Local and national news programs regularly feature retired athletes who are having financial problems. The roster of down and out former players includes everything from well-known footballers to backup baseball pitchers, former hockey stars, and basketball players who were once household names. Why do so many professional sports figures end up without much cash in the bank?
The reasons vary, but there are a few common patterns. In many situations, athletes who devote their early lives to a physically demanding game make no plans for a second career. Others retire with a decent nest egg but burn through it quickly. Other reasons former pros end up in the red include lavish lifestyles, making terrible investments, retiring too early, and more. There’s no single scenario that explains the otherwise mysterious phenomenon of highly-paid sports stars ending up without financial means, but the following are some of the most frequent reasons.
Having No Backup Careers
The sports pages of entertainment and news websites are full of sad stories about once great professional players who run into money problems just a few years after ending their sporting careers. In very many cases, the main cause of their money difficulties is the lack of other job skills. Too often, people who spend their high school and college years on the field don’t acquire enough marketable skills to survive in the regular world. Then, when their playing careers are over, they struggle to find worthwhile jobs.
Ignoring the Value of Taking Out Personal Loans
Every day working people routinely take out personal loans when they face short term financial challenges. It’s part of life and can be a great way to improve credit scores. But for so many former athletes, who never had to deal with the regular ups and downs of personal finances, the idea of taking out a loan is not on their radar. Too many retired athletes burn through their retirement savings accounts and family nest egg money when something out of the ordinary comes up. Instead of borrowing, budgeting, and spending wisely, they use the precious financial resources they’ve amassed during their playing careers. The good news is that anyone can apply for a personal loan to get through a rough spot, finance a vacation, or start a business.
Living the Lavish Life
Unfortunately, there are always the once-famous sports stars who squander their fortunes on lavish lifestyles. During their active years in the leagues, they had plenty of income, traveled the world, and lived a high life. When reality hits, in the form of retirement, far too many continue doing the same things they did when their incomes were sky high. Then they run out of funds within a year or two. Some end up selling autographs or giving speeches if they are famous enough or getting nine-to-five jobs like everyone else. Not all are lucky enough to make a smooth transition to civilian life. A few live out their last days in less than enviable circumstances.
Making Unwise Investments
Wealthy ex-athletes often fall prey to scam artists. It’s common to read about former pros who put all their money into shady real estate schemes, startup companies, or other questionable investments. In fact, some of the most famous stars of the past have lost vast sums of money and never gotten back on their feet financially. In addition to making unwise investments, an unlucky few end up being bilked out of their cash by criminals who abscond with the money. Others fall prey to greedy managers and agents who drain the athlete’s bank account within a few months after they retire.
Retiring Too Early and Not Earning Mega Bucks
Career ending injuries are to blame for some of the financial problems retired player’s encounter. It’s easy to forget that even the best competitors in all the top sports have relatively short careers compared to non-athletes. Consider that most top-rated players rarely last more than 20 years. For the ones sidelined by injuries, ten years might be more common. Then, retiring at age 30 or 35 can mean almost certain money troubles. The other factor is that most pros don’t earn super-high incomes, so an injury can be a life changing event, at least from a financial point of view. A 30-year-old with a medical condition, no reliable source of income, and few job skills is almost destined for a tough future.
