I was watching a ESPN documentary back in 2012 called “30 For 30 For Broke”. Basically it was centered around athletes going bankrupt. I found it very interesting and astonishing that so many athletes, whether it was basketball, hockey, football, or baseball players going down a bad financial path. And it’s a topic I want to discuss today. So why are so many athletes going broke? Well, according to a 2009 Sports Illustrated article, 60 percent of former NBA players are broke within five years of retirement. By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress. Sucked into bad investments, stalked by freeloaders, saddled with medical problems, and naturally prone to showing off, many pro athletes get shocked by harsh economic realities after years of living the high life.
Lets start with Antoine Walker, a former 3 time NBA All Star, who played for the Boston Celtics, Dallas Mavericks, Miami Heat, and Minnesota Timberwolves from 1996-2008 and played overseas from 2010-2012. He has earned over 110 million dollars throughout his 12 year NBA career.
Growing up as the oldest of six, Walker helped his mother raise his siblings as she struggled to provide for her family. Once Walker made it to the league, he was set on providing for his family and it did not take long before he blew through his rookie salary.
“I never really thought about the severity that I put myself through after just the first year of the league, but I did not really worry about it because the money was constantly coming in,” said Walker. “
He quickly got hooked for the finer things and upgraded his entire family to live in multi-million dollar homes that he built from the ground up. His driveways were filled with four to five luxury cars — from Bentleys and BMWs, to his prized $350,000 Maybach. And as one of the most fashionable ballers, Walker never wore the same designer suit twice.
His generosity extended beyond his family to his many friends and acquaintances. From lavish all-expenses-paid trips to luxury gifts for his friends, Walker made sure everyone in his circle enjoyed the lifestyle he led. With his fellow NBA players, Walker gambled extensively – losing $646,900 in just two years.
Even as his spending spiraled out of control, Walker had a plan to put his income to work and bought more than 140 properties along the South Side of Chicago. Whether it was land to build on or commercial and income properties, Walker had a full-range of real estate investments meant to maintain the lifestyle he had built for his family after retiring from the league.
With the housing bubble and bust, Walker found himself defaulting on loans where he was the personal guarantor, losing value on land, and failed to get a handle on the legal issues that followed.
Looking back, Walker says he regrets making significant investing decisions before retiring from the league. With his attention focused on his NBA career — in full swing at the time — he didn’t have time to keep a close eye on his investment properties, and like many others, was caught off-guard by real estate crash.
“I think there were different ways of how I could have saved the bulk of my wealth. I could have been on top of it. I missed a lot of court dates, a lot of default judgments, there’s a lot of properties I could have kept that I thought were good investments,” Walker said.
Hitting rock bottom in 2010, Walker declared bankruptcy, citing $12.74 million in liabilities with $4.28 million in assets. The entire bankruptcy process was drawn out over two years. Stripped of his credit cards and his bank accounts frozen, it was heartbreaking for Walker to liquidate many of his priceless possessions, including his NBA championship ring his team, Miami Heat, won in 2006.
Mike Tyson a former world heavyweight boxer faced money problems as well. He had earned more than $400 million in his boxing career. However, he had spent almost all of it, spending it away on extravagances like mansions, luxury cars and pet tigers. He also owed $9 million for his divorce settlement and $13 million to the IRS. When he filed for bankruptcy in 2003, he claimed debts of $27 million.
Johnny Unitas(R.I.P)was a former NFL star who played from 1955-1973 with the Pittsburgh Steelers, Baltimore Colts and San Diego Chargers.The legendary quarterback had attempted to parlay his earnings into shrewd business moves, such as restaurants, real estate ventures and bowling alleys, but these businesses never performed in the way that he had hoped. Ultimately, he declared bankruptcy in 1991, and when he died in 2002, Unitas Management Corp was also forced to file for bankruptcy to protect itself from an unresolved lawsuit plaguing the Hall of Famer’s estate.
When alot of these athletes become professional, they are seeing a paycheck that they never seen before, cause a lot of these players grew up in poor situations, whether not having enough money for clothes, food, bills, etc. So a lot of them do not know how to handle their money correctly, I could only imagine being 20 years old and I am making 4 million dollars a year, and experiencing that rich lifestyle, where you can buy all the cars, jewelry, houses, and clothes that you want. That being said, there is something called self discipline. You have to know there are limitations you have to make when it comes to spending money, cause as some of these athletes demonstrated, just the way you was able to get that amount of money, you can lose that money just like that without any proper financial self discipline.
And this doesn’t only apply for athletes only. This goes for anyone who is making a significant amount of money, you can’t always give in to financial temptation. You have to ask yourself, “Do I really need 7 cars” “Do I really need 4 mansions”, “Do I really need a new pair of sneakers, boots or shoes every week”. Those are the questions you have to ask yourself before you spend your money on things you may regret later on in life and put one self in deep debt.
