Author Topic: Bankruptcy among former NFL players.  (Read 5875 times)

Homey The Clown

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Bankruptcy among former NFL players.
« on: June 02, 2015, 09:23:18 AM »
http://www.npr.org/2015/06/02/411406460/many-nfl-players-make-abysmal-financial-decisions-research-shows

Definitely not unique to football players among athletes. Also similar to what almost every college grad does upon getting a job, spend a bunch of money. My favorite mustachian part of the story was when the researcher said they should be saving 80% of their income. The minimum salary this year is $435,000. So they should be living on $87,000 and saving the rest to fund their post NFL retirement.

Bob W

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Re: Bankruptcy among former NFL players.
« Reply #1 on: June 02, 2015, 09:27:38 AM »
NFL = Not for long.   Those guys are complete idiots to start with.   Yeah, I get paid 800K for 4 years,  end up with brain injuries and bankrupt at the end. 

Would be so much better if the NFL required that payouts be over life.   These guys are too young, inexperienced and easily influenced to be able to handle huge lump sums.    The average player might only receive 120K per year for life.   My guess is that they would still take out loans and go bankrupt though.   

eljefe-speaks

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Re: Bankruptcy among former NFL players.
« Reply #2 on: June 02, 2015, 09:54:52 AM »
Those guys are complete idiots to start with.

The list of NFL players and ex-players who are decidedly not "complete idiots" is long.

I think NFL players are sold a dream from the time they are little kids. Work hard, be the best, make it to the NFL, and be set for life. It's an easy trap to fall into, especially considering athletic prowess is prized above education in some communities.

Only recently have all the warnings re: concussions started to get traction. It will have an effect as parents start realizing the dangers.

neil

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Re: Bankruptcy among former NFL players.
« Reply #3 on: June 02, 2015, 10:27:04 AM »
I'm not really trying to defend it, but...

http://www.cbssports.com/nfl/eye-on-football/25144070/ex-nfl-db-my-mom-said-i-owed-her-1m-after-i-was-drafted

Ok, I would probably set my mom up for life if I made it, too.  But it's not just the parents who come after you, and everyone knows what you make.  My family probably has an idea of my salary (which is nice, of course) but not my net worth (which puts me in a higher percentile).  I feel I might be probed for money more often if it was known.  Even those that understand better likely fall prey to investing in family business ventures or other things their CFAs convinve them into.  It's probably worse than winning the lottery.  I'd rather people not know.

MgoSam

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Re: Bankruptcy among former NFL players.
« Reply #4 on: June 02, 2015, 10:40:09 AM »
Or like Tyron Smith who had to file a restraining order against his mother and siblings. Apparently they kept showing up at his house demanding money.

http://espn.go.com/nfl/story/_/page/hotread141125/dallas-cowboys-tyron-smith-gets-control-battling-family-money

mathlete

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Re: Bankruptcy among former NFL players.
« Reply #5 on: June 02, 2015, 10:43:25 AM »
Yeah I typically don't blame the athletes here. A lot of these guys grew up poor and then they have a legion of hanger ons once they come into money.

It's probably hard to become a millionaire at 21 and then explain to your mom that you can't afford to buy her a car. It's even harder to come to the realization that you really don't owe her anything.

mathlete

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Re: Bankruptcy among former NFL players.
« Reply #6 on: June 02, 2015, 10:44:36 AM »
Also NFL players get hosed.

The NFL is the most popular sport and yet they don't have guaranteed contracts. Their union sucks. They should take note from the NBA players and MLB players. Those guys got much better deals.

eljefe-speaks

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Re: Bankruptcy among former NFL players.
« Reply #7 on: June 02, 2015, 10:57:09 AM »
Also NFL players get hosed.

The NFL is the most popular sport and yet they don't have guaranteed contracts. Their union sucks. They should take note from the NBA players and MLB players. Those guys got much better deals.

Not to mention how badly they were already hosed at the collegiate level.

MgoSam

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Re: Bankruptcy among former NFL players.
« Reply #8 on: June 02, 2015, 11:40:12 AM »
Also NFL players get hosed.

The NFL is the most popular sport and yet they don't have guaranteed contracts. Their union sucks. They should take note from the NBA players and MLB players. Those guys got much better deals.

I don't dispute this, but what I wonder is that even if they were given guaranteed contracts, would they be any better at saving their money or making it last?

Psychstache

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Re: Bankruptcy among former NFL players.
« Reply #9 on: June 02, 2015, 02:20:07 PM »
Also NFL players get hosed.

The NFL is the most popular sport and yet they don't have guaranteed contracts. Their union sucks. They should take note from the NBA players and MLB players. Those guys got much better deals.

I don't dispute this, but what I wonder is that even if they were given guaranteed contracts, would they be any better at saving their money or making it last?

I do think it is interesting that the sport with the most powerful player union that has established the best pension system and 100% guaranteed contracts has the lowest rate of bankruptcy (MLB). I suspect that having to survive for a few years in AA and AAA ball where you make peanuts helps.

The ESPN 30 for 30 "Broke" goes into these issues. It is a pretty fascinating documentary if you are interested in this particular subject.

One Noisy Cat

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Re: Bankruptcy among former NFL players.
« Reply #10 on: June 02, 2015, 04:43:34 PM »
     I remember one of the people in the Dallas Cowboys front office (Tex Schramm or Gil Brandt) said they tried bringing in financial advisors to get players to invest reasonably (blue Chip stocks, zero coupon bonds). The players didn't want reasonable gains, they wanted biggest-gain-biggest-risk. Probably the hyped, adrenaline-soaked nature of football does that.
     Then again baseball players stuck together much more in strikes, etc than did footballers. Especially ironic because I remember 40 years ago NFLPA head Ed Garvey was critical of MLBPA's Marvin Miller claiming he wasn't doing enough for the rank-and-file.

