The Real Reason Why Athletes Go Broke

The Real Reason Why Athletes Go Broke


Here are the real reasons why athletes go
broke! The biggest and most important reason just
might surprise you! 10 – The Joneses
Nothing gets you broke faster than making financial decisions based on what other people
think. Most athletes struggle to understand this
and a lot of them eventually end up learning the lesson the hard way. Athletes are in the spotlight and they want
to be a trendsetter. And because so many guys do it, the pressure
of owning several cars, homes, and designer clothing is high. But it doesn’t mean they have to! Athletes not thinking long term can easily
blow through millions. Especially since most athletes accumulate
a lot of cash early in their lives, and don’t have a career after their playing days. Athletes need to realize that unlike other
people, their careers are short-lived. The cash flow they’re used to doesn’t
continue as long as they think it does. The average basketball career is less than
five years while the average football career is even shorter at three years or less. Another crazy fact is that 60% of NBA players
are broke within five years of retirement and nearly 80% of NFL players have little
savings left within two years of retirement. On the flip side, most athletes should take
Adonal Foyle as an example. Although he wasn’t a star in the NBA, he
still made over 63 million dollars during his 13-year career! Even when he became a multi-millionaire, he
always maintained his strict financial discipline. For example, he only bought used cars and
never took the big depreciation hit on new cars. Foyle never adopted the carefree spending
lifestyle of his peers. Instead, he learned from their mistakes and
controlled his spending, even cutting out $4 coffees for a while midway through his
career and brewing coffee at home! 9 – Mismanagement
Imagine if the person who’s supposed to help you make more money actually has no clue
what they’re doing? That’s the story of William “Tank” Black,
one of the most notorious agents in sports history. He was kinda the Bernie Madoff of sports! Black was originally a South Carolina assistant
football coach. He started Professional Management Incorporated
and quickly used his football connections and charisma to become one of the most successful
football agents of his time. Let’s take former running back Fred Taylor
as a quick example. Taylor was the Jaguars’ first-round pick in
1998, and one of Tank Black’s premier clients. He invested Taylor’s money, along with a
lot of other players, in a ponzi scheme in the late 90s! Tank Black lost $3.6 million of Taylor’s money
alone! Investing in a ponzi scheme by accident is
just one example of dumb things Tank Black did with money. But he was extremely charismatic, and that’s
why players trusted his judgement. In fact, Taylor was so close to Tank Black
that he started calling him “Pops”. He represented well over 50 NFL players at
his peak. In 1999, he signed a record five first-round
draft picks in the NFL, in addition to 3 second round draft picks. Tank Black ended up in prison because of money
laundering and stock fraud. He lost millions of dollars for his clients. At first, Taylor defended Black. But soon he found himself at a bank, applying
for a $100,000 loan just so he could get through the 2001 offseason. He was barely scraping by because he chose
the wrong person to invest his money! Taylor later admitted he nearly retired from football
because of all the stress. For what it’s worth, Black did win a civil
suit the SEC filed against him alleging that he cheated clients. Quick, before we continue, do us a big favor,
and hit the like button, because it helps us out a ton! 8 – Kid Problems
Wait what?! Too many kids is on this list?! Well, first of all, kids are expensive in
general. The average cost of raising a child from birth
to the age of 18 is roughly around 234 thousand dollars! However, raising the kids themselves are something
that most professional athletes can afford, even if they have something like 10 of them. But that’s only if you’re taking care
of the kid yourself, so you have the ability to choose how much to spend. What I’m really talking about here is child
support. And we know that child support isn’t cheap. Especially in states where child support is
a percentage of income. Let’s take Travis Henry as an extreme example. Henry was a former NFL running back who played
for three teams from 2001 to 2007. He has nine children, EACH by a different
mother, and some of his kids were born just a few months apart! Henry eventually went broke because his career
fell apart. And because he didn’t save his money, he
couldn’t pay his child support. A more recent example is with Blake Griffin. He was ordered by the Los Angeles superior
court to pay 258 thousand dollars a MONTH in child support! Does that sound insane for a judge to rule
that or is that just me? So yes, not having unplanned kids IS a financial
strategy. 7 – Uncle Sam
Professional athletes and tax problems: it’s a recurring theme. Examples include Manny Pacquaio, Lionel Messi,
and Cristiano Ronaldo. But why does it keep happening? One reason is the lack of knowledge with taxes. Younger athletes are often making a lot more
money than people their age. A 25-year-old making $50,000 working in an
office is going to have an easier time with taxes than a 25-year-old professional athlete
making millions of dollars a year. That professional athlete is also very likely
surrounded by people who don’t have his best interests in mind. Another reason is forgetting to withhold money
for their additional income, such as endorsements and personal appearances. Some athletes simply forget that they have
to pay taxes on extra money and they don’t withhold any of it! Also, state taxes gets really complicated
as far as how and where players get taxed. For example, NFL players don’t just pay
state taxes where they live. They pay where they play and, most notably,
where they practice! This is the so-called Jock Tax in action. An athlete who doesn’t have a knowledgeable
tax advisor can easily get into trouble and have to pay fines and back taxes. 6 – Bad “investments”
Despite their high salaries, many professional athletes burn through their nest egg, often
before hitting retirement. One of the most common mistakes they make
is putting money into bad businesses or investments that never had a chance. Former NFL player Rocket Ismail lost $300,000
