The Uncertain Financial Futures Of Athletes And Entertainers Demand Training And Discipline
How professionals with unpredictable and short-term earning windows can lock down their financial futures
In one corner, you have the likes of Mike Tyson, Michael Vick, Allen Iverson, Antoine Walker, Evander Holyfield, Lawrence Taylor, Scottie Pippen, and Lenny Dykstra, who collectively earned in excess of $1 billion throughout their respective athletic careers. And in the other corner you have the likes of George Foreman, Magic Johnson, Michael Jordan, Roger Staubach, Wayne Gretzky, Tiger Woods, Greg Norman, and Cal Ripken Jr., who not only earned large sums of money in uniform, but went on to build successful business careers, both during and after their playing days. !e former group figured out how to burn through a cool billion dollars, and have nothing left to show for their domination in their respective sports.
According to Sports Illustrated, 78% of NFL players who are retired for only two years file for bankruptcy. After five years of retirement, 60% of NBA players suffer the same fate. According to a study by the National Bureau of Economic Research, nearly 16% of the NFL players in the study who were drafted during 1996-2003 filed for bankruptcy within just 12 years of retirement.
In this article, I will examine the common mistakes made by those working in a profession where the longevity, predictability, and sustainability of earning power are difficult to forecast. I will share my own experiences working with and advising athletes and entertainers (A|E) and what I learned about the many challenges they face. I will address several important planning considerations these professionals must address, plan, and solve for, regardless of the length of their careers. In addition to the financial planning and investment mistakes that have haunted this group for generations, many other tangible and intangible factors contribute to the success or failure of A|E during and after their careers. I will discuss the common themes and actions of professionals who not only survive but thrive after their playing days are over.
*Statistical sources: Science Daily, nba.com, espn.com
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