Reasons Many Professional Athletes Go Broke After Retirement

Wednesday December 15, 2021

Jay Nicholls Economics of Sports Prof. Enz 4/5/13 Why do so many professional athletes go broke after retirement? After watching ESPN’s 30 for 30, Broke, my mind starting pondering this question of why and how so many professional athletes are blowing through the millions they make while playing their specific sport? It is amazing that someone can spend that much money so quickly. What are they buying and who are they buying things for? Where are they spending it? Where do they go wrong? When did this trend start and will it continue in the future? What are the league officials doing in order to prevent this tragedy from happening? These are some of the questions I will try to answer throughout this paper. In March of 2009 Pablo S. Torre wrote an article for Sports Illustrated titled, “How (and Why) Athletes Go Broke”. He explains how many athletes, especially minority ones, come from very humble beginnings often times growing up in poverty. Some of whom are the only ones in their family to reach college. Then some of them even start earning money while still in college through “illicit payments from agents” (Torre). Once these players hit the big leagues and start earning millions, much of it is invested blindly by people who appear to be trying to help but often times do not. Their fortune seemingly evaporates right before their eyes. If and when these athletes look at their bank accounts their reactions are usually similar, “What the …? ”(Torre). The most common leagues that players go broke are the three most popular in the country, NFL, NBA, and MLB. Torre reported that “By the time they [the athletes] have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce. (Torre). That is an astounding number of players looking at overdue credit card bills, child support payments and much more. Athletes who do get married and then eventually divorced, in many cases, do not sign prenuptial agreements therefore losing at least half of what they worked so hard for. Another astonishing figure reported by Torre was that 60% of former NBA players are broke within five years of retirement. They typically run into many of the same problems as NFL players. The MLB is no different. High profile Major League Baseball players like Johnny Damon and Jacoby Ellsbury reported that some of their money is tied up in an $8 billion fraud scandal due to a shady financier named


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