From Riches To Rags
Broke. Tapped Out.
Would it surprise you to know that some of the greatest athletes of the last 40+ years are now poorer than dirt?
All of these famous, well accomplished athletes have made millions upon millions of dollars in their careers, and what do they have to show for it? Not a whole heck of a lot.
On a percentage basis, professional athletes are the WORST money managers.
I recently read the following statistics when it comes to professional athletes and money: Around 78% of NFL players and 60% of NBA players go broke within five years of leaving the field, according to a Sports Illustrated estimate made in 2009 (Source: UK Guardian).
Just look at the life of professional boxer Mike Tyson.
At the height of his career, here’s what Mike was able to accomplish. He was the undisputed heavyweight boxing champion of the world. He was the youngest man to ever win the WBC, WBA and IBF Heavyweight Titles. Finally, he was the first man to win 12 of his first 19 fights in the first round by KO. His estimated lifetime earnings range from $300-400 million.
Yes, you read that correctly, $300-400 million!
But then, the wheels came off and his life fell apart. Mike Tyson’s story reads like the Great American Tragedy: domestic violence, bad press interviews, the death of his father-figure trainer, a nasty divorce, a federal rape charge, felony possession of drugs, a DUI, and a bloody ear incident.
And, at one point after this whole mess, Tyson was worth less than $700. Now, how in the world do you go from $300 million all the way down to less than $700?
3 Ways To Go Broke Quickly As A Professional Athlete
When you investigate the lives of professional athletes who have gone from millions to bankruptcy, you can definitely see a pattern that led them down a bad financial path. If I had to pick three areas that led these athletes in the wrong direction, then here are the three I would list:
- Fast Living. Sex, drugs, and rock-n-roll. If you want to make millions of dollars and lose it all, then simply live fast and loose. In this way, you can lose your career faster, go to court, land your butt in jail, get divorced, and then pay millions in alimony and child support. Yeah, that’s pretty easy to do.
- Toy Gathering. Expensive luxury cars. Multi-million dollar homes. Massive yachts. These are the high dollar items that get many athletes in trouble. But, this is what happens though when young athletes go from financially poor to massively wealthy as soon as they sign on the dotted line of an incredible contract deal. They don’t know how to handle that kind of wealth. So, they run out and go on spending sprees. Plus, they end up spending more than they actually make on stuff that will sharply go down in value within a few short years.
- High Risk Investments. Getting investment advice from those people closest to you (family and friends) is always a bad idea. But, when you look at these riches-to-rags athletes, this is definitely what you observe – rich people taking investment advice from other people around them who are just plain money hungry. Bad restaurant deals are pretty typical with athletes. The restaurant business is a brutal industry and not a wise place to invest large sums of money.
Questions: Ok, so you’re not a wealthy athlete, but are you making some of the same mistakes as these athletes? Are you living a questionable lifestyle that will damage your finances at some point in the future? Are you buying a bunch of stuff that is dropping like a rock in value? Are you making any risky investments that will come back to bite you in a few years? What decisions do you need to make, today, in order to put yourself in a better financial position?