Austin Cook - Co-NBA

More Money, More Bankruptcy?

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He wasn’t lying

 

According to Sports Illustrated in 2009, 78% of NFL players file for bankruptcy or are under financial distress and 60% of NBA players are broke after just 5 years of retirement. These statistics are eye-opening to say the least.

It’s not out of the ordinary to hear about a former professional athlete filing for bankruptcy years after they retire. Why is this? These athletes make large sums of money that should leave them living comfortably for quite some time. It’s easy for the average person to blame the athlete for their lack of responsibility, but is there something more here? If we roll our eyes and brush off the news of another bankrupt athlete, why hasn’t something been done?

Here are just some of the notable professional athletes who have filed for bankruptcy:

  • Warren Sapp – NFL
  • Jamal Lewis – NFL
  • Mike Tyson – Boxing
  • Lawrence Taylor – NFL
  • Pete Rose – MLB
  • Evander Holyfield – Boxing
  • John Daly – PGA
  • Terrell Owens – NFL
  • Allen Iverson – NBA
  • Michael Vick – NFL
  • Scottie Pippen – NBA
  • Bernie Kosar – NFL
  • Johnny Unitas – NFL
  • Sheryl Swoopes – WNBA
  • Tony Gywnn – MLB
  • Darren McCarty – NHL
  • John Arne Riis – FIFA
  • Kenny Anderson – NBA
  • Muhsin Muhammad – NFL
  • Marion Jones – 3x Olympic Gold Medal Winner

As you can tell, this issue is widespread among sports. I’m not going to sit here and tell you how and why these athletes lost millions of dollars because each athlete has different reasons that factor into their financial shortcomings. Rather, I’m going to discuss what needs, or at least should be done about this.

The respective leagues around the sporting world need to find some way to encourage financial planning or low-risk stocks. There are a number of different ways to slowly accumulate money with little to no risk. Investing in stocks such as these aren’t going to make these athletes much of anything in comparison to their paychecks from competing but over time, these begin to add up and best of all, they don’t stop when you retire. It would be unfair of me to refuse to acknowledge that some initiative has been taken. For example, the NFL at the rookie symposium has former head coach Tony Dungy speak on the importance of financial responsibility. This is a great start but it is one thing to speak about it and it is another to offer assistance.

I know the initial reaction to suggestions like these. “Who are these leagues to tell athletes how to spend their money?”. That is a justified opinion and I agree 100%. These leagues are controlling enough as it is but to offer such a program would only benefit athletes as well as increase leagues’ respective reputations. You can thank me later Public Relations department. Obviously I don’t know that financial toll implementing such a program would cost but I like to think that these “nonprofit” organizations can afford to spend a little.

While it would be a nice gesture for a financial guidance program to be implemented, the real initiative needs to come from the athlete. This is not a new discovery. Athletes have faced financial trouble for decades. Whether it’s hiring someone to reinvest money or provide a budget to follow or even trusting a close friend or relative’s guidance with their money. Being smart financially may not allow for quite the luxurious lifestyle that other athletes may be living, but ultimately the paychecks stop coming and believe it or not, the bank account runs dry.

This is crucial for some athletes coming into the professional sports world with suddenly all this freedom. No more NCAA telling you what you can and can’t do and a whole lot of money to do whatever you chose with. Some players as young as 18 years old with hundreds of thousands of dollars. What do we expect to happen here. There are always exceptions but I’m willing to bet most people aren’t ready to be financially responsible at 18. This comes at a time where it’s not out of the realm of possibility that we see NCAA athletes begin to receive compensation. Can universities make freshman take a finance pre-requisite? Can high schools require students to take an introductory finance class prior to graduation? These are little things that are beneficial to any student but also guarantees that standout athletes have some finance education prior to playing. Money is such a crucial part of life and it seems like it’s undervalued in the education system. It just doesn’t add up to me.

These are just a few ways that could help encourage financially responsible decisions and bring those astronomic percentages down to more reasonable levels. It’s always been an interesting topic but never receives the attention it desperately needs. Maybe one day we will see something impactful done about it but I see nothing in the immediate future to help solve this unfortunate issue.

(pic credit: empireappraisalgroup.com)

 

– Austin Cook

@SportsMeccaCook

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