Pro athletes have to face many significant issues when they retire. The years of wear and tear on their bodies will typically land them with massive medical bills, and the years of freely-spending on cars, nice restaurants and similar trappings of instant wealth usually leave them with even bigger money problems.
If I decide to hand a check for $500,000 to any random 21-year old college student in the US, the odds are pretty good that the money wouldn't last for more than a year. Why would this be any different with a young, freshly-drafted athlete?
This, in a nutshell, is why pro athletes often go broke post-retirement. Managing a gigantic pile of money is a business, and very few of these athletes have any sort of real business background. For millionaire professional athletes, managing money absolutely is a second job, and many of these young, enthusiastic male athletes lack the maturity and patience to deal with the boring spreadsheets. As a result, they end up living essentially paycheck-to-paycheck, only with much larger paychecks.
If a pro athlete neglects to save money during their career, then the money runs out when the paychecks stop, leaving them in whatever financial situation they were in when their career started, only probably with much more debt.
For athletes like LeBron James, Alex Rodriguez, and other similar megastars, money will likely never become a problem. For "average" players, who make $1-2 million a year (before taxes) while also not playing for as long as the star players, going broke is much, much easier.
The fix seems fairly intuitive: make athletes take more finance classes when they're in school, and encourage them to hire a financial adviser, an accountant, and a lawyer ASAP once they turn pro.
No comments:
Post a Comment