The NBA has a program called RTP (Rookies Transition Program)
The NBA’s Rookie Transition Program is a mandatory initiative for new, young players entering the league that helps provide them with information and resources to assist them in making better decisions in order to more successfully adapt to the lifestyle and challenges of the NBA. Created in 1986 by the league and the National Basketball Players Association, the program claims to be among the most comprehensive of its kind in professional sports.
There are eight categories on which the program focuses, including financial education, the business of basketball, drug and alcohol education, health and safety, legal education, media and image communications, professional ethics, and technology and continuing education. The league also sponsors a program to help players transition into new careers after retirement.
Utah Jazz president Randy Rigby said the team and many other NBA franchises have developed programs to help teach new entrants the lessons they need to manage their new found wealth responsibly.
“You want to constantly reiterate to them that the average NBA career is four or five years, and you’re going to make a lot of money, but it will take fiscal responsibility (to manage it correctly),” he said. “This type of income is not going to be there forever, so you need to manage it so that you have (adequate) financial resources going forward.”
He said the league also conducts meetings with each team in their cities once or twice a season focusing on issues such as fiscal responsibility.
“We make sure our players are at those activities,” he said.
Rigby said the team has forged relationships with local financial institutions that offer financial advisory and wealth management services where players can access expertise on proper money management. The team also offers long-term help to current and alumni Jazz players in their post-basketball careers.
The NFL also has a program called the FEP(Financial Education Program). Which provides players with valuable knowledge to manage their personal finances and improve financial decision-making. The objective of the program is to ensure the long-term financial stability of players throughout the league. The program offers players resources and a realistic perspective on the current economic environment. The non-credit seminars teach players about cash management, insurance, tax planning, estate planning, investments, retirement planning and other related topics.
MLB have their program to teach young baseball players the life of being a professional baseball athlete called the
Rookie Career Development Program. For more than two decades, Major League Baseball and the Major League Baseball Players Association have joined forces to create this event, designed to help future big leaguers avoid the kinds of pitfalls that have kept many players from being able to focus on that on-field work.
There are sessions on dealing with the media, how to handle situations in the clubhouse, drugs in baseball and financial planning, just to name a handful of issues addressed. Players get to interact with each other around these topics and there are breakout sessions with former big leaguers to allow smaller groups of players to drill further down on specific issues.
Not only athletes go through these problems, but other types of people such as musicians, and actors.
Willie Nelson who is a known musician for songs like “Nothing I Can Do About It Now”, “Hello Walls’, “On The Road Again” has had some money setbacks himself.
Willie Nelson declared bankruptcy in 1990, owing the IRS $16.7 million in unpaid back taxes and fees. Depending on who you ask, either his accountants had not paid Willie’s taxes for years, or they had invested his money in tax shelters that turned out to be illegal.
To help pay off his tax debt, in 1991 Nelson released an album titled “The IRS Tapes: Who’ll Buy My Memories,” and paid all proceeds to the government. He also auctioned off some of his memorabilia, and by 1993 he had finished paying the IRS all the tax he owed.
Rapper MC Hammer known for his songs like “U Can’t Touch This”, and “Too Legit To Quit”, was forced to file for bankruptcy in 1996 with $13 million in debt. M.C. Hammer earned more than $30 million in the early ’90s, but after purchasing a $12 million mansion with a paid staff of 200, along with a 40-plus person entourage, he soon found himself unable to support his luxurious lifestyle.
Actor Burt Reynolds, known for his movies as “Deliverance”, “Boogie Nights”, “Smokey And The Bandit” and “The Longest Yard” went through money problems himself in August 2011. Mortgage lenders filed foreclosure proceedings on his waterfront compound, Valhalla, in Hobe Sound, Fla. The five-bedroom home and two guest houses contain a movie theater, swimming pool, indoor waterfall and boat dock, according to real estate listings. Reynolds had tried to sell the property for $9 million, and then dropped the price in January 2012 to $4.9 million. A check of Martin County, Fla., legal records shows that the actor, who recently performed a one-man show, “An Evening with Burt Reynolds,” at a theater near his home, was still involved in litigation with lenders in August 2012.
You also have to be careful on investments you decide to make, who you have as your financial adviser cause that person may be a scam artist, looking out for their pockets only, and last but not least, you have to learn to say “NO”. When you start to get money, you may have “family’ and “friends’ coming out of nowhere looking for handouts, and asking for you to buy them clothes, house, help with bills, etc. You have to remember, your true family and friends would not try to purposely dig you in a financial grave, and will not try to be a burden on you. Cause when certain people see that you reached a new financial status, they feel they are entitled to some of your money just because they either went to school with you, was a former co-worker, or because they are blood related. It may be hard at first, but u have to realize who was really your friend or truly had your back when you were not making millions of dollars a year, cause I’m pretty sure a lot of celebs besides just athletes feel that they owe people something, and that can also be a big reason why they suffer financially. I just hope more people wise up and handle their money better, and learn from other people’s mistakes. I guess Biggie Smalls wasn’t lying when he said ” Mo Money, Mo Problems”.