Why do so many NFL players go bankrupt?

[Kalisto2010]

In fact, according to the NFL Players Association, at least 78 players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds.

Just last May, Atlanta hedge fund manager Kirk Wright was convicted on 47 counts of fraud and money laundering in a scheme involving more than $150 million. His client list included at least eight NFL players; former safeties Blaine Bishop (who lost $4 million, according to court documents) and Steve Atwater (who lost $2.7 million) had recruited former Broncos stars Terrell Davis and Rod Smith to Wright's firm, unwittingly making them victims too. Soon after his conviction Wright committed suicide in prison.

Incredible.

[Dirtbag59]

Originally Posted by DBUCHANON101

Here ya go Shaq, go buy yourself a jumping car.....Bling Bling

Shaq allegedly has a mistress in every NBA city that he's set up with an allowance and place to live. That can't be good for his financial situation. It's funny how we complain about people who make a living playing sports but now when I look at them since yesterday I think man, that guys probably going to be broke in a few years.

Especially with inflation. For example Joe Namath made $400,000 back in the 60's. That comes out to around $2.2 million today but I find it hard to imagine that Namath was much of a saver. Ironically George Best who was featured in the 25 article was very similar to Joe Namath. First real celebrity athlete in England that loved women, or as he put it while showing up drunk on a late night talk show "I love to screw." He was also an alcoholic except unlike Namath, Best died before he could complete rehab.

Either way it's crazy. By the time I die the entry level salary for most jobs will probably be around $100,000.

[Schneed10]

Originally Posted by SirClintonPortis

Because humans rarely are perfectly rational in how they behave and thus what appears self-evident to some people does not necessarily make it the norm. The pheonomenon appears prevalent enough to warrant serious attention.
Hyperbolic discounting - Wikipedia, the free encyclopedia

Considering that people like to run up debt on their credit cards and the like, it's safe to say that there's at least some biological influence on why they keep spending even if they know they won't balance their budget. Woefully irrational, but that's exactly why "knowledge" is needed to keep said influences in check. Not everyone's a Leopold Mozart who knows how to manage their money well with little outside help. Some are more like Wolfgang and prefer gratification over disciplined spending.

To me, that's just a long-winded way of saying these people are irrational. Which is by its nature, stupid.

You say tomato, I say moron.

[Schneed10]

Originally Posted by SmootSmack

Well like I said before, a lot has to do with misplaced trust. Because maybe your 3 year old daughter can look in her piggy bank. But maybe your 3 year old says to your 2 year old son (assuming you have one) "Look, this isn't my area of expertise but this what you get paid to do for lots of people. So look after my piggy bank for me" And then...the money's gone because your daughter made the mistake of trusting your son. Your daughter's fault? Probably. But is that idiocy or ignorance, or is it one and the same? Confucious once say "Real knowledge is to know the extent of one's ignorance."

Additonally, I suspect this 78% must include a lot of Marcus Mason type players. Granted, Mason I'm sure has made a pretty penny in his brief cup of coffee with the league, still he's not a multi-millonaire. Is he?

No guys like Mason don't make an exhorbitant salary, he'd be as well off as a lot of doctors. In the cases of misplaced trust, I guess that's better than pulling an MC Hammer and simply spending yourself into the ground. But still.

Just like you said, know what you know, and know your limits. Do your homework to make sure you don't make a huge mistake, don't just turn all your money over to one advisor. That goes for anybody. Just like you shouldn't put all your eggs in one Enron basket, you shouldn't keep all your money with one advisor. To me that seems like common sense, but I guess financial literacy in this country is so shoddy that it's not even considered common knowledge.

[53Fan]

Quote:

In fact, according to the NFL Players Association, at least 78 players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds.

Just last May, Atlanta hedge fund manager Kirk Wright was convicted on 47 counts of fraud and money laundering in a scheme involving more than $150 million. His client list included at least eight NFL players; former safeties Blaine Bishop (who lost $4 million, according to court documents) and Steve Atwater (who lost $2.7 million) had recruited former Broncos stars Terrell Davis and Rod Smith to Wright's firm, unwittingly making them victims too. Soon after his conviction Wright committed suicide in prison.