dollars investing in a Hard Rock Café knock-off. The restaurant was supposed to be called Rock
N Roll Cafe. Former star baseball player Torii Hunter said
he invested $70,000 in an inflatable raft invention. Apparently the pitch was that when high-rainfall
areas were flooded, consumers could pump up the device and allow their furniture to stay
dry. Seriously. He actually invested money in that! Former NBA forward Vin Baker thought that
he was getting into a safe investment by starting a seafood restaurant. But the restaurant was foreclosed on after
nearly 900,000 dollars in unpaid loans! Former pitcher Curt Schilling famously lost
millions of dollars in 38 studios, a video game company he started. And the list of bad investments that athletes
get into go on and on. The lesson here is that business is tough. However, a lot of times, the ideas are just
bad from the get-go. 5 – Too much house
Players love putting money into their house. Chronic over-allocation into real estate and
bad private equity is the number one problem for athletes in terms of a financial meltdown. I’m not talking about just buying regular
houses as an investment to flip, or buying commercial real estate to rent to businesses. I’m talking about buying too much house
that they can’t afford to live in. Instead of paying in cash, athletes will take
out a mortgage for the house. And yes, sometimes it does make sense to take
advantage of low rates and use the cash for a better investment opportunity. But that’s a whole different argument! Some examples of athletes who had to foreclose
their homes at some point include Jose Canseco, Antoine Walker, and Allen Iverson. The problem with athletes buying too much
real estate is that when they get into trouble, they have a hard time selling the house, even
when it’s at what’s considered a bargain price. That’s because of the high price of the
homes athletes buy. A house is a very illiquid asset, especially
when it’s worth multi-million dollars. Athletes typically put in crazy stuff that
most people don’t want. Whatever expensive custom made additions they
put in the house typically won’t reflect back in the sales price. 4 – Entourage
It’s often made up of close friends and family members. But does the entourage actually make sense
for an athlete? Athletes and agents say a support system can
be a necessity. And that’s true. Athletes are constantly asked for money. Mundane tasks such as going to the supermarket
can be a challenge for someone ultra famous. So it definitely makes sense to have a personal
assistant, or maybe even two. But honestly, no one needs 50 people hanging
around helping them navigate everyday life. Unless they’re helping to run a business,
the only thing an entourage that big is good at is spending an athlete’s money. Business is business, and friends are friends. Athletes that blindly give away money to someone
they grew up with isn’t doing their friends a favor, nor themselves. Oscar de la Hoya saved nearly $400,000 dollars
a year in food, housing, and travel expenses after dropping 10 entourage members mostly
made of good friends. Allen Iverson used to roll with a crew of
up to FIFTY people! Mike Tyson used to have a payroll that had almost two hundred people! Find out some more of the crazy ways Mike
Tyson blew through 400 million dollars by watching our video here! In reality, no one needs to buy their friends,
no matter how rich they are. 3 – Bad partners
Athletes today have to be very careful whom they marry because they can end up losing
most of their hard-earned money if they choose the wrong spouse. Divorce is expensive, and this is an issue
even the average Joe deals with! Sometimes it’s the athlete’s own fault. That was the case with Michael Jordan and
Tiger Woods. Tiger ended up paying over 100 million dollars
to his ex-wife because of his infidelities. And Michael gave up over 168 million dollars
to his ex-wife Juanita! But athletes can have bad partners in the
financial sense even if they don’t get a divorce. Both people have to be on the same page when
it comes to finances. Once you get married, you get married to everything. And that everything includes spending habits
and debts. It’s not that we’re against marriage here,
but if you’re gonna get married, make sure you want to do it and make sure it’s to
the right person! 2 – Life Choices
Some athletes are champions on the field, but some of them are also champions at just
making plain DUMB life decisions. These bad decisions basically just show their
attitude towards money. We’re not against spending money, because
at the end of the day, what’s the point of being rich? But we’re against not getting the proper
value for each dollar you spend! For example, ex NFL player Vince Young once
had to fly from Nashville to Houston. He didn’t want to deal with a bunch of crying
babies and just people in general, so he bought up every seat on the plane. Yep, there were 120 seats and he bought them
all, very likely paying as much as $22,000 for ONE flight. He didn’t even get the benefits of flying
private! And let’s not forget the time he dropped
$15,000 dollars for ONE meal at the Cheesecake Factory! What’s the most expensive item on the menu?! Ex NBA player Gilbert Arenas spent a million
dollars on his pool and shark tank. Nope, he didn’t get that money back when
it was time to sell the house! Ex-Knick Eddy Curry once had a thousand dollar
a month cable bill! The examples are literally endless. All this stuff is only what’s made public! There’s most likely way dumber stuff out
there that we just don’t know about. 1 – The Biggest Reason
And what exactly IS the biggest reason athletes go broke?Spending more money than they make
is easily THE number one reason why athletes – and anyone else – go broke. If you want to get ahead, spending less than
you earn is the most important financial law to understand and live by. You have to keep what you earn. You want to let money work for you once you
get rich, instead of the other way around. When you spend less than you earn, you’re
no longer playing catch up and living paycheck to paycheck. All the stress that comes from living paycheck
to paycheck can be paralyzing. And yes, as crazy as it sounds, plenty of
professional athletes live paycheck to paycheck. And that’s the #1 reason why athletes go
broke, they spend more than they make! Once they started making big money, their
lifestyles got even bigger! Watch this next video to find out how Mike
Tyson blew through 400 million dollars!

