My roommate and I love playing the basketballreference.com game, where you guess how much an NBA player made over the course of his career. It’s pretty astounding how much money those guys make and it’s equally astounding how they go broke. The facts are staggering. A recent SI article claims 60% of NBA players are broke within five years of retirement and 78% of former NFL players have financial troubles within two years of retirement. The usual culprits are there, baby mommas, divorces and bling.
There are a host of other reasons for the financial demise of these athletes. Very poor investing is a major contributor to the problem. As the article points out, athletes don’t want to invest in mutual funds, stocks and bonds. Nightclubs, restaurants and car washes are much more interesting. Oh, and inflatable rafts to save your sofa during floods. Just ask Torii Hunter.
About five years ago, Hunter says, he invested almost $70,000 in an invention: an inflatable raft that would sit under furniture. The pitch was that when high-rainfall areas were flooded, consumers could pump up the device, allowing a sofa to float and remain dry. “The guy I invested with came back and wanted me to put in more, about $500,000.”
Fortunately, Hunter got hooked up with an advisor who shut that second capital contribution down. Some athletes are not so lucky, as they become the pray of financial sharks. Just as many athletes are victims of their own spending habits. While not in danger of going broke soon, banking a quarter billion in salary plus a healthy endorsement career, Shaq’s expenditures per month exceed $875,000, according to papers filed in his since canceled divorce. Maybe his next flick should be “Shazam 2: The Disappearing Fortune.”
It’s easy to sit back and and ridicule these athletes for blowing their cash load, but it’s not as egrigious as it appears. Most of these kids are handed millions after growing up with nothing. Once Uncle Sam and the agents are through, the bottom line is cut in half from the start. Factor in a few escalades, child support payments and predators and it’s easy to see how they go broke. On a side note, I’d love to see a poll in five years of athletes who regret voting for Obama after getting railed by the tax collector.