Staggering amount of NFL players file bankrupt

[tazinib1]

Staggering

 

 

I was shocked that I was not shocked by this report.

[Savage Beatings]

That sounds like the business plan of Kramerica Industries.

 

[bpwallace49]

I dont know what you guys are talking about.

 

Pacman "make it rain" Jones

[Riffraff]

Previous conversation on the same 78% stat.

[Bronco Billy]

Hard to imagine. It really is.

 

These kids get a free education, predominantly at Div I schools. They can get all the help they need at no cost in at achieving at least a minimum of junior status undergrads. They walk away with no financial obligations leaving college at all. They get paid more in 3 years than half the population in this country makes in a lifetime. Even if they don't play another down beyond their initial contract, they should be so far ahead of all but an exclusive few in the population that they should be able to retire comfortably at 50 in the worst case. The NFLPA has negotiated a lucrative set of benefits extending well beyond their playing days.

 

Instead, the money is just pissed away like so many 8 year olds spending so much monopoly money. And the excuses for it are just so pathetic that you want to puke.

 

Maybe they need to write contracts in the NFL that pay these guys like children who have a trust fund established unless they can show some kind of financial comprehension beyond throwing thousands of one dollars bills at strippers and of being capable of at least understanding the fiscal principles of running a lemonade stand.

 

:shakinghead:

 

I just don't have it in me to feel even a remote amount of sympathy.

Edited May 30, 2010 by Bronco Billy

[wolfer]

Lottery winners also go through the same thing--the tendancy to blow the winnings and revert back to what you had before the big win. You are who you are.

 

Money management is a skill that few 22 year-olds have, especially if their parents also had no money to begin with.

 

I can't feel sorry for these 78%, other to say when you surround yourself with people upon signing that first contract (agents, lawyers, etc) add a freaking accountant/FP to your team. If you aren't going to learn money management, pay some good people to do it for you...

[Riffraff]

This was the best part of the article for me:

 

The 78 percent number is buoyed by the fact that the average NFL career lasts just three years. So, figure a player gets drafted in 2009, signs for the minimum and lasts three years in the league: He will have earned about $1.2 million in salary. Factor in taxes, cost of living and the misguided belief that there will be more years and bigger paydays down the road, and it becomes a lot easier to see how so many players struggle with money after their careers end. Nobody plans on playing just three years in the NFL, you know?

 

One thing that wasn't mentioned specifically was that these guys go out and buy a huge house. While the huge house may get paid for up front, the upkeep and maintenance on some of these estates can end up costing a good $30k or so a year. After their playing days are done (only 3 years?), a lot of these guys are going to barely make over that in a year in salary. Easy way to lose the house.

[policyvote]

I can't feel sorry for these 78%, other to say when you surround yourself with people upon signing that first contract (agents, lawyers, etc) add a freaking accountant/FP to your team. If you aren't going to learn money management, pay some good people to do it for you...

 

I remember reading in Charles Barkely's (first) autobiography, he hired a money manager, told him to handle everything and just give him an allowance. After a few years, he realized that dude had frittered everything away on scattershot investments, and fired the guy. As Barkely put it, "Anybody need 75 head of cattle?" A lot of players have no idea how to handle money--so they have no idea how to hire someone to handle their money either. Even when they thing they're doing it right, they're still doing it wrong. Worse yet, a lot of players have family that expect to hit it big, too.

 

I remember seeing an article on a O-lineman, I think it was Derrick Deese, whose parents demanded he buy them a dream home when he was signed as an undrafted free agent. He tried explaining to them that just being in the NFL didn't make him infinitely wealthy, but they'd have none of it--so he ate ramen in an apartment for a couple years while they got their dream home.

 

By the way, from Deese's Wikipedia page:

 

Deese played college football at the University of Southern California after playing at El Camino College in Torrance, CA. He is among the few Trojan football alumni that has not been accused or convicted of a crime.

 

 

Peace

policy

Edited May 31, 2010 by policyvote

[Ursa Majoris]

I remember seeing an article on a O-lineman, I think it was Derrick Deese, whose parents demanded he buy them a dream home when he was signed as an undrafted free agent. He tried explaining to them that just being in the NFL didn't make him infinitely wealthy, but they'd have none of it--so he ate ramen in an apartment for a couple years while they got their dream home.

I guess he was too nice to tell them to go f themselves which is what he should have done.

[BeeR]

Hard to imagine. It really is.

I find it hard to imagine that anyone finds it hard to imagine. The avg NFL player isn't exactly a rocket scientist and isn't drafted or signed for his 4.0. GPA. And that's not even taking into account the whole thug factor.

 

I just don't have it in me to feel even a remote amount of sympathy.

Why tf would anyone with a brain?

[Jrick35]

How about this crazy idea?

