Why Many Athletes go Broke After Their Retirement

According to Sports Illustrated, 60 percent of former NBA players went broke within five years of retiring. That’s more than half of the players earning millions of dollars in the average span of 8 to 14 years. Unfortunately, bankruptcy isn’t uncommon among former professional athletes.

So, why, with all their money, do these people file for bankruptcy so quickly? Here are the most common reasons behind this problem.

Image source: complex.com

Lifestyle: If you’re earning millions of dollars a year, there’s no limit to what you can buy, and these players have some of the most expensive lifestyles in the world. To give you some perspective, Scottie Pippen once bought a jet for $4 million that didn’t even fly.

Lack of financial literacy: Most professional athletes weren’t born wealthy. These people, who have suddenly come into a great deal of wealth, do not have enough knowledge when it comes to investing their money. Maybe they know they need to, but they don’t actually have an idea where to invest. So, they just hire investment professionals to make the investments for them.

Image source : dailymail.co.uk

The entourage: Finally, and probably the biggest reason for bankruptcy, is the entourage. Allen Iverson is known to surround himself with 60 bodyguards. A professional athlete surrounds himself with different people to help him take care of his financial interests, safety, and time management. Employing these people are expensive, that’s why when the paychecks stop coming in, you will be left with no savings but only dues.

Hi, my name is James DeVellis, and I’m a college student from Arizona majoring in sports administration. Check out my LinkedIn profile to know more about me.