Top 5 Reasons Athlete’s Go from Ballin to Broke

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Most athletes play professional sports, on an average, four to eight years.  They have to  pay taxes (up to 40 to 50%) and agent fees. Although they have the usual expenses everyone else accumulates: housing, food, clothing etc…, they create an abundance that becomes out of control. Expensive mansions, exotic cars, designer clothing, expensive jewelry, unique electronics etc… After they become accustomed to a certain lifestyle, it is hard for them to be grounded about what their true financial outlook is. They do not look at the future and what it will actually cost to maintain that huge home, with the utlities, maintenance, and insurance.

The cars are quickly depreciating by the day but the insurance and upkeep stay the same. The designer clothing and latest electronics depreciate in value as well. They are no longer the hottest thing out the next year. Jewelry can keep some of its value, but many athletes are not knowledgable about what they are buying in the first place. They do not know the quality of the cut or color of the diamonds so when they try to sell it later they find that it really is not worth what they paid for it.

Most athletes feel obligated to help everyone out at first. They have family and friends and friends of friends that all of sudden claim to have been there for them before they made it big. Unless an athlete has a protective team around them, family and friends can be the biggest financial demise for their earnings.  Many of them also want to keep up with their teammates. If someone buys a Bentley, they have to buy one; if someone buys a $75,000 watch, they have to buy one to keep up the appearance.

It is depressing when their career ends and they are  not the celebrity they once were, many of the “friends and family” drop off.  These athletes are still  trying to maintain a multi million dollar house, drive three or more vehicles, travel in private planes (or first class only) until reality sets in. So few athletes plan on life after sports. How few realize that if they invested a large chunk in the beginning, they could be living on the interest of those investments and enjoying life.

Here are the top 5 reasons why athlete’s go broke:

1. Lavish Spending

Antoine Walker’s lavish spending in the past is now forcing  him to bounce checks to casinos.  The casinos want $1 million now.  Did you not know that the million was not in the bank?

2. Bad Financial Advice

The NFL Players Association states at least 78 players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds.

3. Drugs

Pro football star, Ricky Williams, lost millions of dollars in salary when he failed several drug tests.  He left the NFL in 2004 and had to pay $8.6 million for breach of contract.  To add insult to injury, he was suspended  for a year in 2006.

4. Divorce

Most spouses lose half of their net worth in a divorce proceeding.

Around retirement is when most splits occur. When the player’s  high earnings period is long over and they are not living the same way. The stress level at home rises. This timing is no accident. “There’s this huge lifestyle change,” says former NBA center Mark West, a licensed stockbroker who is now the Suns’ vice president of player programs. “You and your wife are suddenly always at home, bugging each other. Before, you’d always say, ‘I gotta go to practice.’ Now you don’t have to practice. You have to finish conversations.”

5. Just Being Irresponsible

After signing a five-year, $35 million contract, New York Giant Plaxico Burress was sent to prison for two years for having an illegal gun and shooting himself, by accident, at a nightclub last November.

 

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