Personal finances of professional American athletes
Encyclopedia
The personal finances of professional American athletes are so often handled badly that, according to a 2009 Sports Illustrated
Sports Illustrated
Sports Illustrated is an American sports media company owned by media conglomerate Time Warner. Its self titled magazine has over 3.5 million subscribers and is read by 23 million adults each week, including over 18 million men. It was the first magazine with circulation over one million to win the...

article, 78% of National Football League
National Football League
The National Football League is the highest level of professional American football in the United States, and is considered the top professional American football league in the world. It was formed by eleven teams in 1920 as the American Professional Football Association, with the league changing...

 players are either bankrupt or in financial trouble within two years of retirement, and an estimated 60% of National Basketball Association
National Basketball Association
The National Basketball Association is the pre-eminent men's professional basketball league in North America. It consists of thirty franchised member clubs, of which twenty-nine are located in the United States and one in Canada...

 players are bankrupt within five years after leaving their sport. Some even manage to go broke while they are still playing and receiving large salaries. Though the average annual salary of players of the major sports is over $1 million, and for the top stars, in the tens of millions, many athletes are ill-prepared or uninterested in managing their own finances
Personal finance
Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future...

. After studying players with a net worth
Net worth
In business, net worth is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time...

 of at least $5 million, accounting firm Rothstein Kass concluded that "Only one out of every three professional athletes is focused on the business side of his or her career". Sources of financial problems can include poor investment choices, lavish spending, and reliance on advisers or managers who are unqualified or crooked.

Players' vulnerabilities

Athletes are draft
Draft (sports)
A draft is a process used in the United States, Canada, Japan, Australia, Russia and the Philippines to allocate certain players to sports teams. In a draft, teams take turns selecting from a pool of eligible players...

ed out of university or even high school, and suddenly go from amateurs to millionaires overnight. Rarely do they or those close to them have the knowledge and training to deal with such a sudden financial windfall. As sports agent
Sports agent
A sports agent procures and negotiates employment and endorsement contracts for an athlete.In return, the sports agent generally receives between 4 and 10% of the athlete's playing contract, and 10 to 20% of the athlete's endorsement contract, though these figures vary...

 and attorney Leigh Steinberg
Leigh Steinberg
Leigh William Steinberg is an American sports agent and sports lawyer. His client list has included Steve Bartkowski, Steve Young, Troy Aikman, Warren Moon, Bruce Smith, Thurman Thomas, Kordell Stewart, Jeff George, Ben Roethlisberger, Myron Rolle, Matt Leinart, Mark Brunell, Ricky Williams,...

 noted, "Coming off college scholarships, they probably haven't even learned the basics of budgeting or keeping receipts."

Baseball outfielder Torii Hunter
Torii Hunter
Torii Kedar Hunter is a Major League Baseball right fielder for the Los Angeles Angels of Anaheim.Hunter has taken away many home runs throughout his 13-year major league career by "climbing the fence" in the outfield. He has won nine consecutive Gold Glove Awards as an outfielder.Hunter resides...

 brought up another obstacle: "Once you get into the financial stuff, and it sounds like Japanese, guys are just like, 'I ain't going back.' They're lost." Ex-football wide receiver Raghib Ismail
Raghib Ismail
Raghib Ramadian Ismail is a retired professional American and Canadian football player, who played Wide receiver in both the Canadian Football League and National Football League. He played college football at Notre Dame...

 likened a meeting with J. P. Morgan
J.P. Morgan & Co.
J.P. Morgan & Co. was a commercial and investment banking institution based in the United States founded by J. Pierpont Morgan and commonly known as the House of Morgan or simply Morgan. Today, J.P...

 to "listening to Charlie Brown's teacher."

Exacerbating matters, peer pressure
Peer pressure
Peer pressure refers to the influence exerted by a peer group in encouraging a person to change his or her attitudes, values, or behavior in order to conform to group norms. Social groups affected include membership groups, when the individual is "formally" a member , or a social clique...

 encourages players to spend lavishly. Rod Strickland
Rod Strickland
Rodney "Rod" Strickland is a retired American professional basketball player and currently in an administrative role for the University of Kentucky basketball team under head coach John Calipari. Strickland was formerly the director of basketball operations at the University of Memphis...

 explained, "For rookies, it's like an unspoken initiation ... You're trying to get in good with the veterans, so you go beyond your means."
Friends and strangers become part of their entourages. Retired basketball center Danny Schayes
Danny Schayes
Daniel Leslie "Danny" Schayes is a retired American professional basketball player who played in the NBA from 1981 until 1999. At 6'11" and 235 pounds, he played at center...

 stated, "Guys go broke because they surround themselves with people who help them go broke".

