A recent article in Sports Illustrated details some shocking statistics about professional athletes and their lack of financial savvy.
"By the time they have been retired for two years, 78 percent of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce," writes reporter Pablo Torre in the March 23 issue of the magazine. Torre's article is called "How (and Why) Athletes Go Broke."
A case in point is Raghib "Rocket" Ismail, a former wide receiver for Notre Dame who went pro for a princely sum in the early 1990s but is now in dire straits. "[Ismail] has lost a lot of his fortune," Torre tells host Robert Siegel." He wouldn't say that he is broke or bankrupt, but [he] is really a model case in terms of somebody who squandered millions of dollars on a string of just absurdist — almost tragicomic — investments."
The fundamental problem, Torre says, is that professional athletes are behaving like lottery winners. Athletes are not "prepared to deal with a sudden windfall of millions of dollars at age 22. So they end up putting it in things they know and trusting people they shouldn't."
The problem isn't just confined to professional football players. Torre's article says that within five years of retirement, an estimated 60 percent of former NBA players are broke. The problem extends to professional baseball and hockey players as well.
No Financial Education
"The media, the leagues, agents, certainly were all sort of complicit in this sports-industrial complex — meaning we're sort of incentivizing young men who are very good at sports to not have to worry about financial education or just basic classroom education," Torre says. "So what they're doing is funneling them into a channel, which guarantees them millions of dollars but without any of the equipment" to manage that money.
When it comes to investments that professional athletes make, Torre says, "There is a prevailing trend in terms of what's attractive to an athlete — it's things that they know," such as cars or nightclubs.
Paternity payments can also prove a major financial strain for former pro athletes.
Former NFL running back Travis Henry, who played most recently for the Denver Broncos, is the record holder for paternity obligations, Torre says. Henry has nine children by nine women, Torre says. Since the story was published, he adds, reports have surfaced that Henry also had twins — so it's now 11 children by 10 women.
"If you're an athlete and you're not careful or in Travis Henry's case — apparently willfully not careful — you have these paternity suits that just build up and are giant minus signs on your monthly accounts," Torre says.