 

The article mentioned the example of a player that lasts 3 years at the league minimum would make 1.2 million. In the simplist form a person who makes 1.2 milllion in 3 years after taxes should take home around $600,000.

 

Here's the crazy part. If that player could manage to survive on $50,000 a year for those 3 years he could bank $450,000. I know living on $50,000 is a crazy idea for an NFL Player but honestly what do they HAVE to pay for? As much time as they spend traveling they don't need a mansion for a home anyway.

 

If he could bank $450,000 and then park that in just a decent Growth Stiock Mutual Fund that earns him 10 - 12%. He could draw 8% if he was no longer in the NFL and that would generate an annual income of $36,000. That is not a lot of bank but it is also not bankrupt and that $36,000 a year will be forever so long as that mutual fund avergaes 10 -12% growth longterm.

 

And they could be generating other income during the same 3 years they are in the NFL through endorsements or just by having a career path chosen to follow during the offseason. Then if they don't make it past year 3 they would have a small income to live on until they established their post nfl career.

 

And this doesn't even account for whatever signing bonus they may have gotten.

 

Food for thought. At the height of his career Barry Sanders lived in a House in a Detroit suburb that was valued at less than $200,000. But he had also put his siblings through college. Now that is a role model for all young NFL Players to follow both personally and financially.

 

ETA: This is all based on the LEAGUE MINIMUM. All those making more than that who go bankrupt are exponentially more irresponsible than those making the minimum.

Edited June 2, 2010 by Jrick35

[Riffraff]

Here's the crazy part. If that player could manage to survive on $50,000 a year for those 3 years he could bank $450,000. I know living on $50,000 is a crazy idea for an NFL Player but honestly what do they HAVE to pay for?

No matter the paycheck, very few people live off only 12.5% of thier total income for a 3 year period.

 

No one believes that they'll only be employed in their profession of choice for 3 years.

[Jrick35]

No matter the paycheck, very few people live off only 12.5% of thier total income for a 3 year period.

 

No one believes that they'll only be employed in their profession of choice for 3 years.

 

No kidding? Did you put a lot of thought into that reply?

 

It is all relative.

 

Not many people could live off of 12.5% of their salary but then again not every one has a career in which even the lowest ranking employees are catered to at every turn and make several hundred thousand dollars a year. And my example was based on the absolute league minimum and it was an extreme example meant to display the ease with which someone can set themselvs up when presented with enough cash.

 

Living off of 12.5% of $100,000 would be nearly impossible but living off of 12.5% of $300000 - 400000, that is much more doable. It is simply a lifestyle choice between spending every penny we make or trying to save more than we spend.

 

Most of the players make more than the league minimum so the %'s would change accordingly.

 

The point is that there is a large percentage of athletes and lottery winners alike who piss away everything when they could simply save a little and be set for life. And those lucky ones who get the big contracts have even less excuse. (See Mike Vick.)

 

A lot of these kids get enough in a bonus alone to set them and their kids up for life. And a lot of them do the smart thing (see Barry Sanders) but a large % don't.

 

And EVERYONE, athletes and non-athletes alike need to spend their entire career planning for the worst case scenario so they can be prepared financially if the worst case scenario should come to be. And that need is amplified for a professional athlete whose main source of income can be gone in a second just by tripping over a yard stripe. (See jamal anderson RB of the Falcons).

[Goopster24]

I remember watching Outside The Lines and they said that more than half of NBA players live paycheck to paycheck. THAT is unreal.

[BeeR]

I remember watching Outside The Lines and they said that more than half of NBA players live paycheck to paycheck. THAT is unreal.

Again keep in mind the boneheads we are talking about. It shouldn't be at all surprising.

[Seahawks21]

Earlier today I spoke about this subject at length with one of my childhood friends. He just retired last year from the NFL after ten seasons, in which he played for the league minimum in just about all of them. The guideline his financial advisor suggested for him was to buy a piece of property every year, and invest at least 33% of the remaining money into some kind of mutual fund. As of last year, he owned eight houses/condos across the country. The first thing that happened to him was that he took a bath with his mutual funds. Also, over the past few years, his properties have depreciated tremendously. Now his advisor has told him to get out of all of his properties immediately. He has sold 6 of them so far, and five of them have been for a loss, three of them being a very significant loss. Obviously he is far from bankrupt, but he did admit that he has to start looking for a job soon. I really don't know how he is going to get a good job in this market. Most of us have been working in our field for quite some time to get to where we are at now, but he is going to have to get an entry-level position in his mid 30's, and there is probably a bit of a climb ahead. He knows he is blessed to have gotten to play for so long, but he did admit that if he had only played for 2-3 years, he most likely would not be in very good financial shape right now.

