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Rags to Riches to Broke: Why Professional Athletes Struggle With Money

Written By Gary S. Williams, CFP®, CRPC®, AIF® and Nicholas A. Ibello, CFP®, AIF® February 27, 2019

A headline we hear of all too often…It seems as though every year we hear about another professional athlete that files for bankruptcy. It is unfathomable to think a person who earns tens of millions of dollars a year can file for bankruptcy. What causes an athlete from making more money than most people do in a lifetime down the path of “going broke.”

A headline we hear of all too often…It seems as though every year we hear about another professional athlete that files for bankruptcy. It is unfathomable to think a person who earns tens of millions of dollars a year can file for bankruptcy. What causes an athlete from making more money than most people do in a lifetime down the path of “going broke.”

From Mike Tyson, who earned more than $400 million in his boxing career (filed for bankruptcy in 2003), to Terrell Owens, who earned $80 million during his 15-season NFL career (filed for bankruptcy in 2012), the list is growing and growing. According to Sports Illustrated, it is estimated that 80% of retired NFL players go broke in their first three years out of the league. Below are some of the most common causes for athletes losing all of their earned income.

Lack of Competent Financial Advice and Blind Trust

It is not uncommon for athletes to enter the professional sports world so focused on their career, that they blindly trust “advisors” to manage their multi-million-dollar contract. To put it simply, most recent college graduates don’t have the financial background, wherewithal, or interest to balance a checkbook, let alone, manage a few million dollars.

According to the NFL Players Association, at least 78 players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds! Former Pro NFL player Reghib (Rocket) Ismail stated “I once had a meeting with JP Morgan, and it was literally like listening to Charlie Brown’s teacher.” In other words, he did not understand what his financial advisor was saying, but continued to work with him.

In some cases, investments are made haphazardly into risky, illiquid business ventures. Some professional athletes are attracted to the “thrill of tangibility”. While traditional investments like stocks and bonds have been historically time-tested methods to build wealth and financial independence, they could be boring, especially to someone who may not truly appreciate what “long-term investing” means. Instead, restaurants, night clubs, real estate, or start-up companies are exciting and “tangible”. More often than not, these investments fail with nothing to show for it.

In essence, athletes who receive large contract deals out of college are no different than the typical college graduate that goes into the work-force. The main difference is the professional athlete is likely earning an income over a few years that is higher than most college graduates will never earn in their lifetime. Especially after coming off a full scholarship for their respective sport, they typically have not learned the benefits of budgeting, and other basic financial principals.

Therefore, it is crucial that the athlete choose advisors who have experience and proven track records to help budget and develop a financial “game plan” off the field that hopefully will be just as successful as their career on the field. It is this foundation that will likely either set the stage for financial success for generations or becoming destitute.

Family Support

On top of not having prudent financial advice from experienced advisors, there is the “guilt” factor that many athletes experience in regards to helping their family and friends with their newly earned riches. Bernie Kosar said it best on ESPN’s documentary about athletes going broke, “There was probably, different times, [I was taking care of] 25, 50 families”.  For many of these young men and women who earn an incredible amount of wealth from playing a game at the professional level, they may feel the need to financially support those who were there for them, cheered for them, and even raised or sheltered them while growing up.

Another example is Tyron Smith, one of the best offensive lineman for the Dallas Cowboys. He was the 9th overall pick in the 2011 NFL Draft at 20 years old, making him the youngest player in the NFL, leading to a four-year, $12.5 million contract with the Cowboys.

From there, he unselfishly offered to buy his mom a Range Rover and pledged to pay off his parents’ mortgage and all family debts. Smith stated, “I didn’t think I owed them anything, I just really wanted to help out. I know how hard the struggle is, and growing up we always had to worry about debt.” Unfortunately, Smith later finds out that the money was not used for the aforementioned purposes. On top of that, he agreed to buy his family a home with a budget of $300,000. His family came back with a home request of $800,000. Smith says, “Yeah, my parents wanted a house, but it was way bigger than mine and cost way more than mine.”

At this moment, with the help of his financial advisor, Tyron Smith put his foot down and told his family “enough is enough” and learned that it is okay to say “no”. While, by nature we want to protect and take care of our loved ones, sometimes we need to put ourselves first. Sometimes this could be difficult for a professional athlete.


One of the most common factors in athletes going broke is through the unfortunate event of divorce. Divorce is often claimed as the number one financial challenge for athletes and non-athletes alike, due partially to the substantial implications of splitting up assets and potentially-ongoing alimony and child support payments.

While a prenuptial agreement is a safety valve for athletes, unfortunately, many spouses of professional athletes do not agree to them for various reasons, with the most glaring being they wouldn’t be able to “cash-in.” Divorce lawyer Raoul Felder, who has represented the ex-wives of Patrick Ewing, Jason Kidd, and Mike Tyson, stated “The percentage of prenups amongst athletes is appreciably lower compared with nonathletes at the same economic level.”

Whether you are a professional athlete or not, achieving financial success in life starts with having a vision and goals then determining what it takes to reach those goals and finally staying accountable to implementing the steps of the plan. With a combination of well-vetted advice and the desire to accept guidance from independent, experienced tax, legal and financial professionals working in a fiduciary capacity, professional athletes can develop a financial playbook off the field to reduce their chances of financial ruin.

Let the Certified Financial Planner™ professionals at Williams Asset Management help with your wealth management needs. Whether you need comprehensive and holistic financial planning or investment management, we can help!  We are fee-based, independent financial advisors located in Columbia, the heart of Howard County, Maryland.  Schedule your complimentary consultation today by calling (410) 740-0220!