The NFL's Personal Finance Class (Making Cash Last a Lifetime)

[MJ DeMarco]

Thought this was very "Fastlane" as it is discussing how to have your short NFL career earnings last a lifetime.

http://www.marketwatch.com/story/take-the-same-finance-class-the-nfl-gives-its-players-2016-04-06

Over 42 slides.

 

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[HyperFocus]

Interesting stuff. I wonder how these top athletes deal with money.
Generally they have amazing discipline so they might be smart with their money, on the flip side they receive a lot of money in a short period of time which can be confusing. They also have limited financial knowledge. Last, a lot come from humble beginnings which also influences how much wealth they want to show.

What do you guys think? Anyone has data on the % of people who dont go broke.

 

[Ubermensch]

Interesting stuff. I wonder how these top athletes deal with money.

They make a decent amount while they play, and then usually lose it it all very quickly after leaving the league.

Generally they have amazing discipline so they might be smart with their money

Typically not.

, on the flip side they receive a lot of money in a short period of time which can be confusing.

Exacerbated by the fact that they typically get this money while relatively young (in their 20s and perhaps early 30s).

What do you guys think? Anyone has data on the % of people who dont go broke.

Forbes: 5 Reasons why 80% of NFL players retire broke.

Making it as a professional athlete requires Mastery, like anything else. It requires thousands of hours of practice, and extreme dedication (often at the expense of not developing other unrelated skills).

Being a good football player does not make you a moneymaker in any other sector of the economy other than on the field. When players leave the league, they often leave behind their family (their teammates), which can cause a bit of depression and lack of identity.

ESPN: Life after NFL a challenge for many: (excerpt below)

Terrell Owens hasn't officially retired yet, and he already has blown the $80 million he earned during his career. Warren Sapp recently filed for bankruptcy. Former first-round picks Michael Bennett and William Joseph currently face federal charges of tax fraud and identity theft. Not every player falls into these traps, but a 2009 Sports Illustrated study said that 78 percent of NFL retirees have "gone bankrupt or are under financial stress because of joblessness or divorce" within two years of their careers ending. "You're talking about an identity crisis," said NFL vice president of player engagement and former Pro Bowl cornerback Troy Vincent. "Every athlete has to face the same question when they're done: 'Who am I?'"

Sports Illustrated: How and Why Athlete Go Broke (excerpt below)

Then there are the unnamed athletes and team personnel who pawned 400 title rings to the online reseller championship-rings.net over the past three months, a spike of about 33% from the same period last year. (A 2008 Giants Super Bowl ring was among them.)

This is just plain sad and pathetic. Professional athletes wind up broke a few years after they leave the league, even if they won a championship. They end up so broke, they sell the championship rings to pawn shops.

Many people in the USA complain that professional athletes make millions, while other hard-working individuals slave away for a fraction of the wages.

The Universe, it seems, balances the scales.

On a positive note, the phenomena of professional athletes winding up broke as a joke (or jock) clearly represents a need. 1) Someone could start a business to help athletes manage their lifestyles. 2) Someone could start a movement preaching to young kids, showing them that playing a sport is not the best way to financial freedom.

 

[luniac]

how the F*ck do you blow 80 million dollars!?!? i never understood how that's possible...

I mean goddamn the kind of lifestyle a person must live to blow 80 million omg... its gotta be the worth of 1000 normal peoples lifetimes...

jesus im so deprived....

p.s.
The whole athlete vanishing value upon ending career is why im sacrificing my own potential small time sports career for app development.
If i make it while young maybe i can still enjoy the sport at a pro level, if not well at least ill be retired financially free someday. Still better than being washed up broke athlete. The decision did hurt though but im at peace with it now.



anyways shouldn't the best advise be to use those millions to make more millions?? the graphs show a future where the athlete completely retired from ANY work! LOL you should never stop building something in this life as far as im concerned at this point.

 

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[Yoda]

how the F*ck do you blow 80 million dollars!?!?

Spending principal, not interest.

 

[CMA]

This is why most NFL players go broke.

They simply don't understand basic money principles like interest.

Sad really.

 

[ace81385]

It's actually sad, a lot of these guys as mentioned come into extreme wealth at 21-29 years old. Most of them although they went to "college" are not educated. They have people around them exploiting them( their "crew", family, "advisers" aka enablers) NFL contracts a lot of the money is not guaranteed so you could score a 6 year 100 million dollar deal with 10 million guaranteed and be cut. I assume these guys buy a mutli- million dollar pad + other homes cars, crazy jewelry, boom all gone. Bad business investments, ponzi schemes the list is pretty endless how the money is blown.

 

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[RHL]

how the F*ck do you blow 80 million dollars!?!? i never understood how that's possible...

