Bankruptcy: An NFL Player Trend

Football fans are beginning to get the fever as a new season approaches. I know I am. Why? Because I have heard from a very reliable source that the GIANTS are going all the way this year. Seriously, they are. It’s going to happen.

I love watching football. I love cheering for the GIANTS every week. As a lifelong GIANT fan, some weeks are tougher than others, trust me. But what happens each week on the gridiron is not so important as what happens off the field.

We all know that the NFL is that it is a multi-billion dollar business. The players, coaches, and owners all make quite a bit of money, many make millions of dollars each year. What you may not know is that bankruptcy and football go hand in hand.

Some Sad News

The Wall Street Journal reports that 1 in 6 NFL players will go bankrupt a mere 12 years after retirement. Those are some serious numbers when you break them down further.

We’ve said before on this blog that bankruptcy can be a good and positive thing when used as a financial planning strategy. But sometimes bankruptcy is the only option that a person has because they obtained a large amount of money quickly and did not receive any financial counseling, or they hired a financial planner and chose to ignore the warnings given to them.

The Causes

Most NFL players make a lot of money during their playing years, but they do not have very long careers. Also, many players are very young when they begin receiving large paychecks. In many cases, these players have never been exposed to this type of money. It is understandable that they may go a little crazy.

However, once their playing years are over, they have a choice. They can try and live off of their retirement for as long as possible, or they can save money while playing and get a job after retiring. Unfortunately, most players try and live off of the money that they made while playing.

If you combine the facts (a person that is no longer generating income but living an expensive lifestyle) it adds up to zero money saved for retirement - which is why most NFL players wind up bankrupt within twelve years of retiring. This doesn’t have to happen.

Whose Fault Is It?

Sure, you could blame the players for being financially irresponsible. A large paycheck also comes with a huge responsibility, and it comes with the ability to hire the best financial planning talent, agents, etc.

A player could choose to ignore the advice and spend all of his money, or he could choose to invest a large portion of it for retirement. So, the argument goes, it’s all about individual choices.

On the other hand, an argument could be made to place some blame on the NFL. The organization and the owners make money because of the athletes, but do they have an obligation to worry about the players after their playing days are over?

An NFL Responsibility

Some people would argue, yes, the NFL should take care of its players. Some people would go so far as to say that the NFL has a duty to care for the players. If so, how far does that duty extend? Well, if you read the NFL Collective bargaining agreement you would think that the NFL is doing more than its fair share, yet 1 in 6 players will have to file for bankruptcy protection. The numbers just don’t add up.

Could the players either save more money or maybe make better financial decisions? Sure. Could the NFL provide more financial planning advice or programs to those players who are interested in learning? Sure. Should the NFL offer courses in bankruptcy? I don’t know. Should both parties be working harder to solve this problem? Absolutely.

A Matter of Skill

Even in these cases, filing for bankruptcy can give players that have not saved any money a way to wipe the slate clean. However, it’s difficult to rely on one skill that no longer applies to any jobs available - most NFL players do not have a backup career plan. This puts players in a tough position (one that is unfortunate as well).

The Solution

Better overall financial planning while part of the NFL in addition to honing another skill after retirement is two of the things that could save some NFL players from bankruptcy.

In the interim, the NFL could seek to improve the overall financial lives of its players. The NFL could offer more options to those players interested in learning more in the areas of education, planning and career counseling. When 1 player out of 6 needs to file for bankruptcy protection, something is wrong. It’s a problem worth looking into.