About the Author: Michael Flood

73 Comments

  1. The number six bad investment. First the guy is playing COD MW2 next he is playing the game on a Gateway P6860 FX laptop. How do I know? I still have mine…

  2. Blake Griffen was order to pay $250,000 a month, Fuck that, if that was me, I would transfer all my money out of the states and renounce my citizenship in a country with no extraditions with the U.S.

  3. Doesn't gambling make this list, does it count ? Lots of athletes are addicted casino gamblers who don't know how to bet, thereby frequently losing millions in a short time. M. Jordan, C. Barkley, A. Iverson, Pete Rose too mention just a few.

  4. I dont get, why they do not have any pension fonds for players. Would be wasy to bring up by the players union.

  5. Again, if all the money in the world was divided up equally, it would gradually make its way back to the hands from which it came.

  6. Wait…..you didn't mention skeezy fraudster Christian Laettner, who "helped" his old friends go super broke. Or Jack Clark, once the highest-paid player in baseball who spent his way to bankruptcy whilst he was STILL the highest-paid player.

  7. 2 Biggest facts that people dont know about NFL: the owners of all nfl teams do not pay Any Tax and they pay nothing to build a stadium and upkeep…… Sounds shady ?

  8. Divorce and Child Support are the main reasons why Athletes go broke… the other stuff is just common sense stupidity and foolisness..

  9. Idc what he says is number one from what I see its Child support and alimony I know an athlete that pays 10 grand a month for C. Support

  10. Kid problems or women/support problems? Women will set a guy up to have a child just to get paid!!! What kind of sh*t is that? Have a human for financial security? Gotta watch them hoes.

  11. If I ever get married it will be to a rich woman or one that makes more money than me; I am not getting hosed by some broad.

  12. When I checked the story said that Blake Griffin refutes the report that he has to pay 258 thousand a month and TMZ reports that he does not have to pay the astronomical amount and has not in all caps.

