Professional athletes can become brands and icons unto themselves during their careers. This makes them an amount of money that can generously be called “godly.” Then they lose it. For every Michael Jordan or Tiger Woods, there are hundreds or more who lose what they made during their careers.
No matter how many times it happens, it doesn’t stop. These athletes inevitably make millions, and then lose it all once they’re too old to earn it all back. Why?
Consider the typical athlete. You’re barely out of your teens. A company or team signs you to a contract that lasts for years, offering millions of dollars. You can expect endorsement deals if you become good enough to be famous. Who hasn’t heard of Jordan, Gretzky, or LeBron?
So how do they end up losing all of that by the age of 40?
It isn’t the lottery. It’s not a game of chance. No, what kills the finances of these athletes is a series of bad decisions, sometimes including being so bombastic that they buy into their hype and personas.
There’s the story of Mike Tyson, who spent his fortune on multiple homes, cars, gaudy jewellery, and pet tigers. Baseball legend Curt Schilling made $112 million over two decades, but ended up so broke he had to get the Baseball Hall of Fame to give him some memorabilia back so he could auction it.
One of the reasons athletes lose this much money comes down to payments. Divorce and child support are the biggest ones, and athletes rarely anticipate them. There is an alarmingly high divorce rate among athletes, and that means a lot of alimony money being paid out.
There’s also the problem of an athlete fathering multiple children with multiple mothers. This can result in child support payments that would make even the richest man baulk in the long term. This is especially bad for athletes like Shawn Kemp, who had seven children by age 28.
Taxes and utility bills also eat up an incredible amount of cash.
If you buy a massive estate, as Evander Holyfield did, you’re spending more than just for the land and the building. You’re paying property taxes. You’re paying a lot of money to keep the lights on. These may not seem like much, but they eat away at your cash over time.
Friends and family can also be a drain. The more of them you have, the more money you spend.
This is a natural thing. People are expected and often are all too willing to give money to people around them. It could be paying off other people’s debts or just being generous. However, at some point, you give away too much, and suddenly you’re bankrupt.
Finally, there’s the fact that athletes are signed with little to no knowledge of how to plan financially.
Most of the time, they’re never given that knowledge. They rarely consult firms like The Financial Advisors Perth, who can help them with these matters. They come from backgrounds that don’t allow them the means to manage their newfound wealth properly.