Here Today, Gone Tommorrow: Pro Athletes And Their Money

This weekend, I was asked this question: “How people can have millions of dollars and go broke?”  This question was one that really made me think: if you have never had a million dollars, this makes lots of sense, because most of us are “ballin on a budget,” which means we make a little bit of money go a very long way. If you have ever attended a financial seminar, you can see that people have squandered large amounts of money. Some have lost more money than any of us could possibly ever make in a lifetime, while others have taken small wealth and turned it into riches beyond our belief.

A person can obtain that money in different ways. The most common are entertainment, lottery, and successful work ventures. I honestly think how it is obtained has a lot to do with the success rate of keeping it.

Money habits rarely change when someone wins a big lottery prize. If a person can't manage money before winning the lottery, then chances are, without outside help, that person will run into even bigger financial problems with the big money they've won.

If a person can manage money before winning the lottery, then they will have little trouble in that area after. Sure, they'll go a tad wild and buy some nice things they've always dreamed off, but most of that money will be wisely invested.

Most lotto jackpots wins are supposed to be paid, via direct deposit. With that, you don't walk into the bank with a huge check for millions of dollars.

There are plenty of stories of lottery winners who go flat broke, because they can't manage their money before winning or after winning. Big money leads to bigger financial mistakes.  I've never known anyone to win a lottery, but a friend of mine who can't manage money inherited a very large amount of money from his grandparents. He blew every penny of that to the wind. In the end, he had large debts and nothing to show for all that money he blew on partying and traveling.

Rich professional athletes squandering their millions has become a sad cliché.  I remember reading a Sports Illustrated article this year which showed how shockingly common financial ruin is amongst athletes:

  • By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.
  • Within five years of retirement, an estimated 60% of former NBA players are broke.

The problem is that most of these athletes have lived beyond their means for a long time, and they really only make enough money to manage that lifestyle. Were they smarter, they would have invested some money and gone through some financial counseling. It doesn’t make a lot of sense to work to make enough money to survive, especially when you make millions of dollars a year.

Take a look at New York Knicks center Eddy Curry. He is currently in debt, despite the fact he's still playing out the remainder of a six-year, $60 million contract. His main expenses? A $6,000-per-month chef, a $16,000 monthly allowance that he sets aside for friends and family, and a $570,000 personal loan he's trying to pay off that carries a whopping 85 percent interest rate (now that’s just poor money management.)

Then there are guys like Antoine Walker. Walker didn't just go broke; he went for broke. Though he made more than $100 million during his NBA career, Walker now owes creditors and casinos large sums of money. He's spent all his supporting a gigantic entourage, buying up cars, building his mother a ridiculous pad in Chicago, gambling with other professional athletes, and routinely flaunting his wealth.

Not all are victims of bad spending. Some try the money management, and they just fall short or they make a bad investment along the way. Needless to say, people are just careless with money.

Everyone wants to be Magic Johnson, who runs the successful Magic Johnson Enterprises, as well as which invests in urban development. When most pro athletes try and run their own business, however, the results are poor.

Recent examples include Saints all-time leading rusher Deuce McAllister, who filed for bankruptcy protection for the Jackson, Miss., car dealership he owns and Panthers receiver Muhsin Muhammad, who put his Charlotte mansion on eBay a month after news broke that his entertainment company was being sued by Wachovia Bank for overdue credit-card payments.

DYKSTRA 25 MILLION DOLLAR HOME FACING FORECLOSURE

The most spectacular recent example is former MLB All-Star Lenny Dykstra, who has been forced to sleep in his car after his magazine, The Player's Club, failed miserably. Dykstra filed for bankruptcy protection in July, reportedly owing between $10 and $50 million.

The moral of the story is simple: spend less than you make, and have a retirement plan. Note also that when you retire, unless you have a plan to continue to make money, then you should probably downsize and live like a normal person, so that your funds don’t completely dissolve into thin air. Fast cash goes fast without proper management.

Stay Breezy ~ I’m Out.

7 Replies to “Here Today, Gone Tommorrow: Pro Athletes And Their Money”

  1. Right on all points. I remember seeing a report on...I believe it was David Eckstein. And he lived in a small, but comfortable apartment. Cooked his own meals...drove a really modest car. And he was like...he MIGHT buy a nice in couple years...lol

    But that's why my attitude of money has changed so much in the past couple years. I know TOO many folks who make what I'd consider VERY nice livings with creditors callin' them every day. So I soon learned that it's not HOW MUCH you make...but what you do with what you have.

  2. The pro leagues aren't babysitting agencies! And this IS America - you can't exactly FORCE these guys to take a money mgmt class or adhere to its guidelines. These multimillionaire man-children should set aside a couple of bucks and hours to take a money mgmt class on their own. Not that it would likely help much.

    They are driven by instant gratification and ego. It's more a personality disorder than lack of savvy with money. They're rolling in dough and are like kids in a candy store.

    Not all athletes fall victim to this. It's the same dynamic with 'regular' folks: some have inner discipline and live within their means, some don't and rack up huge credit card bills and defaulted mortgages. But the multimillionaire athlete busts are much more spectacular in circumstances and garner much more attention. Bottom line is they get what they deserve - famous or not.

    And I always remember Sprewell as 'the guy who choked his coach' first, the guy who made that asinine statement about "feeding his family" second. He's not the first, or last, overpaid athlete to make that stupid statement, but he is the only one to try to strangle his coach. He's a loser through and through, and these troubles couldn't happen to a better guy!

  3. Ironically, Nails (Dykstra) spent his retirement trying to show pro athletes how to make money by investing in the stock market. He even started a magazine called The Players Club to show them how to make the most of their money. But he struggled to keep his operations afloat, eventually declaring bankruptcy in 2009 after a bunch of creditors came after him when he started missing payments on his mortgage, his business office's rent and his credit cards. My boyfriend thinks the same with me. He is eight years older than me, lol. We met online at agelesscupid .c om a nice and free place for younger women and older men, or older women and younger men, to interact with each other. Maybe you wanna check out or tell your friends.

  4. @Chuck - yeah and Brandon Jennings. Be smart with your money. It's only going to be temporary stretch it and make it last .

    @Jeremy - I can see your point, but you did go in kinda hard on spree.

    They could all use a lesson in money management.

  5. Athletes think their salaries are everlasting. Many get duped into investing in unsafe investments. They have a difficult time understanding money. They need to display the same focus and commitment they used to make them professional athletes into their investing. Moreover, many need to modify their spending before they need to rely on bankruptcy. For example many athletes can reduce the amount of cars they own in half i.e. ten to five.

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