 

I am in no way defending those that are insanely foolish with their money, but at the same time, those with the most assets and money are the ones that are losing the most in the current economy. Ten years ago, you might have been able to buy a house or two, invest a little money, and been able to spend somewhat freely and still be able to come out the other end in fine shape. Nobody really has that kind of room for error anymore.

[Jrick35]

Earlier today I spoke about this subject at length with one of my childhood friends. He just retired last year from the NFL after ten seasons, in which he played for the league minimum in just about all of them. The guideline his financial advisor suggested for him was to buy a piece of property every year, and invest at least 33% of the remaining money into some kind of mutual fund. As of last year, he owned eight houses/condos across the country. The first thing that happened to him was that he took a bath with his mutual funds. Also, over the past few years, his properties have depreciated tremendously. Now his advisor has told him to get out of all of his properties immediately. He has sold 6 of them so far, and five of them have been for a loss, three of them being a very significant loss. Obviously he is far from bankrupt, but he did admit that he has to start looking for a job soon. I really don't know how he is going to get a good job in this market. Most of us have been working in our field for quite some time to get to where we are at now, but he is going to have to get an entry-level position in his mid 30's, and there is probably a bit of a climb ahead. He knows he is blessed to have gotten to play for so long, but he did admit that if he had only played for 2-3 years, he most likely would not be in very good financial shape right now.

 

I am in no way defending those that are insanely foolish with their money, but at the same time, those with the most assets and money are the ones that are losing the most in the current economy. Ten years ago, you might have been able to buy a house or two, invest a little money, and been able to spend somewhat freely and still be able to come out the other end in fine shape. Nobody really has that kind of room for error anymore.

 

These are all good points. And he may have lost principal in his mutual funds during the recession (during which time he could just stop drawing anything off of them if he was) but for over a year now mutual funds have been regaining at 30 - 40% so if he left them alone(as we all should have) then he has most of it back. The people with the most may indeed lose the most but the sad truth of recession & depression economics is that the people with the most money also make the most money on the back end when the recovery begins.

 

And at the end of the day selling properties at a loss is really tough if he was upside down in the properties. But if they were payed for or he had some equity in them, which with a 10 year NFL Income one or the other should have been the case, then he may have lost money but when the selling was done he would still have some liquid assets to work with.

 

Your friend did it right and has something to fall back on even if at a loss. And hopefully he left the mutual funds sit.

 

But if a person spends it all on partying or whatever, or just wastes it, then 10 years later they have nothing to fall back on.

[MTSuper7]

The idea that an NFL player lives off of a small percentage of his salary is a pipe dream. In some sort of social vacuum, sure it could work. But even though these guys have a lot of things paid for them when they travel, etc., they are going to be home the majority of the time. And all of the friends and family in their life will likely have expectations which means the amount of direct and indirect pressure from friends, family, teammates who spend freely is hard to fathom. How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is? The analogy to people who win the lottery is a good one, because the same pressures afflict them. Feel sorry for them? No. But I'm also not going to sit here and get all holier than thou on how stupid and ignorant they are either because I've never experienced that kind of day in and day out pressure from all sides.

 

Oh, and this article reminded me of Eddy Curry's financial problems.

[BearBroncos]

The idea that an NFL player lives off of a small percentage of his salary is a pipe dream. In some sort of social vacuum, sure it could work. But even though these guys have a lot of things paid for them when they travel, etc., they are going to be home the majority of the time. And all of the friends and family in their life will likely have expectations which means the amount of direct and indirect pressure from friends, family, teammates who spend freely is hard to fathom. How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is? The analogy to people who win the lottery is a good one, because the same pressures afflict them. Feel sorry for them? No. But I'm also not going to sit here and get all holier than thou on how stupid and ignorant they are either because I've never experienced that kind of day in and day out pressure from all sides.

 

Oh, and this article reminded me of Eddy Curry's financial problems.

 

Not only that, if you want to prevent a majority of your earnings to be taxed to death, you have to spend the money to retain deductions. Yes, it's s shame but our federal government forces you to spend or they will take it.

[Jrick35]

The idea that an NFL player lives off of a small percentage of his salary is a pipe dream. In some sort of social vacuum, sure it could work. But even though these guys have a lot of things paid for them when they travel, etc., they are going to be home the majority of the time. And all of the friends and family in their life will likely have expectations which means the amount of direct and indirect pressure from friends, family, teammates who spend freely is hard to fathom. How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is? The analogy to people who win the lottery is a good one, because the same pressures afflict them. Feel sorry for them? No. But I'm also not going to sit here and get all holier than thou on how stupid and ignorant they are either because I've never experienced that kind of day in and day out pressure from all sides.

 

Oh, and this article reminded me of Eddy Curry's financial problems.

 

So an NFL player should squander his fortune because his family & friends think he should have a huge house and a fancy car? I don't buy that at all.

