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Why professional athletes always end up broke

Amercian football player having his helmet on her head against black

Just how do athletes, making millions of dollars, manage to go bankrupt and/or end up jobless? The similarities between the “how” and the “why” of this downward spiral that most athletes are on are actually impressive (in a bad way!).

With just 2 years of retirement under their belt, 78% of NFL players go bankrupt or end up with financial burdens, mostly because of joblessness or divorce.

By year 5 post-retirement, close to 60% of NBA players are basically broke.

These sound like the stats of an epidemic, except athletes are plagued with a disease that eats away at their financial stability at an alarming rate. It happens to NFL, NBA, and major league baseball players. It really seems like the sports industry chews you up, and spits you out with a vengeance.

From filing for bankruptcy, to being sued for overdue credit card payments, or being jailed for failing to pay child support!  They just seem to not be able to catch a break after the money from those big contracts stops coming in. Not to mention the post-retirement divorce rates among professional athletes.

So what are the main theories behind this infamous phenomenon?

There are as many theories as there are people that like to talk about how others handle their finances. But there are some patterns that reveal themselves when studying the spending habits of athletes.

The lifestyle creep

It finds its way even when you start making $10.000 more a year. You wouldn’t imagine yourself adjusting back to your old budget after giving every extra $ a purpose. The same happens for the 18-22 year olds that get recruited into professional leagues, and immediately get offered millions!

They build their lifestyle around these outrageous incomes, but when contracts end life catches up to them. Mortgages don’t go away, and neither do car payments, their money-hungry entourage or their taste for the finer things in life.

Picked young and dropped early

Athletes get pushed into a very narrow field of expertise at a tender age in their newfound maturity. As soon as 18 years of age they are taught and incentivized to think, eat & breathe just one thing: the game!

That’s why at 24-27 years old they step out into the real world with that short-lived career having taken its toll on their body. Athletes are then left to figure it out without having any real-world skills or the right support system to help manage their superficial wealth. A sort of easy come-easy go.

Spending habits that match their financial literacy

These are among the worst culprits in the financial pandemic that burdens most retired professional athletes.

This isn’t just about how everyone’s trying to keep up with the toxic culture in sports (aka the mansions, the cars, the jewelry, the partying, etc.). It’s mostly about how athletes choose to invest their earnings while they’re still in the game.

They typically set themselves up for failure by trying to play it safe. That’s when their lack of financial know-how outplays them.

Athletes tend to go for the tangible and shortsighted investments that cost them a good chunk of money at a time. They do this because they don’t trust what they often can’t understand (i.e. more conservative stock market investments).

Nightclubs, fashion lines & other gimmicks are the ultimate money drains for a lot of athletes’ entire career’s worth.

Social media would have you believe that professional athletes have everything you wish for and more. But you’re only seeing the highlights & the crashes. The highlights are the extravagant lifestyles they put on display while money is pouring in; and the crashes are the nasty divorces that put them on blast.

You never hear anything anymore about them once they go broke!

Professional athletes that have actually managed to build considerable wealth are few and far between.

American former professional basketball player, Michael Jordan, retired 3 times, before it was final. And he maxed out his fame and success in order to build true wealth. With five regular-season MVPs, Jordan is the most decorated player in NBA history. But it’s his flair for self-marketing that made a big difference in how his post-retirement finances turned out!

The classic, Magic Johnson, used his earnings to set the foundation of Magic Johnson Enterprises, valued at $1 billion dollars. Partnering with Starbucks, 24 Hour Fitness and Best Buy, as well as investing in urban development, this retired NBA player is a rare exception to the rule.





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Written by Patricia Egyed


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