Athletes and Financials

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Athletes making bad decisions is not just getting into fights or using illegal drugs, they can also make poor decisions financially.  It seems like every year we hear about a pro athlete who goes broke because he spent all of his money and declared for bankruptcy.  These athletes make a lot of money, money that most of them aren’t used to having because majority of athletes were poor before they get to the professional level.  These young men do not know how to handle their financials for a couple reasons, like many of them don’t have the education on how to handle money, also many of them have children with women whom they are not married too, so they need to pay hefty fines child support.  One of the most famous athletes who went bankrupt as Maureen Callahan writes in her article titled, “How Pro Athletes Lose Everything” was Mike Tyson.  She wrote, “Mike Tyson, who tore through $300 million on multiple homes, cars, jewels and pet tigers. In 2003, he filed for bankruptcy.” Mike Tyson was ill informed on how to spend his money wisely and ultimately ended up going bankrupt.

Vast majority of professional athletes come from families who were not wealthy growing up. Maureen Callahan writes in her article, “Far too many of them, he found, had not only failed to plan for their future, but lacked a basic understanding of money management.” When these athletes first reach the professional leagues, they do not know what to do with these large sums of money that they just acquired. They have not been educated well throughout their whole lives. These athletes go out and spend their money on material objects instead of investing it, as they should.  These athletes have no idea on how long they will actually be playing their sport for.  Anything can happen, ranging from getting injured to getting cut from the team.  If they can no longer play the sport then they are out of a job in which they have no income to support themselves and since they didn’t invest their money they are going to have to declare for bankruptcy.  In my opinion there should be a required class on managing your financials before you are allowed to enter any professional sport.

Another reason so many athletes are going broke is because they need to pay hefty child support fines on kids that they have.  We know now that athletes do not make the smartest decisions ever, and many of athletes have kids with multiple women.  These athletes need to pay a large sum of their income to these women in order to take care of the children.  Callahan writes in her article, “Divorce and child-support payments, Foyle writes, are two things most young athletes never anticipate. “Early in my career, I heard a league official say that once they retire, there is an 87 percent divorce rate among NBA players,” he writes.” Even if the athletes are educated on their financials, they are still at risk for divorce payments and child-support payments.  They never anticipate it because they think they will be happily married with their kids for their whole life, but that is not the case.

Overall the main reason for athletes going bankrupt is the lack of education followed by paying large child-support fines.  Many of these athletes need to become informed on how to spend their money wisely or else we will see this trend continue in the future.  These young men are only about twenty years old and they are making such large sums of money.  It is a dangerous thing to give these kids this amount of money when they do not know how to spend it.