Spork

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Re: Bankruptcy among former NFL players.
« Reply #11 on: June 02, 2015, 05:02:50 PM »
I'm not a sports guy, so I'm totally pulling this out of my ass ...

Don't baseball players also play a lot longer?  More games per year.  More years playing per career?

Football seems like a sport that would physically wash you out quickly.

FrugalToque

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Re: Bankruptcy among former NFL players.
« Reply #12 on: June 03, 2015, 07:11:03 AM »
This probably isn't too surprising. 

How many players in the NFL come from families that managed money really well?  Or even talked about money?

The proper study here would be to look at the income of the families the players came from and see how that correlates with their bankruptcy probability.
You can't just give poor people large lump sums of money and expect it, in general, to go well.  They have no experience and no education with how to handle themselves.

And that's putting aside the money-grubbing family members.  Yuck.

Toque.

Iron Mike Sharpe

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Re: Bankruptcy among former NFL players.
« Reply #13 on: June 03, 2015, 12:32:45 PM »
I'm not a sports guy, so I'm totally pulling this out of my ass ...

Don't baseball players also play a lot longer?  More games per year.  More years playing per career?

Football seems like a sport that would physically wash you out quickly.


http://ftw.usatoday.com/2013/10/average-career-earnings-nfl-nba-mlb-nhl-mls


I think the average salary info might be a little misleading as all of the sports have those superstar contracts. 

Median NFL salary is around $770,000.

http://work.chron.com/much-money-nfl-player-make-year-2377.html

It doesn't surprise me that most players end up broke.  Most players end up filling a roster spot for 1-3 years making, relatively speaking, very little money compared to the superstars.  But they also don't believe their career will be that short and buy stuff instead of investing. 

And they have to deal with agent fees and high tax rates.  If I make $1 million over my career, it is spread out over many years and taxed at a smaller rate than someone who might make $1 million over two or three years. 

And they are also having to pay taxes to states and cities where they play their road games:

http://www.forbes.com/sites/kurtbadenhausen/2013/04/15/pro-athlete-tax-returns-illustrate-complexities-of-u-s-tax-code/
http://en.wikipedia.org/wiki/Jock_tax

sleepyguy

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Re: Bankruptcy among former NFL players.
« Reply #14 on: June 03, 2015, 01:27:19 PM »
This is VERY true.  Same goes for both NBA and NFL.  Not surprisingly NHL (Generally from well off educated families to start) rarely if ever go bankrupt.

This probably isn't too surprising. 

How many players in the NFL come from families that managed money really well?  Or even talked about money?

The proper study here would be to look at the income of the families the players came from and see how that correlates with their bankruptcy probability.
You can't just give poor people large lump sums of money and expect it, in general, to go well.  They have no experience and no education with how to handle themselves.

And that's putting aside the money-grubbing family members.  Yuck.

Toque.

MgoSam

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Re: Bankruptcy among former NFL players.
« Reply #15 on: June 04, 2015, 08:48:47 AM »
     I remember one of the people in the Dallas Cowboys front office (Tex Schramm or Gil Brandt) said they tried bringing in financial advisors to get players to invest reasonably (blue Chip stocks, zero coupon bonds). The players didn't want reasonable gains, they wanted biggest-gain-biggest-risk. Probably the hyped, adrenaline-soaked nature of football does that.

I recall someone telling me, and I'm not sure how right he was, that this behavior helps explain why they are professional athletes. Sure they are talented and athletic, but their "high risk, high reward" approach to life is what drove them to workout past exhaustion during their development years and led to them having the athletic body to become an athlete. Think Hershel Walker chasing after trains when he was a kid, or just doing pushups wherever he was, which led him to becoming the man that he is today (still doing 1500 pushups each day). Of course their results aren't typical, it simply worked for them to get to where they are.

Chris22

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Re: Bankruptcy among former NFL players.
« Reply #16 on: June 04, 2015, 08:56:04 AM »
Everyone likes to point to pro athlete spending, which can be ridiculous, but I remember reading an SI story interviewing guys and they point out that it's not so much the spending as the hangers-on.  Let's face it, if you buy a $200k Lamborghini in cash, after a year or two you still have a $100k Lamborghini you can sell.  Same with your mansion, it's still an asset, and as long as you didn't finance it (a lot of these guys are at least smart enough to pay cash or put a lot of cash down) too badly, you can sell it and get out.  Lose money, but you still have SOMETHING.

No, what really hurts is that everyone in the inner city that you grew up with, parents, siblings, aunts/uncles, buddies, etc, all see you as a winning lotto ticket and demand you support them or invest in their "business ideas" and all that.  That's where a lot of these guys throw their cash and they never see it again. 

TheGrimSqueaker

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Re: Bankruptcy among former NFL players.
« Reply #17 on: June 04, 2015, 05:43:32 PM »
No, what really hurts is that everyone in the inner city that you grew up with, parents, siblings, aunts/uncles, buddies, etc, all see you as a winning lotto ticket and demand you support them or invest in their "business ideas" and all that.  That's where a lot of these guys throw their cash and they never see it again.

There's something to be said for giving back to the community that created you, and it goes way beyond professional sports. But there's a huge difference between providing new jerseys and gear for your high school football team and paying to build an entire freaking church like Marcus Dupree is said to have done.

One of the down sides to growing up in a poor community is the fact that the people the athlete loves and respects don't often know how to manage money. So not only do they not teach him money management skills, but they give him bad advice once he makes it big.