Did you know that 80% of retired NFL players go broke and file for bankruptcy within 3 years of hanging up their cleats? With a median income of $750,000 it is absolutely insane that so many NFL players go broke and lose everything. In this article we are going to study the exact reasons why NFL players are unable to hold onto their wealth and why so many NFL athletes go bankrupt. Let’s get started!
The Average NFL Career Is Very Short
While many NFL players are earning millions of dollars and look to be living the life of a Saudi prince their window of earning the big bucks is usually limited. The average NFL career lasts just 3.3 years and as the median NFL salary is $750,000 the average NFL player has career earnings of $2.5 million before tax. If we estimate 30% tax, the average NFL player is only taking home $1.75 for his whole career.
$1.75 million is still great money but in many parts of the country it makes you simply middle class and does not afford you to live a life of luxury. However, with the right investing strategy and living below their means the average NFL player should still be able to take this $1.75 million and turn it into a reliable income stream that they could live off for the rest of their lives.
Let’s look at some other reasons that causes NFL players to quickly burn through their millions!
NFL Players Are Often The Target Of Scams
As NFL players are famous and their salaries are public scam artists often position themselves close to NFL athletes. Scam artists will befriend NFL players and pitch different business ideas, ask for loans and convince them to use shady lawyers, financial advisers and accountants. Many NFL stars have lost fortunes investing in fake businesses or having cash stolen by criminal financial advisors.
Cory Redding who played 13 seasons in the NFL was scammed out of $5 million by his former financial adviser, Kenneth Cleveland. Cleveland was sentenced to 5 years in prison after failing to invest the money conservatively as instructed by Redding, instead the rogue financial adviser kept most of the money to himself and paid other members of a Ponzi scheme.
NFL Players Don’t Invest Wisely
Too many NFL players spend all their money on assets that are either high risk or instantly lose value. A great way to go bankrupt is to spend like your average NFL player who immediately splashes millions of dollars on luxury cars that lose 30% in value as soon as you drive away from the dealer. Then you add in 6 figures on diamond jewelry which has terrible resale value and some ugly mega mansion in a poor location which is impossible to sell.
NFL players also love making risky investments such as opening restaurants, gyms, retails stores and other businesses they have no idea about. Over 90% of small businesses fail so it is no wonder that many NFL athletes pour millions of dollars into these risky businesses only to lose it all and have to shut them down!
One NFL player who is bucking the trend is former linebacker, Elvis Dumervil. Dumervil has turned himself into a professional real estate investor and now owns 588 units between 11 buildings in Florida. The former linebacker’s sharp real estate investments allow him to earn millions of dollars every year!
NFL Players Try To Support Their Families And Friends Too Much!
NFL players often come from poor families. It is common for NFL players to grow up in underprivileged environments where their parents don’t have any savings and struggle to put food on the table. Growing up in this environment it is natural for NFL athletes to want to help their families.
The problem is that NFL players often give away too much of their wealth while also still trying to keep up their luxurious lifestyle. NFL athletes will often give their friends and families loans, buy them cars and even houses. If the average NFL players only nets less than $2 million you can see how fast they can go broke if they start handing out such lavish gifts as luxury cars and houses!
If NFL players want to hang onto their money they need to closely budget how much money they give away because there is no point in being generous if it results in the athlete going broke. NFL athletes also need to be careful of family members pressuring them to give them money. It can be hard to say no to a family member when they ask for financial assistance but sometimes it is necessary.
Divorce Settlements Leave NFL Players Broke
Did you know that between 80% and 60% of NFL players are divorced? A great way for an NFL player to lose half of his money is to get divorced. Even worse, many NFL players are left paying huge monthly child support bills that quickly become unaffordable and drain the athlete’s savings.
If NFL players want to hang onto their money they should sign a pre-nup prior to getting married which states exactly what their wife will receive in the event of a divorce. Or they could simply marry the right woman and stay married for the rest of their lives!
NFL Players Don’t Plan For The Future
Too many NFL players get caught up in the moment and think just because they are earning millions of dollars today that it will continue for years to come. But the NFL is a cruel business and an athlete’s career can come to a screeching halt at any point in time. And when you factor in that nearly all of NFL contract money is not guaranteed NFL players need to be extremely cautious with their money and treat it like it can disappear tomorrow.
NFL players who come up with 3, 5 and 10 year plans typically handle their money much more conservatively than athletes who just live in the moment. NFL players can reduce their chance of going broke by creating a yearly budget, and savings goal and sticking to it religiously.
Wrapping Things Up
NFL players go broke because they their careers are short and after taxes they aren’t left with as much money as think (on average $1.75 million). NFL players also fail to wise invest their money, they spend too much on cars, jewelry and vacations and are often the victims of poor financial advice and in some cases scams.