.

If the lifetime earnings of an NFL player is $6.6mm, call it $3.3mm after all is said and done, that allows for about 100k draw down per year. Most of these guys are living way, way beyond that, making bankruptcy almost fait accompli.

DebtDerp

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #4 on: February 28, 2013, 05:48:05 PM »
There is an extremely revealing ESPN documentary on this very subject. It tries to get to the root of the problem which is pretty much that sports throw obscene amounts of money at young people who have often never had a dollar in their life. They have no idea how to manage the money and think that it can last forever. Most of the time they end up in bankruptcy as the article above suggests. It's actually quite incredible how bad the problem is and how wasteful it is.

http://espn.go.com/30for30/film?page=broke

ExBex

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #5 on: March 01, 2013, 08:49:04 PM »
Funny.  I just watched this documentary yesterday on Netflix and thought it was perfect for this forum!  I thought it was a very well done piece. 

The players interviewed were very forthcoming and seemed humbled by their experiences.  They discuss a number of the reasons, but I wasn't left with the impression that they were blaming these outside factors.  There was an amazing amount of responsibility taken. 

Highly recommended. (If you can stomach hearing about such gross wastefulness!)

Kriegsspiel

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #6 on: March 01, 2013, 10:38:53 PM »
So like... where can I apply to be a financial advisor for NBA players?

I'll take on 10 clients and charge 1% of their salary for the duration of their career then I'll call it quits.

I suspect that most of these guys aren't overly receptive to advice. If you exist in an ultra-competitive alpha-male environment, showing up to practice in a 2007 Corolla would take a serious act of contrarian will.

If the lifetime earnings of an NFL player is $6.6mm, call it $3.3mm after all is said and done, that allows for about 100k draw down per year. Most of these guys are living way, way beyond that, making bankruptcy almost fait accompli.

Well hey, Lebron was biking to the stadium last I saw.

mm31

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #7 on: March 01, 2013, 11:03:56 PM »
a lot of these guys also simply get bad advice and even get fleeced by their "financial advisors". I think it's really hard to focus on making sound financial decisions when you lack the focus and knowledge to do so.

strider3700

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #8 on: March 03, 2013, 09:30:27 AM »

Well hey, Lebron was biking to the stadium last I saw.

Jerry Rice got in trouble for running to the games back when he played for the 49ers.  Apparently he'd do an hour jog to the game, warm up play the game then run home.

expat

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #9 on: March 03, 2013, 03:37:36 PM »
I think divorce settlements/alimony and child support do a lot of these guys in. It also doesn´t help that they often have several kids with several different mothers.

Consider New York Jets player Antonio Cromartie who at 28 has 10 babies with 8 different women. Since he is still playing and has income coming in he is fine. But in a few years when his career ends he will still be on the hook for child support for 10 kids, so I suspect he is definately going to be bankrupt post NFL retirement.

spider1204

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #10 on: March 03, 2013, 06:44:05 PM »
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But in a few years when his career ends he will still be on the hook for child support for 10 kids, so I suspect he is definately going to be bankrupt post NFL retirement.

This brings up something I've always wondered about, especially with the ERE mentality, how do they determine how much you owe for child support?  Is it based on your income, or how much it actually costs to raise a child.  If it was income based and calculated during your working years, can you get it adjusted when you ERE?

ncornilsen

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #11 on: March 04, 2013, 12:08:55 AM »
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This brings up something I've always wondered about, especially with the ERE mentality, how do they determine how much you owe for child support?  Is it based on your income, or how much it actually costs to raise a child.  If it was income based and calculated during your working years, can you get it adjusted when you ERE?

Not sure. But you're responsible for providing a certain level of material support for your offspring. ERE is no excuse to stiff one's child regardless of what the law says you must pay. I have no bead on how much that is, though.

LowER

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #12 on: March 04, 2013, 07:08:00 AM »
Child support is based on income.

spider1204

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #13 on: March 04, 2013, 07:23:40 AM »
Quote
Quote
This brings up something I've always wondered about, especially with the ERE mentality, how do they determine how much you owe for child support?  Is it based on your income, or how much it actually costs to raise a child.  If it was income based and calculated during your working years, can you get it adjusted when you ERE?
Not sure. But you're responsible for providing a certain level of material support for your offspring. ERE is no excuse to stiff one's child regardless of what the law says you must pay. I have no bead on how much that is, though.

