Citing the rate at which pro athletes declare bankruptcy after their professional careers end, former Major League Baseball player Doug Glanville writes in his Time magazine column that the problem lies with the speed at which the money comes in. He advises strong financial and life planning for athletes to avoid money woes after the playing stops.
When Michael Vick declared bankruptcy, it raised our eyebrows. Sure, we knew his legal defense against dogfighting charges would have cost a lot of money, but not THAT much money. He, like a host of other visible athletes, made bad investments and hired a fraudulent money manager. His new $100 million contract from the Eagles will help, but it’s also entirely possible that his financial implosion could happen all over again.
According to a often-cited article in Sports Illustrated, a whopping 78% of NFL players will declare bankruptcy or face joblessness and divorce a mere two years after they finish their career. NBA players face a similar fate at a 60% rate within five years of retirement. Former NFL star Chris McAlister, who signed a $55 million contract in 2004, is just the latest in a long list of pro athletes who have gone broke.
Clearly, the numbers don’t add up for these one percent-ers (if I adapt the Occupy Wall Street lingo.) On the face of it, this makes no sense. Top shelf professional athletes make millions in a concentrated period of time. When markets crash, they have enough earning power to wait it out. Even when that earning power of your playing days are over, your stash should keep you from liquidating anything at an inconvenient time. In theory.
Read Doug Glanville’s entire column at Time magazine.