The March 23, 2009 issue of Sports Illustrated features this interesting article entitled, “How (and Why) Athletes Go Broke“.
One astonishing tidbit:
By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.
Within five years of retirement, an estimated 60% of former NBA players are broke
The article analyzes the psychology behind the bad decision-making and puts them into four main categories:
1. The Lure of the Tangible
2. Misplaced Trust
3. Family Matters
4. Great Expectations
As the article notes, many professional athletes are very similar to lottery winners in that they suddenly gain a great deal of money out of proportion to their life skills. Either they raise their life skills to match their money, or they lose money until their bank accounts are again proportionate to their life skills.
These athletes’ stories also illustrate the following truth from Francisco D’Anconia’s “money speech” in Atlas Shrugged:
…Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money.
…Only the man who does not need it, is fit to inherit wealth — the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him.