Brevity of careers

Money manager Michael Seymour pointed out, "There's a far shorter peak earnings period than in any other profession". According to a 2003 Black Enterprise
Black Enterprise
Black Enterprise is a monthly U.S. magazine which describes itself as "the premier business news and investment resource for African Americans" and claims a readership of 3.7 million. It was founded in 1970 by Earl G. Graves, Sr.. The publication is known for its annual listing of the largest...

magazine article, "the average career span for professional basketball, football, and baseball is a mere 4.5 years, 3.2 years, and under five years, respectively."

Managers and investments

With players on the road much of the time, they have to entrust their financial affairs to managers, who are often chosen for the wrong reasons. Magic Johnson
Magic Johnson
Earvin "Magic" Johnson Jr. is a retired American professional basketball player who played point guard for the Los Angeles Lakers of the National Basketball Association . After winning championships in high school and college, Johnson was selected first overall in the 1979 NBA Draft by the Lakers...

, a prominently successful businessman, constantly gets calls for advice. Remarked Johnson, "They hire these people not because of expertise but because they're friends. Well, they'll fail." Rod Strickland
Rod Strickland
Rodney "Rod" Strickland is a retired American professional basketball player and currently in an administrative role for the University of Kentucky basketball team under head coach John Calipari. Strickland was formerly the director of basketball operations at the University of Memphis...

 made his father, Andrew, a retired Air Force lieutenant colonel, his business manager. The older Strickland checked out a real estate deal from a "friend of a close friend" of Rod's, but not well enough to avoid a costly blunder.

Often, managers are just crooked. According to the NFL Players Association, "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." Even solid credentials are no guarantee of trustworthiness, as hockey Hall of Famer Bobby Orr
Bobby Orr
Robert Gordon "Bobby" Orr, OC is a Canadian former professional ice hockey player. Orr played in the National Hockey League for his entire career, the first ten seasons with the Boston Bruins, joining the Chicago Black Hawks for two more. Orr is widely acknowledged to be one of the greatest...

 found with Alan Eagleson
Alan Eagleson
Robert Alan Eagleson is a disbarred Canadian lawyer, convicted felon in two countries, former politician, hockey agent and promoter...

, who "as Orr's agent, left him all but broke as part of one of sports' most spectacular financial scandals."

Spouses, children and divorce

When asked by one of his players "What's the most dangerous thing that could happen to us financially?", Carolina Panthers
Carolina Panthers
The Carolina Panthers are a professional American football team based in Charlotte, North Carolina. They are currently members of the South Division of the National Football Conference in the National Football League . The Panthers, along with the Jacksonville Jaguars, joined the NFL as expansion...

 majority owner Jerry Richardson
Jerry Richardson
Jerry Richardson is the current majority owner and founder of the Carolina Panthers of the National Football League.-Biography:...

 replied immediately, "Divorce." By some estimates, the divorce rate for professional athletes ranges from 60 to 80%, most often after they retire. The money stops flowing in, and couples spend much more time together. Without a prenuptial agreement
Prenuptial agreement
A prenuptial agreement, antenuptial agreement, or premarital agreement, commonly abbreviated to prenup or prenupt, is a contract entered into prior to marriage, civil union or any other agreement prior to the main agreement by the people intending to marry or contract with each other...

, Michael Jordan
Michael Jordan
Michael Jeffrey Jordan is a former American professional basketball player, active entrepreneur, and majority owner of the Charlotte Bobcats...

's $168 million divorce settlement was at the time the largest ever. On the other hand, Dikembe Mutombo
Dikembe Mutombo
Dikembe Mutombo Mpolondo Mukamba Jean-Jacques Wamutombo , commonly referred to as Dikembe Mutombo, is a retired Congolese American professional basketball player who last played for the Houston Rockets of the NBA...

 canceled his wedding, at a cost of $250,000, when his fiancee refused to sign one the day before the ceremony.

Another factor is the sexual opportunities available to athletes during their careers. Players end up being responsible for child support
Child support
In family law and public policy, child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship...

. Shawn Kemp
Shawn Kemp
Shawn T. Kemp is a former American professional basketball player, who played in the National Basketball Association for 14 seasons. He was a six-time NBA All-Star and a three-time All-NBA Second Team member.-Early years:...

 had at least seven children with six women, Derrick Thomas
Derrick Thomas
Derrick Vincent Thomas , nicknamed D.T., was an American football linebacker and defensive end for the Kansas City Chiefs of the National Football League . He played his entire 11-year career for the Chiefs after being drafted fourth overall in the 1989 NFL Draft...

 seven with five, and Travis Henry
Travis Henry
Travis Deion Henry is a former American football running back for the Buffalo Bills, Tennessee Titans and Denver Broncos. He was drafted by the Bills in the second round of the 2001 NFL Draft...

 nine with nine. Henry was imprisoned for non-payment of an estimated $170,000 annually.

