Multi-million dollar contracts. Financial Managers. Long-term savings. Sports Finance Education. Legal issues. These are some topics to be discussed.
Charles Barkley, Allen Iverson, Scottie Pippen, Terrel Owens, Warren Sapp among other famous athletes.
With ratios indicating that roughly 6 out of 10 of NBA players go bankrupted after retirement and that number rises to 78% when the topic is NFL players, some reasonable facts maybe behind these stats.
As so, an average incoming player onto professional leagues is not prepared for a 6 or 7 figure contract. An average player does not understand how taxes work. And the question remains: Is the players’ fault? Maybe it is. Or maybe it’s the league’s.
An average player did not seat for four years of college listening to doctorate professors on financial advices. Even if they listened, an average former collegiate can go broke anyway.
Consequently, there are some crucial professionals to assist the product-that-attract-fans. Also known as players. The former are financial advisors. And this is the first problem.
Thus, players usually indicate a family member or a friend to organize his/her financial status on the short and medium term. Hence, the issue begins when this family member or friend does not have a strong knowledge background in the latter subject. The pyramid to financial independence cannot be sustained if its first level is not even stable.
Moreover, lack of the league’s pension plan usage, low-quality endorsements income management and large family-friend circle of financial assistance will contribute to the under-the-ideal wealth after fat contracts seasons.
Additionally, players do not forecast the medium-term plans and difficulties that they may encounter. With that said, players do not acknowledge how fast a career may end. An unfortunate injury, gambling additions or absence of productivity to the team may lead to an early exit of stardom exposure.
However, one of the key aspects of players’ bankruptcy is related with Divorce. Legal fees and the need to split family assets can lead to the mentioned financial issues. It’s an arduous situation when a player has, legally, to divide half what he/her earned and eventually help on child support payments.
On the other hand, the league’s Player Association, continuous courses on the subject and entrepreneurial projects/investments will lead to a long-term sustainability of players.
Lastly, these successful business-players can influence in a positive way the followers and future pros on how to take care of his/her money. Education is a life-long process. Every individual needs assistance. The latter relevance increases when we are talking about influencers.
Lets keep leading by example. On and off the court, shall we?