Former NFL quarterback Vince Young has made headlines in recent years, but for all the wrong reasons.
Young had a $26 million contract and made over $30 million in endorsement deals during his career. However, in 2014 he ended up filing for Chapter 11 bankruptcy.
He made more money than most people could ever dream of but lost it all. And unfortunately, Young is not unique among athletes.
Whether you watch the NFL religiously or prefer to compete with your fantasy football team, most Americans know that professional football is a big business. And they pay their roster of players handsomely.
On top of that, many football players earn millions representing other companies in advertisements.
Yet, a 2009 study cited by Sports Illustrated found that 78 percent of NFL players go bankrupt within two years of retiring or are in financial stress due to joblessness. Many lose their fortunes due to a few commonplace mistakes.
The financial lives of football players
The average football player made $1.9 million a year in 2012, according to Forbes, with some exceptional players making much more than that.
Of course, the salaries players earn are just a small percentage of their total potential income.
Top players in highly visible roles can command millions more representing brands. For example, Peyton Manning made $12 million in 2015 according to Forbes thanks to his partnerships with brands like Nationwide, Papa John’s, DirecTV, and Nike.
But only a small number of elite players have access to those kinds of opportunities. Most endorsement deals go to quarterbacks and occasionally wide receivers or running backs. But other positions like tight ends or punters are less likely to get a lucrative partnership.
Even though football players have short careers, most still make more money in a single season than most people make in a lifetime. So how does all that money disappear?
Where does all that money go?
It’s not as simple as irresponsible spending. There are many factors that contribute to an NFL player’s financial ruin.
1. Players’ careers are limited
While most players make huge salaries, the career of a professional athlete is limited.
According to The Wall Street Journal and Pro-Football-Reference.com, players in various positions only spend between two to four years in the NFL. But players often think that the checks will keep coming, and do not plan for the future or the lifestyle inflation that may occur.
2. Pressure to keep up with the Jones’
The NFL thrusts young players into the spotlight alongside established players and superstars.
When other athletes are making extravagant purchases and driving luxury cars, younger players may feel pressured to do the same.
3. Family and friends can drain bank accounts
When players enter the NFL, they often have family members and friends who supported them along the way.
Now that they have careers, players may feel obligated to pay for their friends’ expenses. They may even end up supporting dozens of people at once, depleting their bank accounts.
4. Tempting poor investments
Players are constantly approached to invest in a new restaurant, club, or car dealership.
While the idea of a glamorous and tangible business is tempting to invest in, it’s usually a wiser move to look into lower risk assets and a diversified portfolio instead.
5. Players may lack financial management experience
Many players have no real money management experience, especially if they’ve previously lived paycheck to paycheck.
Without the right financial counseling, a player may keep spending at that same rate as soon as they make big money because the concept of saving is foreign to them.
6. They get bad financial advice
Since many players enter the NFL directly from high school or right after college, they may have never had a job before entering the league. Thus, they have no idea how to manage their incomes.
Unfortunately, financial advisors may take advantage of their naiveté. And players with no knowledge of investing cannot identify risky choices or spot fraud.
7. Players don’t have a backup career
Some players make enough money that they could retire in comfort if they plan accordingly.
But for those who make less money or who have shorter careers, they may have to work after retiring from football. Many bank on getting a job as an announcer or football coach, but competition for a limited number of roles floods the market.
How to fix the problem?
The NFL and several football unions are trying to address these financial problems with young players.
They bring in reputable financial advisors to help train players in the basics of budgeting and planning for the future. Engaging NFL players early on is essential in helping them build towards a more stable future.
While football players have much larger salaries than most people working a 9-to-5, the factors that influence their downfall are the same factors that can affect everyday workers.
Just like your favorite wide receiver, it’s important to plan for the future, spend within your means, and do your homework before investing.
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