Education

The National Football League
National Football League
The National Football League is the highest level of professional American football in the United States, and is considered the top professional American football league in the world. It was formed by eleven teams in 1920 as the American Professional Football Association, with the league changing...

 offers its players a Financial Education Program. "The non-credit seminars are offered during the year and teach players about cash management, insurance, tax planning, estate planning, investments, retirement planning and other related topics." There is also a more advanced NFL Business Management and Entrepreneurial Program, with "custom programs at top-rated business schools".

Ryerson University
Ryerson University
Ryerson University is a public research university located in downtown Toronto, Ontario, Canada. Its urban campus is adjacent to Yonge-Dundas Square located at the busiest intersection in Downtown Toronto. The majority of its buildings are in the blocks northeast of the square in Toronto's Garden...

's Ted Rogers School of Management offers a program called Breakaway, which aims to help players in their transition away from professional hockey.

Basketball

Basketball Hall of Famer Magic Johnson is an outstanding example of an athlete who has not only kept his money, but increased it. He has built a thriving business empire. He was at one time a part owner of the Los Angeles Lakers
Los Angeles Lakers
The Los Angeles Lakers are an American professional basketball team based in Los Angeles, California. They play in the Pacific Division of the Western Conference in the National Basketball Association...

, and his company, Magic Johnson Enterprises, has a net worth of $700 million.

Jordan has proven almost as successful in his post-basketball business ventures, despite a temporary financial setback due to his divorce. He has numerous business interests, most notably his own line of apparel through Nike
Nike, Inc.
Nike, Inc. is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon, which is part of the Portland metropolitan area...

. In March 2010, he became the majority owner of the Charlotte Bobcats
Charlotte Bobcats
The Charlotte Bobcats is a professional basketball team based in Charlotte, North Carolina. They play in the Southeast Division of the Eastern Conference of the National Basketball Association. The Bobcats were established in 2004 as an expansion team, two seasons after Charlotte's previous NBA...

 after buying out most of the interest of founding owner Bob Johnson
Robert L. Johnson
Robert L. Johnson is an American business magnate best known for being the founder of television network Black Entertainment Television , and is also its former chairman and chief executive officer...

 for $275 million.

Another Hall of Famer, Dave Bing
Dave Bing
David "Dave" Bing is the mayor of Detroit, Michigan, a businessman, and a retired American professional basketball player who played 12 seasons in the National Basketball Association , primarily for the Detroit Pistons...

, established a steel processing company, Bing Steel, in Detroit in 1980. After Bing Steel suffered a loss in its first year of operation, Bing decided to shift his company from manufacturing to being a middleman. Bing Steel became profitable in its second year of operation, and has since expanded to become the Bing Group, a conglomerate involved in a number of businesses, including supplying the automotive industry.

Baseball

Hall of Fame
National Baseball Hall of Fame and Museum
The National Baseball Hall of Fame and Museum is an American history museum and hall of fame, located at 25 Main Street in Cooperstown, New York, operated by private interests serving as the central point for the study of the history of baseball in the United States and beyond, the display of...

 pitcher Nolan Ryan
Nolan Ryan
Lynn Nolan Ryan, Jr. , nicknamed "The Ryan Express", is a former Major League Baseball pitcher. He is currently principal owner, president and CEO of the Texas Rangers....

 has proven successful in business, though not at the level of Johnson or Jordan. After the end of his playing career in 1993, he was majority owner and chairman of a bank in his home town of Alvin, Texas
Alvin, Texas
Alvin is a city in the U.S. state of Texas within the Houston–Sugar Land–Baytown metropolitan area and Brazoria County. As of the 2000 U.S. Census, the city population was 21,413. Alvin's claim to fame is Baseball Hall of Famer Nolan Ryan, who moved with his family to the city in 1947 as...

 before selling his interest in 2005. He also became part owner of two minor-league
Minor league baseball
Minor league baseball is a hierarchy of professional baseball leagues in the Americas that compete at levels below Major League Baseball and provide opportunities for player development. All of the minor leagues are operated as independent businesses...

 teams in his home state, the Corpus Christi Hooks
Corpus Christi Hooks
The Corpus Christi Hooks are a minor league baseball team of the Texas League, and are the Double-A affiliate of the Houston Astros. They are located in Corpus Christi, Texas, and are named for the city's association with fishing. The team's ownership group is headed by Baseball Hall of Famer Nolan...

 and Round Rock Express
Round Rock Express
The Round Rock Express is a class Triple-A Pacific Coast League minor league baseball team in Round Rock, Texas, owned by RSR Sports and founded by Reid Ryan, son of Baseball Hall of Famer Nolan Ryan. The team is affiliated with the Texas Rangers, for whom Nolan Ryan serves as the president and...

