Almost every child at some point dreams of becoming a professional athlete, and why shouldn’t they? Sports stars not only serve as role models for today’s youth, but represent everything we all fantasize about achieving–fame, glory and, of course, the riches that come along with being a top athlete in any sport.
Pro athletes make serious bank. Just look at the following athlete salary comparison for figures that some of the nation’s favorite sports stars were enjoying in 2008, according to Forbes.com and SI.com:
- Tiger Woods: Just under $128 million
- Floyd Mayweather, Jr: $40 million
- Kobe Bryant: $39 million
- LeBron James: $38 million
- Roger Federer: $35 million
- Alex Rodriquez: $35 million
- Peyton Manning: $30.5 million
- Dale Earnhardt Jr.: $27 million
- Serena Williams: $14 million
- Venus Williams: $13 million
Anyone collecting that kind of money has it made for life. Even in the midst of a recession, you could live beyond comfortably on a multi-million dollar athlete salary.
The Ugly Truth About Athlete Finances
That’s what we’ve all believed, anyway. The truth is a majority of professional athletes run into serious financial troubles during their careers, despite the enormous paychecks they pull in.
Last year, Sports Illustrated delved into some of the stories behind the financial woes of today’s top players in “How (and Why) Athletes Go Broke” in an attempt to shed some light on this puzzling predicament. Check out the surprising findings:
Professional Athlete Money Misfortune
- 78 percent of former NFL players have either gone bankrupt or are under financial stress due to joblessness or divorce after just two years of retirement.
- In fact, it’s estimated the divorce rate for pro athletes ranges from 60 to 80 percent, and husbands commonly lose half of their net worth during the divorce proceedings.
- Approximately 60 percent of former NBA players are completely broke after being retired for just five years.
- Last year, 10 current and former big-leaguers found that at least part of their money was tied up in the $8 billion fraud allegedly perpetrated by Texas financier Robert Allen Stanford.
- In early 2009, 400 title rings, including a 2008 Giants Super Bowl ring, were pawned to championship-rings.net, up 33 percent from the same period the previous year.
- At least 78 NFL players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds.
- At least a dozen players lost a total of about $15 million to William (Tank) Black’s pyramid scheme.
So why is it that athletes run into so much financial trouble?
There is a myriad of possibilities, but it seems a lack of personal finance and investment knowledge, combined with the attitude that a big paycheck equals unfaltering wealth, is the underlying problem. These players take on debt believing that their income rate is sustainable when sadly, it’s not.
This means that while you should continue to support and encourage your own child’s aspirations of sports stardom, be sure to also instill sound spending and saving behaviors early so he or she can properly manage that top athlete pay. Early financial success doesn’t happen overnight, but unfortunately bankruptcy can.
Just because you're a "star" it don't mean you're bright!