Why so many professional athletes are so bad with money

A soccer player sits on a ball in the middle of the field, looking pensive.

Image source: Getty Images

Despite the flashy cars and seven numbers, many professional athletes face financial problems during their careers or shortly after ending their playing days.

the main points

  • Tight profit windows mean that money comes and goes very quickly.
  • Storing cash for retirement can be challenging thanks to the relatively low annual limits.
  • Overspending hurts, regardless of your income.

Mike Tyson, Allen Iverson, Evander Kane – the examples are endless. Professional athletes may seem larger than life on the big stage, but when it comes to personal finance, they are fighting the same battles that you and I do. Million dollar contracts followed by bankruptcy may make you scratch your head. So, why are so many professional athletes bad with money?

narrow earnings window

The multi-million dollar contracts you see in the news seem like a great deal — until you think about how long they take. In the NFL, the average playing career is just 3.3 years, which leaves many players with uncertain future cash flows. This short window is fleeting, and decisions made during this period can be magnified across the lifespan of the player.

The longest-serving NFL player kicker Morten Anderson has played 382 games over a 26-year period. Anderson’s career lasted less than 60% of the average lifespan of an American worker, and with his working life shorter came shorter income guarantees. For a professional athlete to work for only a few years, this means that the safety net for an annual income does not exist. And with the underlying threats of inflation, poor market performance and creeping living standards, the lack of reliable future income can blind retired athletes.

Limited savings opportunities

Another problem with compressed earnings? Fewer opportunities to build retirement savings. Like most Americans, professional athletes have access to the workplace retirement plans. In the NFL, players can contribute to a 401(k) plan, referred to as the “Second Career Savings Plan.” While a player’s earnings may exceed the earnings of the average American player, their contribution limits are no higher. In 2022, a player can contribute only $20,500, which is a small part of his total earnings. With only a few years of professional play, athletes have less chance of contributing to a 401(k) than most Americans.

To make matters worse, the NFL chose not to make contributions to players’ retirement plans for the years 2020 through 2023. This eliminates the big game of $2 for every $1 contribution to 401(k) accounts, and even sets aside $35,000 in a profit-sharing plan for players who They have four or more seasons. For a player to start and finish their career in those three years, the NFL move essentially eliminates any employer retirement contributions.


As it turns out, excessive spending habits cannot be drowned out by money. and construction Unhealthy spending habits Those fleeting years with high cash flow can lead to disaster once a player’s contract expires. Unfortunately, bad financial habits can be contagious as professional athletes fall into the game of “keeping up with the neighbours.” In 2017, John Wall of the Washington Wizards presented each of his teammates with custom Rolex watches – at a cost of more than $600,000.

It’s not all about flexing, though. Many athletes have a long list of friends, family, mentors, and coaches to whom they feel they owe their success. Headlines are littered with professional athletes buying homes and cars for their closest supporters. However, even though a few million dollars quickly run out for one athlete, they run out even faster for their family and friends. At the end of the day, spending is one of the most important factors in personal financingan area where many of your favorite athletes fail.

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