. In 2010, he was the public face of, and a minority investor in, a group that bought the Texas Rangers
Texas Rangers (baseball)
The Texas Rangers are a professional baseball team in the Dallas-Fort Worth Metroplex, based in Arlington, Texas. The Rangers are a member of the Western Division of Major League Baseball's American League, and are the reigning A.L. Western Division and A.L. Champions. Since , the Rangers have...

, the team with which he finished his Major League Baseball
Major League Baseball
Major League Baseball is the highest level of professional baseball in the United States and Canada, consisting of teams that play in the National League and the American League...

 playing career.

Football

Former Washington Redskins
Washington Redskins
The Washington Redskins are a professional American football team and members of the East Division of the National Football Conference in the National Football League . The team plays at FedExField in Landover, Maryland, while its headquarters and training facility are at Redskin Park in Ashburn,...

 cornerback Eugene Profit
Eugene Profit
Eugene A. Profit is an American investor, entrepreneur, philanthropist and former American football cornerback for the New England Patriots and Washington Redskins...

 parlayed his Yale
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...

 economics education into a highly successful financial career. His company, Profit Investment Management, looks after $2 billion in assets.

Mixed results

Another athlete turned successful businessman, at least for a time, was former football safety Dave Duerson
Dave Duerson
David Russell Duerson was an American football safety in the National Football League who played for the Chicago Bears , the New York Giants , and the Phoenix Cardinals .-Early life:...

, president and CEO of Duerson Foods L.L.C. However, an expansion of his company turned into financial disaster due to issues with a supplier of freezers for a meat processing plant. Duerson Foods won a $34 million judgment against the freezer company in 2004, but never collected because the company later filed for bankruptcy, and Duerson himself filed for bankruptcy in September 2010. Duerson's story turned far more tragic, as he committed suicide in February 2011, and a post-mortem examination of his brain revealed he was suffering from what was described as a "moderately advanced" case of chronic traumatic encephalopathy
Chronic traumatic encephalopathy
Chronic traumatic encephalopathy is a progressive degenerative disease found in individuals who have been subjected to multiple concussions and other forms of head injury. A variant of the condition, dementia pugilistica, is primarily associated with boxing...

, presumably from constant blows to the head during his football career.

Failures

While still playing with the Boston Red Sox
Boston Red Sox
The Boston Red Sox are a professional baseball team based in Boston, Massachusetts, and a member of Major League Baseball’s American League Eastern Division. Founded in as one of the American League's eight charter franchises, the Red Sox's home ballpark has been Fenway Park since . The "Red Sox"...

, slugger Jack Clark
Jack Clark (baseball)
Jack Anthony Clark , also known as "Jack the Ripper," is a former Major League Baseball player. From 1975 through 1992, Clark played for the San Francisco Giants , St. Louis Cardinals , New York Yankees , San Diego Padres and Boston Red Sox...

 filed for bankruptcy, with debts of $11.4 million and assets of $4.8 million. Among other things, he had 18 cars, and owed money on all but one.

Mike Tyson
Mike Tyson
Michael Gerard "Mike" Tyson is a retired American boxer. Tyson is a former undisputed heavyweight champion of the world and holds the record as the youngest boxer to win the WBC, WBA and IBF world heavyweight titles, he was 20 years, 4 months and 22 days old...

 earned an estimated $400 million over his career, but declared bankruptcy in 2003.

Sheryl Swoopes
Sheryl Swoopes
Sheryl Denise Swoopes is an American professional basketball player who, subsequent to being waived into free agency, signed to re-join the WNBA to play with the Tulsa Shock in 2011. She was the first player to be signed in the WNBA when it was created. She has won three Olympic Gold Medals and...

 earned an estimated $50 million playing basketball, and declared bankruptcy in 2004, owing $711,050. Swoopes admitted, "I didn't surround myself with the right people. I got in a position where it was like, 'Oh, wow, what happened?'"

Others who faced the same predicament are Lawrence Taylor
Lawrence Taylor
Lawrence Julius Taylor , nicknamed "L.T.", is a Hall of Fame former American football player. Taylor played his entire professional career as a linebacker for the New York Giants in the National Football League...

, Scottie Pippen
Scottie Pippen
Scottie Maurice Pippen is a retired American professional basketball player who played in the National Basketball Association . He is most remembered for his time with the Chicago Bulls, with whom he was instrumental in six NBA Championships and their record 1995–96 season of 72 wins...

, and Michael Vick
Michael Vick
Michael Dwayne Vick is an American football quarterback for the Philadelphia Eagles of the National Football League...

.
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
x
OK