Gripping Statistics About Pro Athletes

The current issue of Sports Illustrated (sorry, there is no available link) contains a sad story about the financial plight of many professional athletes. Here are some troubling statistics:

1. 60% of NBA players are broke within 5 years of leaving the game; and
2. 78% of NFL players will suffer the same financial fate (the time frame wasn't mentioned).

The article is replete with stories of plum awful (read: stupid) investments (such as investing $500,000 in a sofa with a flotation device in it so that if you suffered a flood you could use it to float away), unscrupulous investment advisors and inept clients, who are clueless about saving and how to handle money (and who are surrounded, at times, by people who think that they have an entitlement to the money (and we're not talking about the Federal government here). We're also talking about conspicuous and excessive consumption (a friend told me a story about his girlfriend, who works in a luxury shop in the S.F. Bay Area, where a prominent football player came in with an entourage and dropped $60,000 on items). Oh, yes, there's the entourage problem too.

And these pro athletes are supposed to be the lucky ones -- they made it. The sad thing about the whole story is that you could draw the impression that it's better not to have made it at all than to have made it and lost a fortune -- with absolutely no chance of getting it back, given that the player's skills will have eroded pretty quickly.

This SI edition is worth picking up just to read the story. It's the "March Madness" preview edition, and what you'll read will just astound you.

Before you get too judgmental, though, or judgmental at all, remember that many of these athletes were rushed through the educational system, sometimes getting passes because they were stars, sometimes coming from backgrounds with few if any role models they could trust later to help them with money, and, also coming into money so young that they don't have wisdom about thrift and value. I wouldn't buy a $20,000 Rolex, but if I were the type to, I probably would stop at just one. The problem is that many of these athletes cannot stop spending, because the well seems so deep. Some get married too early and end up getting divorced, which is costly, while others father children out of wedlock (in the case of NFL RB Travis Henry, 9 children by 9 different women).

To a certain degree, it's probably hard to get these stars to listen. What has made them great is that they follow their own muse, they're determined, and they shun the naysayers because they'll be the ones who drag them down. So, it could be hard for them to listen to someone at Merrill Lynch when it was their AAU coach who helped put them on the map (and, in one instance in the article, a player has his former AAU coach manage his affairs, but he doesn't get statements and doesn't know how much the AAU coach is charging).

I'm sure that there are many athletes who are well-provided for, who've saved wisely, and who can have good lives after sports. But it does strike me that many present huge targets for those with unsound, even whacky, investment ideas, unscrupulous motives, and the like. I don't know what can be done to protect the athletes from being targets for financial slaughter, except a) better education, b) honing their ability to say "no", c) impulse control and d) taking more of an interest in their finances. Short of that, this trend will continue and perhaps get worse.

Buy the magazine and read the whole thing.