No of course not, but obviously most of the world has a much different view on how much it costs to support themselves and they most surely have different views on how much it costs to raise a child.  Apparently it is income based, and so making 65k before taxes, you'd be ordered to pay 18k after tax which just seems a little ridiculous when you've got 3 people living quite the luxurious lifestyle on just 25k.  I'm sure little MMM doesn't cost 18k.

Alan2

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #14 on: March 04, 2013, 07:30:55 AM »
The same bankrupcy thing happens with English football players as well.

http://www.thetimes.co.uk/tto/sport/football/article3704753.ece?CMP=OTH-gnws-standard-2013_03_03

Most of the article is behind a paywall, but you can get the gist from the first few paragraphs.  Sounds as though it's probably a generic problem with all richly paid top level athletes.

strider3700

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #15 on: March 04, 2013, 09:02:20 AM »
In my opinion pro athletes are not much different from lottery winners. Yes they did have to work at it harder and for longer then paying a couple of bucks for a lotto ticket but the result is the same.  They're poor, they're poor,  Bam they're rich beyond their wildest dreams.   Nothing prepares you to know how to handle a change like that.  I'd guess you could add musicians and movie starts to the same class.

momo

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #16 on: March 04, 2013, 01:18:30 PM »
In my opinion pro athletes are not much different from lottery winners. Yes they did have to work at it harder and for longer then paying a couple of bucks for a lotto ticket but the result is the same.  They're poor, they're poor,  Bam they're rich beyond their wildest dreams.   Nothing prepares you to know how to handle a change like that.  I'd guess you could add musicians and movie starts to the same class.

Completely concur. The thing is with athletes and celebs I actually do not empathize with their financial implosions. Unlike many of the working class athletes and celebs have access to resources most of us rarely can access. However like us their CHOICES can define their lives. I feel if highly paid athletes are proactive and somewhat humble they can amass and keep a fortune to comfortably live on for generations. Sure the odds are stacked against athletes who suddenly came into millions. Often times they become targets for unethical financial advisors who do not act as fudiciaries and/or they voluntarily enter into business ventures they may not fully understand. However, at the end of the day it is still their decision on the lifestyle they lead (regardless if they can actually afford it or not) and the buck stops must with them.

On a related note here are 9 of the Most Financially Irresponsible NBA Players in History http://bleacherreport.com/articles/1085063-the-9-most-financially-irresponsible-players-in-nba-history

Does it take an Ivy League MBA graduate to understand, one day the money will run out? Sooner or later the individual will face the reality they created of their own chosing. Until they take an active role with their finances, they will always be in the dark and increase the chances of failure.

For every athlete that runs out of money and declares bankruptcy there are a few that buck the trend. There was one particular NBA player featured in a financial magazine who did this and it is really interesting to hear his own words. Unfortunately I cannot locate the article or recall the player. I just recall a few things he was college educated and graduated and originally did not plan on going into the NBA. I think he was studying business and he might've been with the LA Lakers. If anyone knows post up the article to share. Thanks.

Lastly, not sure if this was previously mentioned but it is also interesting to note that the NBA is already forcing players to save towards retirement. http://www.bloomberg.com/news/2012-07-12/nba-players-forced-to-save-toward-retirement-for-first-time.html and still players have a hard time controlling themselves.
« Last Edit: March 04, 2013, 02:44:05 PM by Stashtastic Momo »

DoubleDown

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #17 on: March 04, 2013, 01:30:07 PM »
Child support is based on income.

HOWEVER...

If you are "voluntarily underemployed" (as in, early retirement), the court will still impute income at the level you previously earned. Meaning, the child support payments will not go down. It doesn't matter that you have determined you can cut costs, live on less, and quit work. You will still have to provide support (alimony and/or child support) at the level your ex-spouse has become "accustomed." It is a completely perverse incentive against financial independence/early retirement.

spider1204

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Re: 78% of NFL players file for bankruptcy within 5yrs of retirement.
« Reply #18 on: March 04, 2013, 02:15:50 PM »
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HOWEVER...

If you are "voluntarily underemployed" (as in, early retirement), the court will still impute income at the level you previously earned. Meaning, the child support payments will not go down. It doesn't matter that you have determined you can cut costs, live on less, and quit work. You will still have to provide support (alimony and/or child support) at the level your ex-spouse has become "accustomed." It is a completely perverse incentive against financial independence/early retirement.

Not that I ever plan on being in that situation, who does, but that's what I was afraid of.  It seems especially insidious when your talking about athlete's that really only a very short career, although I guess they are probably no longer considered underemployed when they get knocked out due to an injury.  So glad my parents were reasonable about the whole custody thing.