 

And my exanple of living off of a small % of their salary is not a pipe dream, It is a good idea. As I stated earlier 12.5% is a relative #. At the league minimum it is a small amount. But what about the guy who signs the $60 Million contract with $36 million guarantee over 6 years. You gonna tell me that he couldn't get by on 4.5 million over 6 years? Because that's 12.5% of 36 mil(And that's just the guaranteed part of the contract.

 

Look I said in my original post "Here's a crazy idea" I never expeceted that any one would live on only 12.5% of their annual ioncome but the model is a good one. Most Professional Athletes make hundreds of thousands of dollars a year. The article that spurred this entire thread was all about the Staggering number of professional athletes who are broke within x number of years of leaving their sport.

 

I am not saying they should live on only 12.5% of their income(although they absolutely could) that number was just an example but if they were to start a solid plan from day 1 that involved living on significantly less than they are earning then they could easily have a nice account established for post nfl life.

 

We all do it we all have 401K's that we contribute to and most of us make a heck of a lot less than the nfl players make.

 

Most financial experts would recommend banking 15% of your income for retirement in some form or other. That number 15% is just as relative as my 12.5% example because at 15% of my income I am not banking a whole lot on an annual basis but an NFL player could be banking over $30,000 a year at the league minimum for a Rookie. And it wouldn't be hard for them to raise that % to 20 - 25%.

 

And yes Uncle Sam does take a TON of our money. But the idea that we HAVE to spend money to retain deductions is naive at best. We only get a small % of that money back in tax deductions and we were already taxed on the money once when we were paid.

 

So if I make $15 and the government take $5 that leaves me $10. If I then spend $3 for a tax deduction I am down to $7. When I file my taxes I am only going to get a small %of that $3 back so I still won't have $10. So I would have been better off staying at the $10 I had or investing the $3 in a Roth IRA(or something equivalent) where my money would grow tax free than I would have been to spend the $3 on some sort of tax Deduction.

[BeeR]

So an NFL player should squander his fortune because his family & friends think he should have a huge house and a fancy car? I don't buy that at all.

Me either. Besides you could still have a nice car and a nice house and not piss away a huge % of your money or be broke long before your time. It's not like we're all saying they should drive around in a used Ford Focus and live in a grass hut. They could buy both of those (paid in full up front) and have plenty left over. As for the mooching friends and family, it's time to grow up and put one's foot down vs being a doormat. Plus I suspect for many (most?) of them, it's more about just pissing it away stupidly and irresponsibly vs being this great benefactor.

[Jrick35]

Me either. Besides you could still have a nice car and a nice house and not piss away a huge % of your money or be broke long before your time. It's not like we're all saying they should drive around in a used Ford Focus and live in a grass hut. They could buy both of those (paid in full up front) and have plenty left over. As for the mooching friends and family, it's time to grow up and put one's foot down vs being a doormat. Plus I suspect for many (most?) of them, it's more about just pissing it away stupidly and irresponsibly vs being this great benefactor.

 

Exactly! The idea that they need a multi-million $ house and cars that cost 6 figures is ludicrous. And the truth of the matter is, if they were smarter with their money throughout their careers then for those who do last more than 3 years and get the bigger contracts then when they retire at the ripe old age of thirty-something, then they could still have a nice house and a fancy car. Not to mention enough money to retire on to allow them to stay home while their kids grow up.

 

And if you want to take care of the moochers and hangers-on, then simply don't spend money on them. They will leave soon enough.

[Jrick35]

How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is?

 

I know I already responded to this post once but this question needs answered separately. I will answer it with another question.

 

How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is, AFTER you find out that the vast majority of those friends who drive the fancy cars and live in the giant houses are going to end up bankrupt within the next 3-5 years?

 

And that $50,000 becomes $100K if you just make $800K per year so not many people would be living on just the $50K per year.

 

The inability of most people to understand the value of living on less than they earn is exactly why credit lending companies run the financial world.

[policyvote]

How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is

 

Bingo. Why'd I just buy a PS3? Because my DVD player broke, and all my friends are trying to play me in Madden and loan me movies on Blu-Ray. At some point, if you want to run in your social circle, you have to keep pace financially.

 

Peace

policy

[Jrick35]

QUOTE (Jrick35 @ 6/4/10 7:11am)

How easy would it be for you to live on $50k per year when all of your teammates are driving fancy cars and living in giant houses and you have virtually every single person in your life asking you where your fancy car and giant house is

 

 

(Policy @ 6/4/10 8:33am)

Bingo. Why'd I just buy a PS3? Because my DVD player broke, and all my friends are trying to play me in Madden and loan me movies on Blu-Ray. At some point, if you want to run in your social circle, you have to keep pace financially.

 

Peace

policy

 

 

I was totally misquoted!!!