Incredible.

White collar crime has become so prevelant in this country, thanks in large part to our political leaders, that this sort of behavior has become routine. It's hard to trust anyone anymore. You would be wise to do extra homework on to whom you trust your money.

[tootergray34]

you should ask Deon Sanders...well he's working now...but he certainly spent his money QUICK!!!

You should check out tracy mcgrady...he's actually invested real well i've heard...but yeah most people lost it b/c they've never had money before so when they get it..they spend it immediately.

it's just going from one lifestyle to the next...much like when rednecks win the lottery...it's gone before they know it and they have a mountain of garbage that they don't need.

[tryfuhl]

these guys don't balance checkbooks, their money is in other places than just checking and they have people to take care of it.. sometimes those people don't take care of it so well

when these guys pay things on credit or buy a house it's not always coming from one account... or having a lien on it

it's much diff than just balancing a checkbook

[Schneed10]

I like the story of Robert Smith. The guy was a real impressive RB for the Vikes there for a number of years in the 90s. Then he up and retires when he was seemingly right in his prime. He had signed a good contract that paid him good money, not Albert Haynesworth money, but a pretty penny. Rather than spending it, he saved 80-90% of his salary and bonuses, all throughout his career. He lived in a nice, but not lavish home. He didn't buy lots of fancy cars, just had two nice ones.

So then he retired in his prime. The reason he gave was he wanted to retire before he really hurt his body over the long haul, and he had saved up enough money to last him the rest of his life. And so he left football to spend his free time with his kids.

That's a man who gets what life is about. Having money isn't about the flashy things and the possessions. It's about the freedom it gives you, the time to spend doing whatever in the world is important to you. Robert Smith gets to choose to work, or choose not to work. To be with his kids, or to travel the world.

That's what frustrates me most. These guys have a shot at setting themselves up to do ANYTHING with their lives, and never to be tied down to a job. But they blow it. Failing to understand what you're passing up is unfathomable to me.

Anyway, Robert Smith was one of the all time great guys in sports. I admire him so much for that decision.

[53Fan]

^ Nice post Schneed10. Smith used his opportunity in sports wisely IMO.

[tryfuhl]

Originally Posted by Schneed10

I like the story of Robert Smith. The guy was a real impressive RB for the Vikes there for a number of years in the 90s. Then he up and retires when he was seemingly right in his prime. He had signed a good contract that paid him good money, not Albert Haynesworth money, but a pretty penny. Rather than spending it, he saved 80-90% of his salary and bonuses, all throughout his career. He lived in a nice, but not lavish home. He didn't buy lots of fancy cars, just had two nice ones.

So then he retired in his prime. The reason he gave was he wanted to retire before he really hurt his body over the long haul, and he had saved up enough money to last him the rest of his life. And so he left football to spend his free time with his kids.

That's a man who gets what life is about. Having money isn't about the flashy things and the possessions. It's about the freedom it gives you, the time to spend doing whatever in the world is important to you. Robert Smith gets to choose to work, or choose not to work. To be with his kids, or to travel the world.

That's what frustrates me most. These guys have a shot at setting themselves up to do ANYTHING with their lives, and never to be tied down to a job. But they blow it. Failing to understand what you're passing up is unfathomable to me.

Anyway, Robert Smith was one of the all time great guys in sports. I admire him so much for that decision.

Yep, also wasn't fond of Ohio State not letting him focus more on academics, though he left after his sophomore year anyways. I think that he could've played longer and not done more harm to his body, but that was his choice.

[Kalisto2010]

Originally Posted by Schneed10

I like the story of Robert Smith. The guy was a real impressive RB for the Vikes there for a number of years in the 90s. Then he up and retires when he was seemingly right in his prime. He had signed a good contract that paid him good money, not Albert Haynesworth money, but a pretty penny. Rather than spending it, he saved 80-90% of his salary and bonuses, all throughout his career. He lived in a nice, but not lavish home. He didn't buy lots of fancy cars, just had two nice ones.

