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Joshua Kennon

78% Of NFL Players Bankrupt or In Financial Distress Within 2 Years of Retirement

By September 20, 2009

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I just read an article that was referencing an original Sports Illustrated piece that detailed a shocking statistic: Within two years, 78% of NFL players are either bankrupt or facing severe financial hardship. The article points out that the starting salary of even the lowest NFL player is $310,000 and then jumps to $460,000 in year two. The latter figure puts these players in the top 1% of income in the United States according to the Federal Reserve data. How on earth could they be going broke? That's obscene.

The fact that so much of NFL player wealth is invested in real estate doesn't help either, the authors argue. They have a point. (What's the first thing you see a newly signed player do? Buy a house for themselves and their mom.) The piece also points to a Business Insider article that says having a higher-than-average number of children by different women is also a problem. Case in point: "Take the example of former NFL player Travis Henry. The NYT reported recently that Henry, 30, a former N.F.L. running back who played for three teams from 2001 to 2007, has nine children each by a different mother, some born as closely as a few months apart. Henry says he's broke, and cannot afford the estimated $170,000 in child support he owes per year. Or boxing champion Evander Holyfield. As the AJC notes, Holyfield has grossed more than $248 million in the ring, but also come close to losing his Atlanta home because of child support payments believed to total $500,000 annually -- on top of two divorces and several failed business ventures."

Doesn't everyone know you never touch the principal! It's so unbelievably simple. If you do your job right, you can live off interest income and dividend checks for the rest of your life, without lifting a finger. This is just tragic.

Comments
September 20, 2009 at 9:57 am
(1) Julie Ann Garber, Esq. says:

Hi Joshua, this really doesn’t surprise me, particularly as you point out that the first thing that a player does is buy a big house for himself and his mother, not to mention a nice car or two! But you have to remember that these guys are really young and really inexperienced, and if they don’t learn early that they should listen to their agent and the NFL, which does provide financial training to all of its players, then they will never learn.

As an estate planning attorney I have worked with NBA, NFL and MLB players as well as an Olympic gold medalist. The athletes I have worked with have been fortunate enough to have a good agent as well as a good financial planner, but unfortunately it appears that this is not the case for the majority.

For example, take Steve McNair, who it seems has left a large estate for his wife and four children (who by the way, have three different mothers), but he didn’t do any estate planning at all which will leave his family to pay several million dollars in unnecessary federal and Tennessee estate taxes:

Steve McNair’s Estate Valued Near $20 Million

Steve McNair’s Lack of an Estate Plan Teaches a Valuable Lesson

Perhaps some NFL players will learn from Steve McNair’s mistakes.

Sincerely,

Julie Ann Garber, Esq.
Your Guide to Wills & Estate Planning
email: wills.guide@about.com
http://wills.about.com

The information contained in this comment is not legal advice and is not a substitute for legal advice. For legal advice, please consult with an attorney.

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