Yes, yet again, another professional athlete has filed for bankruptcy. After 15 years in the league and $87 million dollars in earnings, Derrick Coleman is broke. Why do we continue to hear story after story about players and their financial woes?
Much like too little money, too much, can be a problem. One we’d all like to get a stab at, perhaps, but a problem nonetheless. Countless books and websites are devoted to smart money practices. Too, there’s a legion of wealth managers that stand ready to offer their expertise. The National Football Players Association even maintains a list of financial advisors for its members to consult, all of which have been subject to a rigorous background check. So again, why are these guys broke?
Most of the young athletes that I work with come to me at the beginning of their careers. We review their new-found wealth, current needs, debt, family obligations, housing options in their new location and the price tag for the one car they’ve always wanted.
Investment generally does not play a role until a year later when we have a good picture of their standing in the league. Unfortunately for some, pressures to spend big start to pique around this time. They’re on the radar of fraudulent investors. Family and friends make emotional pleas for cash and gifts. Colleagues with greater wealth entice them with more expensive cars, houses and jewelry.
Overnight that young man who was in your office attesting to his willingness to be patient and make prudent investment choices, has now added professional financial advisor to his resume. No longer led by an experienced investor, but the player’s desire to move fast and garner quick returns, the results are often disastrous.
In May 2009 Sports Illustrated reported that 78% of football players file bankruptcy after two years of retirement; 60% of basketball players do the same within five years of leaving the league. Conspicuous consumption is not all to blame. Failure to plan for possibilities like injuries, dismissals, delayed contract negotiations and league disputes also play a roll.
Unless these guys get their wants lined up with their means and start setting aside a bit for a rainy day, we’ll keep hearing about these ballers who blow their bank.
Aaron W. Smith is the author of “In The Black: Live, Faithfully, Prosper Financially The Ultimate 9 steps for Financial Freedom.” Visit him atawsmithfinancial.com and intheblackretirement.com for more information.