Athletes are some of the highest-paid professionals in the world. Many professional athletes are famous and are well paid. Yet, most of the athletes go broke after a very short period. Why is it so? Many athletes have a short career of around 5 years while many other careers span between 30 to 50 years.
In this article, we will look at some athletes who went broke and the reasons why many professional athletes go broke.
Professional Athletes that Went Broke
The following is a list of athletes who went broke in their professional careers.
1. Mike Tyson. He was a professional boxer and was once worth $400 million. He went broke due to issues like drugs and substance abuse and multiple women. He declared bankruptcy in 2003.
2. Diego Maradona. He is a professional soccer player who went broke for not paying taxes. The Italian Tax Authority demanded that he pay $54 million in tax that he couldn’t afford. He filed for bankruptcy.
3. Allen Iverson. The basketball superstar was once worth over $150 million from his career and sponsorship deals. However, when a court compelled him to pay $860,000 to a jeweler in 2012, he couldn’t pay.
Read more: Professional athletes that went broke.
Why Athletes Go Broke
The following are some of the reasons why athletes go broke.
1. Athletes Have a Short Career
One of the main reasons why professional athletes go broke is because they have short careers. The average career length of a majority of professional athletes is less than six years. In other professions, the average career length is 30 years.
As such, many athletes do not have ample time to earn and invest due to the short period of their careers. The money they earn within six years is not enough to sustain them for the rest of the years. As such, many of them end up broke.
2. Trying to Keep with Joneses
Another reason why many athletes go broke is trying to keep up with their peers. While self-made millionaires are very frugal with their spending, athletes are out there splashing their money in all kinds of spending. They are not able to guard their wealth and multiply it and in the end, they end up going broke.
3. Lack of Financial Literacy
Financial literacy is very important, especially for new and rich athletes. Financial literacy teaches you skills like budgeting, saving, borrowing, and investing. Without these skills, it is very challenging to build wealth.
If you don’t understand how money works, then it becomes challenging to make money work for you. And this is the case with many professional athletes. Financial literacy helps you come up with ideas that can help you grow your wealth. It also helps you to be frugal in your spending and only spend money where necessary.
Also read: How to survive without money.
To become rich, you need to be frugal about your spending. Unfortunately, most athletes are spendthrifts. They splash most of their cash on unnecessary things. Some of the richest people in the world like Elon Musk are very frugal in their spending. They spend their money on the important things only.
You will notice that athletes are always giving gifts and cash to their fans, especially during events. This leaves many of them with very little or nothing to save or invest in. In the end, they end up going broke.
5. Failure to Plan for Retirement
By the time they are retiring, most athletes usually have not planned for their retirement. In other traditional careers, most people have social security and retirement income accounts where they save and invest for retirement. When they retire they use these savings for survival. Many athletes usually don’t have such savings. As such, they usually have no means to support their livelihood after retirement.
6. Family Problems
A good number of professional athletes have went gone because of marriage or child support-related issues. Some of them include Allen Iverson whose wife filed for divorce after 8 years of marriage. Soon after, Allen Iverson became broke.
Another professional athlete that has gone broke because of family-related issues is Dennis Rodman who was paying $50,000 in child support every month. In 2012, he was broke and couldn’t pay child support any longer.
7. Drugs and Substance Abuse
Another reason why professional athletes become broke is because of drugs and substance abuse. A good example is Mike Tyson and Michael Phelps; an Olympic gold medalist swimmer whose endorsement with Kellogg’s got canceled after a photo of him emerged taking marijuana.
Also read: Are professional athletes overpaid?
8. Multiple Women and Scandals
A majority of professional athletes are often chasing multiple women and splashing money on them. And because of their fame, women also chase them. Also, some athletes have gone broke due to issues like divorce. Divorce is expensive, especially when you have to split wealth with your spouse. This leaves many of these athletes broke and financially strained.
How Many Athletes Go Broke?
It is estimated that about 60% of athletes go broke within five years after retirement. Statistics show that National Football League (NFL) players are at a higher risk; 78% of going broke, followed by National Basketball Association (NBA) players at 60%.
Summary of How and Why Athletes Go Broke
Athletes are some of the highest-paid professions yet most of them go broke after a very short time. Some of the athletes who were once millionaires and went broke include boxing superstar Mike Tyson. Some of the reasons why athletes go broke are because of their short career window, lack of financial literacy knowledge, and failure to plan for retirement.