So then he retired in his prime. The reason he gave was he wanted to retire before he really hurt his body over the long haul, and he had saved up enough money to last him the rest of his life. And so he left football to spend his free time with his kids.

That's a man who gets what life is about. Having money isn't about the flashy things and the possessions. It's about the freedom it gives you, the time to spend doing whatever in the world is important to you. Robert Smith gets to choose to work, or choose not to work. To be with his kids, or to travel the world.

That's what frustrates me most. These guys have a shot at setting themselves up to do ANYTHING with their lives, and never to be tied down to a job. But they blow it. Failing to understand what you're passing up is unfathomable to me.

Anyway, Robert Smith was one of the all time great guys in sports. I admire him so much for that decision.

Robert Smith is educated that's why, someone who actually paid attention in school. I know he had aspirations of being a medical doctor, so I'm sure he had the intellectual prowess to understand the complexities of investing.

I know If I was 22 years old, with a millions of dollars, the last thing I would be thinking about 40 is years down the road. You know young men don't think like that. Here's another interesting factoid from the article.

experts estimate that only one in 30 of the highest-caliber private investment deals works out as advertised.

Recession or no recession, many NFL, NBA and Major League - 03.23.09 - SI Vault

[SirClintonPortis]

Originally Posted by Schneed10

To me, that's just a long-winded way of saying these people are irrational. Which is by its nature, stupid.

You say tomato, I say moron.

I like describing the portrait of reality as completely as possible. Part of the problem is indeed foolishness, but information asymmetry is also prevalent among the top 25, and you vehemently trivialize information asymmetry as a significant factor in some of these people's respective downfalls for whatever reason, which I consider an oversimplification. Every one of your critiscisms is one of lacking in knowledge and risk aversity(supposedly) and that ALL the problems due to that.

It's not worth my time to go ahead to continue, since you would then probably say something to the effect that even investing in US government bonds is doomed to failure, which by implication means everyone else doing that is also dumb. Also, hiring other folks to manage their expenses is also dumb, even if they do apply some sort of risk aversity in their decsion.

[GMScud]

Originally Posted by JoeRedskin

I don't need to "walk in another man's shoes" to study and learn from his experiences. If that were true, then there would be no point to education.

I think the term ignorant is more appropriate here. Some of these guys are ignorant b/c they simply have never learned the value of education, some are ignorant b/c they come from a background that celebrates ignorance and some are ignorant b/c they choose to be so and listen to their yes men.

Lots of smart people can be ignorant. Happens everyday. Some are self aware enough to realize they are ignorant and then do something about it. Others, like coddled atheletes coming from a culture that permitted or encouraged them to feel entitled, not so much.

I think that's a big part of it nowadays. These athletes have sponsors, agents, family members/friends, and other yes-men types who pump up their egos so much for their own personal gain. A lot of these kids have been told how great they are for years and years. Once they get that money the yes-men get louder, the temptation to spend and give away money grows.

I would go as far as to say that unless said athletes are pretty smart and/or surround themselves with people who truly care about their financial well-being, chances are they'll get taken for a pretty penny at some point.

For every big contract that is signed in pro sports, there are plenty of vultures waiting to attempt to siphon their share. Lots of huge wallets in the back pockets of low IQ's to prey on.

If I was the commish of any pro sports league, I would have mandatory financial counseling for every single rookie, in addition to optional counseling for every other veteran player. These kids have got to be made aware of the predators out there, and they also need to hear some perspective on the dangers of becoming mega-rich overnight.

[Giantone]

Originally Posted by Schneed10

If you put 100% of your money in any stock at any time, whether Apple, Enron, AIG, or Coca Cola, you're dumb.

What if that one company goes out of business?

Find the post I said 100% of my money,read again I said if you invested $1000 and I did 1 million according to you if we invest in the same thing and it goes under I'm stupid but your not,I might have lost more money bit you are just as dumb as everyone else.

[Giantone]

Originally Posted by tryfuhl

If an FA suggested Enron to you 5 years ago, not only would you be dumb, but so would he.

You know what I meant .