Failing to prepare athletes for lifestyle only feeds problem
That’s because “making the show” often exposes a number of undeveloped life skills. It’s most evident when a draftee is pushed from a protective collegiate environment into an often lonely first professional season.
The specters of fiscal mismanagement, rising debt, shady investments and lack of attention to earnings can converge on a 22-year-old and hang a financial albatross around his neck. Newfound friends, social popularity and back-slapping entourages are exciting and ego-building, but they also drain bank accounts and threaten statistical performance.
Many teams take the approach that it’s not their responsibility to help young players manage personal finances. After all, lottery picks probably earn more than the general manager and can afford the finest investment advisers. The problem with this approach is that the general manger knows certain young players have never been around money and haven’t enjoyed the luxury of positive financial influences.
Worse, the draftee may not know how to sustain a privileged lifestyle because they’ve never seen a checkbook or mastered the most basic tenets of personal accounting. In these situations, it’s no surprise that many athletes find by the time they report to camp they’ve already run up six-figure debt and made the decision to trust someone else to solve their problems.
Dez Bryant’s recent legal troubles were avoidable. Would financial skills training have helped?
And what’s the real issue here?
Well, where individual fiscal failure harms a team most is evident in the player’s emerging personal psychology. A player facing sudden or massive debt is more stressed and less mentally strong because no one is paying the pipers. To resolve this, many athletes turn to agents or someone in a trusted inner circle.
As the athlete abdicates financial control and ignores improper accounting or basic auditing, nervous or naïve behavior emerges. It makes young athletes susceptible to an increasing number of poor choices where they overlook their personal “burn rate.” From there, a vicious cycle kicks in that can often lead to financial mismanagement, debt, drug use, alcoholism, unplanned children with multiple partners, eating disorders and/or expensive divorces.
Naturally, assisting players is a delicate business, and teams and leagues vary on how to help players learn money management. The NFL has previously offered a finance session during the league’s rookie symposium. But in light of the NFL’s current lockout and ongoing legal developments, it’s worth asking whether the fiscal protection of young athletes should now be part of the league’s next collective-bargaining agreement. Should the NFLPA include this concept in their demands of the owners? Should the owners include mandatory participation by players in a money management program as part of their demands?
The statistics of failure are not mythic. Sports Illustrated noted in 2009 that “by the time they have been retired for two years, 78 percent of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.” Likewise, “within five years of retirement, an estimated 60 percent of former NBA players are broke.”
We believe every sports organization investing massive sums in college graduates should consider providing comprehensive ways of introducing basic money management concepts, including controlling one’s financial affairs. If nothing else, we believe allowing players to think much more proactively about protecting earnings and guaranteeing substantial future income is good business.
There is no great secret to wealth management. The problem exists when individuals who have never been exposed to affluence must suddenly deal with a new lifestyle. For a team to fail to offer simple financial counseling is to subliminally play a role in the development of a problem that will return to haunt them when victories are on the line.
Most of us shake our heads in wonder when we read about players who earned $50 million and are now broke. Or read about star athletes found dead in back allies after seeking drugs. We shake our heads but rarely ask what early career initiatives could have prevented that fall from grace.
A 2009 article by Business Pundit listed 25 wealthy athletes who went broke. Guys like NFL running back Deuce McAllister, who turned a $70 million career into a $6 million debt in just a few years. Other examples include the NFL’s Travis Henry, who fathered nine children by nine women and reportedly lost $20 million in the process.
To that end, the creation of some simple “master” classes by teams or life skills classes while athletes are still in school (we teach one at Syracuse) could easily provide simple financial counseling that requires no investment by the player and no pitches from financial services organizations. These classes could include life skills (e.g., safe sex, recognizing addictive behavior, etc.) as well as financial management strategies.
The benefit of higher education is more often than not to prepare citizens for a productive future and teach them to never stop learning. Pro teams might view entry-level fiscal education as an important employee training program that picks up where college left off.
Rick Burton is (firstname.lastname@example.org) is the David B. Falk Professor of Sport Management at Syracuse University. Norm O’Reilly (email@example.com) is an associate professor of sport business at the University of Ottawa.