  13. Tiger Woods reserves to pay his ex over 100 million due to his infidelity. I think he had a pre-nuptual agreement that was not enforceable because of his infidelity.

  14. That sound effect you have going in the background that sounds like two soup cans being clanked together is extremely annoying.

  15. Because they are stupid people who were raised by stupid people, around stupid people, thus they were never made to realize personal responsibility.
    Always told to wait for someone else to do or blame someone else if things don't get done while being encouraged simply to do what you want aka YOLO. Again, stupid shit.

  16. You only need to make a million dollars, once.  You do not need to invest it, you do not need to start a business. Put it in CD's and saving accounts, you can live off the interest, if you live a modest life style.   Most of the athletes come from single parent homes at near the poverty line and have had no example of how to manage money.  It is sad, but true.  They are young and think it will last forever.

  17. Funny how when the talk about tank Black they show the guy in the video as being white.  Tank is African American.

  18. One of the Koch brothers just died. He left an estate of a billion plus $. He would have been better off enjoying the spoils…for he sure didn't take it with him.

  19. A lot of agents steal millions from these guys you gotta have the right people around you and don't trust someone just because they say their professional or a leader in that field do you're on research and find good people to represent you

  20. The main reasons athletes go broke is because a lot of them are illiterate, came from nothing, didn't have a real education. No clue of how the real world works. Just incredibly stupid. Pamper and controlled there whole life just because of their gifted athleticism.

  21. You've no money, you no money manager. You can manage your own money. These people are seeking to plunder the players.

  22. Brewing coffee at home. That's a big financial advice if your going to make 60 million in your NBA career. 4 buck's per coffee at your local shop can really put a dent in those 200,000 pay cheque's

  23. this is why if you are a pro athlete you get a vasectomy immediately , never let whores bankrupt you because you are paying child ransom , that is what it truly is , child ransom , not support.

  24. Number one reason athletes go broke is because they think with their DICK! The first thing the ghetto boys do is buy a fancy car that they cannot afford!! Then they buy a bunch of gold chains to look like they really made it and before you know it they pissed all their money!!!

  25. On ENTOURAGES ….. YEAH, hang out once in awhile …. but take care of YOUR business, send them dudes packin, y'all can hang sometime but ALL THE TIME !!!!? ……… HELL NO !!!!

  26. Raising a kid 234k , he's buggin not when you collecting rent and the house pays for it self , though about the unfortunate 25 cents a day x 365 x 18= 1,642.5 $ = 2 pay checks lol

  27. Not that I know her personally, but I don't believe Tigers' wife was a bad partner. Tiger did a lot of bad things and deserved to lose more than what he paid.

  28. If I was rich like that..I'd make sure every women who had my kids knew that if she even tried to put me on child support she would come up missing for sure..

  29. Most of these guys are good. Some can be considered great at what they do for a profession.
    It doesn't mean they know a thing planing for life after sports.

  30. Before I start watching, I want to say that child support and adjusting the child support amount after their sports careers are over. This should be the number 1 reason why

  31. If some of the retired athletes stay private and stop putting themselves on there after retirement, they'll have half of their riches.

  32. They live laveshly while there making money then still want to live the same way after they are not making much money.
    You cant tell me someone that makes 5 million or more a year couldnt have invested even a small amount wisely. They spend it all like theyre never going to retire.

  33. all millionaires who went broke i know: 20% had gambling addiction (mostly penny stocks) 80% paid too much money in losing lawsuits. not because they got sued and lost. but because they sued others and lost. too expensive lawyers pumping up there already inflated ego making them believe they can have power over everyone by dragging them to court. this 2 points are somewhat missing here.

  34. The REAL reason athletes go broke is because of freeloading ass family members, who always have their hands out and  think your money is their money.

  35. When you earn a great deal of money I understand wanting to buy nice things for yourself, help out family and close friends but doing too much of that will cause you to go broke. I feel living below your means is the best lifestyle to practice no matter how much money you earn as far as NOT going broke.

  36. No, marriage really is a cataclysmic waste of time and money. I would not recommend trying it… unless you're a glutton for punishment. Then go for it, why not?

  37. The real reason athletes go broke? Most of them are stuck with extremely low intelligence and were raised by single moms on welfare. Bling is all they care about.

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