Same way over half of Americans are over-weight and like 2% of adults have six-packs. Because over consumption is the path of least resistance. Every other person and company and entity is trying to get you to spend. Saving is hard. Conserving is hard. Self-limiting is hard. Discipline is hard.

Add to that the fact that a significant number of pro athletes come from absolute sidewalk backgrounds, because athletics was seen as the only way to pay for college, and they have the pressure of nagging and decades of influence from their welfare-taking mom, siblings, cousins, etc., their friends who work at the convenience store or washing dishes but want that "sick instagram life," and so on.

Toxic cocktail.

 

[AgainstAllOdds]

In my opinion, the NFL's doing a poor job of teaching these athletes finance.

Let's be honest. When a jock sees a "powerpoint slide" like the one below, then his brain automatically shuts off.

Way too much math!

And though all of us here on this forum can process it, think back to high school.

What percent of the kids in your high school could comprehend this math easily?

Maybe half.

Really. Maybe half.

If you've ever tutored these jocks, then you know that they just don't care enough to try and learn the math. Their usual mentality: "I suck at math." As in: I see a bunch of formulas. They're simple formulas. But I'm not even going to try using my brain power.

So in my opinion, the NFL and other leagues need to change their approach and actually cater to their clients (athletes). They need to present that information in a format that is easy to digest. It needs to be in a lowest common denominator format.

Which I believe is video. And I also believe creates opportunity for any entrepreneur that wants to present this information in lowest common denominator, entertaining video format.

For example, if you can take something simple like the video below, and put a finance spin on it, then leagues will pay you large sums of money for the original video + an annual fee to update it. It's a hard pitch, but definitely something with a high reward:

 

[Delmania]

how the F*ck do you blow 80 million dollars!?!? i never understood how that's possible...

I mean goddamn the kind of lifestyle a person must live to blow 80 million omg... its gotta be the worth of 1000 normal peoples lifetimes...

jesus im so deprived....

That's very easy. The United States teaches nothing about financial literacy in schools; basic concepts such as budgeting and investing are ignored in favor of teaching us a series of skills we rarely use. Most these players are young and starstruck by the lifestyle. They get used to the lifestyle, and then when the retire, they have saved nothing.

 

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[Delmania]

On a positive note, the phenomena of professional athletes winding up broke as a joke (or jock) clearly represents a need. 1) Someone could start a business to help athletes manage their lifestyles. 2) Someone could start a movement preaching to young kids, showing them that playing a sport is not the best way to financial freedom.

You're not the only one who thinks that way: https://twitter.com/ramit/status/717854407950467072

Rather than teach kids not to pursue sports, I'd rather see core financial literacy skills taught in schools.

 

[vinylawesome]

Hopefully the class will help some of the players. Your post reminded me about an article I read that highlighted a small subset of players that are currently saving a tremendous amount.

"There are few places more predictable than an NFL team parking lot: There’s a bunch of luxury cars, a spot reserved for the head coach and innumerable signs warning outsiders to park as far away as possible.

You see those things in Washington too, but there’s also a conversion van, a bicycle, a handful of worn-out sedans and a beat-up old Mazda that rolled off the assembly line more than two decades ago.

That’s because the surprise NFC East champion Redskins have a group of stars who are obsessed with spending as little money as possible.

“Maybe someday I’ll have enough saved and I’ll see what I can get,” said starting quarterback Kirk Cousins, who drives a dented GMC Savana passenger van to work. “But it’s better to buy appreciating assets than depreciating. No yachts, no sports cars.”""

Source: http://www.wsj.com/articles/why-the-redskins-players-are-so-frugal-1452014607

Same way over half of Americans are over-weight and like 2% of adults have six-packs. Because over consumption is the path of least resistance. Every other person and company and entity is trying to get you to spend. Saving is hard. Conserving is hard. Self-limiting is hard. Discipline is hard.

Add to that the fact that a significant number of pro athletes come from absolute sidewalk backgrounds, because athletics was seen as the only way to pay for college, and they have the pressure of nagging and decades of influence from their welfare-taking mom, siblings, cousins, etc., their friends who work at the convenience store or washing dishes but want that "sick instagram life," and so on.

Toxic cocktail.

The producer mindset never goes away, especially when your at the top. Koch Industries, "The Koch Brothers" Famously reinvest 90% of their profits back into their business.

"Koch Industries, Inc., (www.kochind.com) a privately owned company headquartered in Wichita, Kan., owns a diverse group of companies with annual revenues in excess of $60 billion and a presence in about 50 countries."


"Koch has a historical practice of reinvesting up to 90 percent of earnings back in its businesses – something a public company is generally not able to do."


Source: https://www.sec.gov/Archives/edgar/data/41077/000119312505225958/dex993.htm

 

[DaveC]

Essentially this is just windfall management, nearly the same as a big lottery win. Maybe the NFL and sports in general can decrease huge signing bonus windfalls and pay out more over time?

 

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