Author Topic: 90% of NFL players are poor within 10 years  (Read 4639 times)

mushroom

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90% of NFL players are poor within 10 years
« on: May 05, 2013, 07:14:50 AM »
http://www.gq.com/news-politics/newsmakers/201304/nfl-mba-program?printable=true

The article states that the average NFL salary is 1 million/year, but I imagine that the median salary has to be a lot less than that. In any case, I doubt that an MBA degree is what's preventing the players from keeping their money.

Mr Mark

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Re: 90% of NFL players are poor within 10 years
« Reply #1 on: May 05, 2013, 08:58:32 AM »
Sounds like they could do with a union pension plan! And vanguard...

GreenGuava

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Re: 90% of NFL players are poor within 10 years
« Reply #2 on: May 05, 2013, 09:19:43 AM »
This program strikes me as a bit absurd, but if it helps some of them, great.  I'd prefer they be assigned to read some books about money management - not even investing, just simple personal finance.  Maybe The Millionaire Next Door.  But then again, I don't work for the NFL.

A great many of these players grew up in families that weren't great at financial management.  All of a sudden, they have a lot of money - and they spend it.  This isn't uncommon with people (typically poor) who come into a large income, and out it goes.

Also, while the average player makes $1.1M, and only lasts 3.x years, this doesn't mean those players exiting early are making over $3M.   There are a ton of players making rookie minimums (the New England Patriots alone just signed over a dozen undrafted free agents);  that $1.1M average per year is greatly inflated by the contracts of superstar players:  Joe Flacco, Aaron Rodgers, and Tony Romo recently signed huge contracts;  Peyton Manning did the same a year or so ago, as did Mark Sanchez.  This isn't limited to quarterbacks, either, and there are plenty of players in other positions dragging that average up significantly (Larry Fitzgerald, Vince Wilfork, etc).  There are also plenty of players with fairly long careers (not just Brett Favre) dragging up that 3.x year average.

So you have guys who grew up without really learning money management.  The NFL tries to educate them on this, but when their parents, siblings, relatives that have come out of the woodwork, friends, and other hangers-on are telling them all these cool things they can spend their money on, what do you expect? 

That's not to say the superstars don't have financial problems - plenty have bad investments.  If you don't know how to filter investment advice, you're liable to give it to some silver tongued salesman.  Heck, there are probably several people on this very board who have received these solicitations - next time you get one, imagine how it sounds if you didn't know what you know about money.

To top it off, they have to be in the league some minimum numbers of years to be fully eligible for lifetime benefits from the league.  The ones who just aren't good enough don't get to this benefit level.  Hopefully they paid attention in college and got a degree.

That's not to say there aren't players who are good with money.  Carson Palmer comes to mind - IIRC, he allows himself $100,000 per year of spending money (debate topic: is that or isn't that mustachian, given his income?).  He, like many of us, had a job he didn't like, but because he had sufficient money saved and didn't need the income, was able to effectively quit and go looking for another one.  Due to NFL rules, he couldn't just shop himself around, but he was able to force a trade from the Bengals to the Raiders.  And now he's with the Cardinals, where I wish him the best of success (his $100,000/year allowance will go much further in Phoenix anyway).   Another that comes to mind is Alfred Morris, the Redskins' rookie running back this past season who still drives his mid-90s Mazda 626 that he bought for $500. 

CALL 911

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Re: 90% of NFL players are poor within 10 years
« Reply #3 on: May 05, 2013, 10:24:01 AM »
Exactly. The "average" NFL player struggles to read (let alone understand) his contract, never heard of FICA and thinks he just got unlimited wealth. Hedonic adaptation is very prevalent in these circles as well.
"Hey, he just got a (Bentley, Ferrari, Range Rover, mansion), and it's sweet! I'm rich (making $450k) so I can too! And they do. Then they get cut, and all they have left is a bum knee and a depreciating car they can't afford to insure. A few years back, Denver had a running back they cut after a couple of seasons named Bell. Then all of their backs got hurt. They found Bell again working at cell phone store in the Aurora mall. Not owning - working at. He had a paid off house worth $400k, a paid off Benz (cost $90k) and that's it. Sadly, I applaud his level of saving, given his profession. At least he had a house. Most don't even have that, but if he had been mustashian, the job would have been unnecessary.
As an aside, it doesn't help that the average salary and time frame mentioned here are dragged up by the Peyton Mannings and Champ Baileys. The medians are much smaller as pointed out.

foobar

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Re: 90% of NFL players are poor within 10 years
« Reply #4 on: May 05, 2013, 02:06:54 PM »
The average career in the NFL is something around 3 or 4 years for most guys. That is 1 or 2 million dollars of which a good chunk is taken by agents and they do end up with some other expenses (personal trainers, tax accountant to file in all 8+ states or so where they owe taxes) that normal people don't have. I can totally understand why those guys go broke.  They might only be netting 800k or so over 4 years which is a lot of money but not insane. Now the guys that have burned through 50+ million are nuts.

http://www.gq.com/news-politics/newsmakers/201304/nfl-mba-program?printable=true

The article states that the average NFL salary is 1 million/year, but I imagine that the median salary has to be a lot less than that. In any case, I doubt that an MBA degree is what's preventing the players from keeping their money.

Roy

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Re: 90% of NFL players are poor within 10 years
« Reply #5 on: May 06, 2013, 03:17:49 AM »
It reminds me of the pattern you see with lottery winners who get lump sums. Most of them go broke too.

Most come from poor families, poor neighborhoods, having no money. When they get a contract, every relative, friend and dirtbag who can get near them them is suddenly trying to get money out of them because...it got announced on the news that they got a $1M contract or whatever. Once they give a little money to a few people, everyone they ever knew thinks they are an ATM machine.

Half of their money is gone in taxes, their agent gets a cut, etc. As the players realize they do not have "enough" money, they get desperate to earn MORE money. They become vulnerable to con artists giving them "opportunities to invest" in what they promise are deals with huge returns, but end up being scams. This is why you hear about them investing in some of the dumbest things around.

The NFL/player's union does try to fight this. Every new player has to go through a few days of orientation, including "financial education", but they generally do not take it seriously and sleep through it. Look at it from their perspective: They just went from poor to "rich", now you are going to tell them how to spend their money? They did not get to be some of the top athletes in the world by sitting in classrooms, they are not going to have a lot of respect for "book learning".

It is all kind of sad, but I am guessing they have a few years of fun along the way. :-)


Ultimately, there is always a limit on how much money you can bring in, but your ability to spend has no limits.
aka: "You can't out-earn your stupidity."
I wish governments would learn that.

Rich M

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Re: 90% of NFL players are poor within 10 years
« Reply #6 on: May 09, 2013, 08:46:51 PM »
I'm actually watching "30 for 30: Broke" right now.  Watch this and you can definitely see why.

The classic fails:

--Ignorant about money.
--Ego spending.
--The star effect.
--Drugs.
--Exuberance.
--Bad investments due to ego.