NBA players keep signing massive amount of contracts from team owners and endorsement deals year by year. Those who were once worth 90 to 200 million dollars during their good old days spent their money like they have unlimited resources. It was sad that they are currently struggling today and ended up not having those funds kept for a very long time. Worst is their getting those so called menial jobs just to make their ends meet. Here are the following reasons how they lost control of their funds and why those once richest and famous athletes are facing rock bottom today.
They fathered 7-10 children from different women– According to recent studies done by different universities in the United States that athletes who got the chance to play in a big league are more prone to engage with their fans that means more opportunities to hang out with them. They get to meet women from different locations and had various activities including sex. That causes a lot of unexpected pregnancies as they go along with that habit throughout their career. As they continuously play in different teams it is their responsibilities to pay child support or else they will face legal charges that are going to be more costly.
The danger of materialistic lifestyle– An NBA player who once had a flourishing career usually had fat paychecks and extravagant lifestyle for example; buying 2,000 pairs of shoes, a luxurious seven-bedroom mansion, yachts and jet for partying alone. They tend to overestimate their earnings with their expenses which are very normal at the peak of their career. “The problem with that lifestyle is they forget the tax they must pay in a long run, leaving them with a very small chunk of what they truly earned” an ex- NBA player said. As they increases their lifestyle the more it is hard for them to keep up with it. When they sign another contract that’s lower than they usually get, this is where the problem of falling starts, thus financial bankruptcies are epidemic in the league.
Gambling addictions – Rehab International Organization says more than $5 billion has been lost each year, also the social effects of addictions in the family are tremendously devastating since family members also suffers from physical and psychological abuse. An NBA player, who earned over $200 million dollars throughout his career due to his gambling and drinking issues, loses his wife through a messy divorce, can’t pay his duty like child support, failed to have lifetime collaboration with Reebok. Therefore, addictions can corrupt your good values in life; ruin your family, career and reputation.
Created a business but financial meltdown was really bad – Athletes are trained to do what they need to do on the court but not easily in the league of business. It is too risky for them to manage it without extensive training. Shifting from once famous career can lead serious mistakes and financial injuries will definitely occur. A lot of them attempted to create their own identity after those glorious years, helped a lot of people by simply creating business hoped that it will thrive but low economic growth took all those investments away and left them crippled from many creditors. Without solid financial plan they won’t able to sustain the business.
He is supporting a lot of people – Sports Illustrated done an incredible study that family problems, risky investments, misplaced trust, and providing for an athlete’s friends as the main reasons why players go broke after retirement. Free loading friends as many as 70 left an NBA player who was a top pick in the 1996 NBA Draft, worth 108 million dollars, proved that he was not immune to this kind of misery, he was not able to sustain his earnings after he retire from the big league. He lost everything within 2 years. There’s a lot of athlete who had major financial commitments to a number of extended family members, they spoil their entourage and serves like an ATM for various groups of people. It also shows that they are not well equipped to handle their finances compare to handling balls and technical fouls on the court.
Bleacher Report and Mint.com says 60 percent of NBA players file for bankruptcy five years after retirement. The combination of bad investments, poor economic conditions, lavish spending, bad attorneys, poor mindsets and lack of discipline shows that they are not excluded in financial woes like anybody else.
David Isaiah Angway currently helps young, urban and educated millennial (Gen Y) set and achieve their long-term financial goals by educating them about investments, asset allocation, risk management, retirement planning, and estate planning. His role as a financial planner is to find ways to increase the client’s net worth and help the client accomplish all of his/her financial objectives.