Why NFL players go broke ...
... and what you can learn from them
Terrell Owens was famous for his NFL accomplishments and overthe-top touchdown celebrations. But he’s also famous for running through most of the US$80 million he made during his 15-year career, thanks in part to bad investments and business deals.
“Having a lot of money it’s good but at the same time you have to be smart with it,” Owens says. “You have to really find the right people to help you manage that money going down the road.”
Sports Illustrated once estimated 78 per cent of NFL players end up broke or under financial stress after they retire. In an interview with NerdWallet, Owens and Eric Dickerson, the Hall of Fame running back, talked about their experiences and what young athletes should know about building a solid financial future.
Here are some of the ways people sabotage their finances. The issue: If you have some money, you may have family or friends who ask for loans, handouts or “investments” in their business schemes. Imagine what happens when you have big money.
“Uncles ask for money, aunts, grandmothers, friends, all of the sudden they think it’s a free-forall,” Dickerson says. The take-away: Make sure you can afford to help others before you do. Gifts or loans shouldn’t come at the expense of your own obligations, including saving for retirement. Also, be wary of giving money to people who chronically overspend or who aren’t taking steps to support themselves. The issue: Some athletes get taken by fraudsters such as Robert Allen Stanford, who is serving a 110-year sentence for a US$7 billion Ponzi scheme that snared several pro baseball players. Others get fleeced by advisers who are incompetent or enrich themselves at the players’ expense.
Too often, people turn over the keys of their financial lives to others and stop paying attention.
“That was one of the biggest mistakes that I did is trusting (advisers) to manage my financial portfolio without keeping a close eye on it,” Owens says. The take-away: Learn about money and pick a good financial adviser. At a minimum, advisers should have a significant credential such as a certified financial planner, certified public accountant or certified financial analyst. They also need to promise to be a fiduciary, which means they put your interests ahead of their own, and they should pass a background check. The issue: Athletes can be so dazzled by the money coming in they don’t consider the day when it will stop, Dickerson says. Also consider, what an NFL player is promised in a contract is often far more than he earns, Dickerson says, as careers may be shortened by injuries or getting cut.
“Football is a sport that you can play really for three to four years if you’re an average player. If you’re a great player, you may have a 10- or 12-year career, but that’s very rare,” Dickerson says. The take-away: None of us is guaranteed a long career or ever-climbing paycheques. Living below our means during good times is the best way to survive when times are bad. Putting aside money for retirement and emergencies should be top priorities.