Spoiled.
Out-of-touch.
Entitled.
Irresponsible.
Greedy.
Flashy.
Or, just plain dumb.
Those are some words the average person may use to describe the way professional athletes when it comes to their financial management – or mismanagement. After all, with such vast fortunes thrown at their feet just to play a game, how is it even possible that they squander tens or even hundreds of millions of dollars?
Some of that is probably true. Ok, some of that is definitely true, too often. But there is far more to the story of why a ludicrous number of young millionaire pro athletes end up going broke and filing for bankruptcy. Financial insolvency – or the cautious dance to avoid it – seems to affect ALL pro athletes, no matter who they are, what sport they play, how much money they make, or even what kind of background they come from.
So what is it that’s causing our favorite players to go broke?
Today, we’ll examine some of the data and statistics on pro athlete BKs, as well as examples that will both confirm the common perception above, and also many that will dispel it.
In part two of this series, we’ll cover the top causes of pro athlete bankruptcies, with personal anecdotes that reveal the true nature of these riches to rags stories.
Here are 25 revealing stats, facts and examples of athlete bankruptcies:
The National Basketball Association leads all U.S. team sports in salaries, paying $6.39 million per year on average.
Major League Baseball players earn $4.39 million on average,
NHL hockey pays an average income of $2.9 to their athletes,
And the average salary for NFL players who were drafted and make the team out of training camp is $2.43 million.
However, there’s a HUGE drop-off in salary and career longevity for players that were drafted and didn’t make the team immediately, or undrafted players.) In fact, the median (not the average) NFL salary is only $973,234 – well under one million dollars.
But even a “cool mil” a year is a nice paycheck, right? Still, a jaw-dropping 78% of NFL players end up filing for bankruptcy or are insolvent within just 5 years of retirement.
With the potential to earn millions of dollars every year for the average player – or a hefty sum for even benchwarmers and role players – why do pro athletes file bankruptcy at a rate 7.8 more than the average American (who earns a median of $51,000 per household)?
The average career for drafted NFL players is only 3.5 years.
But far more players have fringe NFL careers, bouncing between practice squads, scout teams, and taking occasional roster spots, but never earning a big contract. But even for the average NFL career, that means only earning pay from their rookie contract, and maybe one bigger contract if they’re lucky – money that needs to last their entire life!
65% of NFL players leave the game with permanent injuries, and every year and 320 veterans lose their jobs and retire or are forced out. In fact, the physical and especially neurological damage caused by such violent impacts severely impacts football players, causing additional financial detriment.
Financial problems seem to plague all major professional athletes, not just football players. In fact, 60% of NBA players file for bankruptcy within 5 years of retirement
MLB (major league baseball) players file for bankruptcy at a rate 4x the national average.
Mike Tyson? $400 net worth in his prime and went bankrupt. But Tyson was a little bit off his rocker, right? Well, the chewed-eared Evander Holyfield was worth an astounding $560 million at one time…and had to file bankruptcy.
So was the case with mercurial NBA point guard Allen Iverson, who was worth $156 million but was declared insolvent due to comically (except to him) erratic spending.
Maybe it’s just a prominent with kids who grow up poor and/or in inner cities?
Not at all, as Johnny Unitas went bankrupt. So did quarterback Mark Burnell, who earned $52 million over his long playing career.
Billy Buckner, the Boston Red Sox first baseman who let one roll between his legs to let the Mets back in – and win – the 1986 World Series, had to file for BK in 2008.
Pitching ace, World Series champ, and TV commentator Curt Schilling filed for insolvency, as well, after he couldn’t pay back a $75 million loan to start a video game company. Fellow Philadelphia Phillies great Lenny Dykstra also had to file for bankruptcy after becoming a “financial guru” in retirement and ending up with $50 million in liabilities and only $50,000 in assets.
Lawrence Taylor, Michael Vick, and Travis Henry had highly-publicized legal troubles to make them broke despite earning a combined $200 million. But for every Vick, there’s a bankruptcy filing for someone like the most famous soccer player in the world (not named Pele), Diego Maradona.
Scottie Pippen won SIX world championship rings with the Chicago Bulls (his teammate, Michael Jordan, had a lot to do with that), but still filed for insolvency despite earning $120 million during his playing days.
Maybe Padres teammates Jack Clark and Tony Gwyn had the same bad financial advisor because they both ended up filing for bankruptcy after their playing days –and their bank accounts – were numbered.
It’s not just men who lose all of their wealth and file Chapter 7 or 11.
Olympic sprinter Marion Jones lost all of her wealth and filed BK after being disgraced by a doping scandal.
WNBA legend Sheryl Swoopes had to do the same in 2004 even though she made more than $50 million in her career.
And Dorothy Hamill, the 1976 Olympic gold medal winning figure skater turned America’s sweetheart overnight who had to file for bankruptcy in 1995.
Dorothy Hamill!
We can go on and on with hundreds – or thousands – more examples, but I think you get the point by now: financial mismanagement and a loss of tens of millions can happen to just about any professional athlete.
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Look for part two of this series, when we cover the REAL top reasons pro athletes have to file bankruptcy.
