“It requires a great deal of boldness, and a great deal of caution, to make a great fortune, and, when you have got it, you require ten times as much wit to keep it” – Nathan Mayer Rothschild
I watched 30 for 30:Broke last night on Netflix last night and it’s a pretty depressing documentary about professional athletes going broke. I don’t expect you to shed a tear for these “millionaires” playing a game. This post is not about that. They have (had) the good life and good for them. They are 100% responsible for their career’s success and the way they manage their money. This post is about the public perception vs the reality. The public perception is shaped by the big multi-million dollar contract printed in bold in every single newspaper. It’s unthinkable that a pro-athlete with hundreds of million in earnings is broke. The reality is that the athlete doesn’t get that full “10 million dollar” cheque. And the reality they are less wealthy than the media portray them to be.
Like any income earner, a good chuck goes to taxes. Yes athletes pay taxes too, and sometimes in multiple states/province/countries. They are hit with the highest tax bracket because their income is considered regular income (not capital gain). So that $10 million turns into $5 million. Again that’s many times what many of us combined will earn in their lifetime. But it doesn’t end there. Some of it goes to your player’s union, healthcare and other programs. Then you have your platoon of “advisors” to support. These are people like you agent, manager, external coaches, lawyers, your posy, and other consultant of the like but they never seem to have a good financial advisor. Then you have your obligations such as supporting your family, your extended family, your wife, your buddies, your posy, your girlfriends, your baby mamas, and the ever increasing child support. Then you have these shady business investments that your cousin try to peddle on you because investing in mutual funds is boring. Then you have your lifestyle to take care of such as mortgages, cars, charities, and the fine life. Too many athletes spend more than they take in, especially in the NBA and the NFL. And a lot of them are broke even before their career is over.
The list of broke athletes is incredibly shocking, among the few notable names: Curt Shilling, Warren Sapps, Terryl Owens, Latrell Sprewell, Michael Vicks, Lenny Dykstra, John Daly, Evander Holyfield, Mike Tyson, Antoine Walker, Allen Iverson, Dennis Rodman, and Scottie Pippen. You can add hundreds of name to that list.
Every athletes should watch this documentary. For a professional athlete, once your career is over, you have the second half of your life to live. Athletes’ financial education is pretty poor if any. You would think that the Universities that used the athletes to milk millions of dollar would have provided a free financial seminar. You can’t live the NFL lifestyle anymore because you don’t have NFL money coming in. Everybody, not just athletes, need a real talk about money. Just before you start your career, or even before your earn your first paycheck, you need to attend some kind of financial boot camp. Its a terrible ending for many that had a the privilege of making millions playing a game they love. While many of them live like kings, many of us are actually richer them.