Professional Athlete Bankrupt. You've seen the headline
before. It's a narrative that no longer surprises even the most
casual sports fan. High profile examples are everywhere. Antoine
Walker earned $110 million and lost it all. Vin Baker managed to
burn through the $93 million teams paid him during an All-Star
career. Mark Brunell made $50 million over the course of his NFL
career and is now $25 million in debt.
Those are the big stories, the ones that find their way onto
SportsCenter and into newspapers, but the tale repeats itself over
and over again in smaller installments. Somewhere between 60% and
80% of athletes in the NBA and NFL go bankrupt within five years of
retirement, despite making an average of $5.15 million and $1.9 million per season, respectively.
So where do the millions go? For answers, we asked Chris Gandy
and Doug Glanville for some insight. Gandy, a former University of
Illinois basketball star who played for the Chicago Bulls and
L'Hermaine in France, is currently a district sales manager at Mass
Mutual where he advises 29 current professional athletes. (As an
undergrad, he also once set this vicious pick on Duke's Steve Wojciechowski.)
Glanville, who had a nine-year baseball career after graduating
from the University of Pennsylvania with a degree in systems
engineering, is a businessman and writes op-eds for outlets such as
The New York Times that focus on the lives of professional
athletes.
Below, you'll find a breakdown of how a $5 million salary is
spent, followed by observations from Gandy and Glanville. These
numbers are estimates, but provide a general guideline.
The takeaway: The spending adds up quickly, and it's not
entirely the athlete's fault.
Gandy and Glanville cite three factors that combine to drive up
costs: an athlete's desire to live similar lifestyle as his peers;
a priority on ease, and quickness of service rather than cost; and
the perception that there is always another massive check
coming.
Part of the expense comes from the unique realities of an
athlete's life. For someone with a contract worth millions of
dollars, the priority is ease rather than price. That luxury is
expensive.
"Services cost more for these guys, mostly because no one has
time to compare and contrast anything. It is all about speed and
convenience," Glanville says. "It's not just because you're showing
off. You are so busy with the game. [During a baseball season], you
have 162 games. You're not paying attention to anything other than
playing. I had one day when six or seven paychecks went into my
back account and I didn't even look."
Agents, who are limited by the CBA in the fees they can charge
(5%-7%, depending on the league), often make another 5%-10% of
their client's contract through "management fees." (If the agent
doesn't, another advisor does.) The players, who are busy focusing
on day-to-day duties of being a pro athlete, are happy to sign on
so their bills are paid, their clothes are laundered, and the rest
of their non-athletic lives are handled. Another 5% doesn't seem
like much when the checks are rolling in every two weeks.
"They are giving away so much money," Gandy says. "In 10 years,
you ask them if they'd give someone $250,000 to balance their
checkbook, they'd say no. But when they are playing, sure they
would."
Friends and family add to the tab. Antoine Walker reportedly had
a crew of 30-70 people on his payroll. Most pros won't ever spend
that much, but $1,000 a month a piece for a couple friends, $1,500
a month for your brother, and a $50,000 for the mortgage on your
mother's house adds up quickly.
Athletes do have more control over their investments, but
they're seen as easy marks and are constantly being pitched
products, clubs, restaurants, and other ideas. The people pitching
want a player's money. Players rarely have the time or the
inclination to do their due diligence—and a life of success in the
field or on the court often breeds an attitude that makes them
believe they can succeed in business.
"You're a gambler by nature. And everybody and their dog has
been pitching you since you signed that first contract. Eventually,
something is going to sound pretty good," Glanville says. "That
competitive nature is hard to turn off."
In Gandy's experience, one in four athletes make a "horrible,
horrible investment that no one else would make." For example,
Torii Hunter sank $70,000 into a raft designed to sit under
furniture that could be inflated during a flood. The investor asked
him for $500,000 more, but the centerfielder declined. Hunter never
saw his cash again.
Athletes are also forced to double up on large expenses. When
Glanville was playing, he owned a house near Philadelphia—he bought
another one in Dallas after he signed with the Texas Rangers. He
also rented a place every year in Arizona during spring training
and routinely shipped his car across the country.
Spending money, in other words, comes with the territory of
being a professional athlete—being fiscally responsible is, in some
ways, antithetical to athletic success. As long as a player
continues to perform, the money will keep coming. When he no longer
can, however, the spigot's turned off. Thinking about saving money
for the future can mean an athlete is allowing doubt about his
abilities creep into his mind. For someone who needs to perform
everyday, in public, that can be a dangerous proposition.
Next week: We'll offer a more conservative spending plan
designed to keep an athlete solvent well after his career is
over.