Why Many Pro Athletes Are So Bad With Money

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Despite the flashy cars and seven figures, many professional athletes face financial trouble during their careers or shortly after they end their playing days.


key points

  • Tight earnings windows mean money comes and money goes all too quickly.
  • Stashing cash for retirement can be tough thanks to relatively low annual limits.
  • Overspending hurts, no matter your income.

Mike Tyson, Allen Iverson, Evander Kane — the examples are endless. Pro athletes might seem larger than life on the big stage, but when it comes to personal finances, they fight the same battles as you and I. Million-dollar contracts followed by bankruptcy might leave you scratching your head. So, why are so many pro athletes bad with money?

A narrow earnings window

The multimillion dollar contracts you see in the news sound like a pretty sweet deal — until you consider how long they last. In the NFL, the average playing career is only 3.3 years long, leaving many players with uncertain future cash inflows. This short window is floating, and the decisions made during this period can be magnified across a player’s lifetime.

The longest-tenured player in the NFL, kicker Morten Anderson, played in 382 games over 26 years. Anderson’s career lasted less than 60% of the tenure of the average American worker, and with his shortened work life he came shortened income guarantees. For a pro athlete to work for only a few years means that the safety net of an annual income is not present. And with the lurking threats of inflation, poor market performance, and creeping standards of living, a lack of dependable future income can blindside retired athletes.

Limited savings opportunities

Another problem with compressed earnings? Fewer opportunities to build retirement savings. Like most Americans, professional athletes have access to workplace retirement plans. In the NFL, players may contribute to a 401(k) plan, referred to as the “Second Career Savings Plan.” While a player’s earnings may exceed that of the average American, their contribution limits are not higher. In 2022, a player can only contribute $20,500, representing a small fraction of their total earnings. With only a few years of professional play, athletes have less opportunity to contribute to their 401(k) than most Americans.

To make matters worse, the NFL has elected not to make contributions to players’ retirement plans for the years 2020 through 2023. This eliminates the sizable $2 match for every $1 contribution to 401(k) accounts, and up to a $35,000 allocation in the profit sharing plan for players with four or more credited seasons. For a player starting and finishing their professional career in those three years, the NFL’s move essentially eliminates any employer retirement contributions.

Overspending

As it turns out, overspending habits can’t be drowned with cash. And building unhealthy spending habits in those floating high cash flow years can lead to disaster once a player’s contract runs out. Unfortunately, bad money habits can be contagious as pro athletes fall into a game of “keeping up with the Joneses.” In 2017, John Wall of the Washington Wizards gave each of his teammates personalized Rolex watches — at a cost of over $600,000.

It isn’t all about flexing, though. Many athletes have a long list of friends, family, mentors, and coaches they feel indebted to for their success. Headlines are littered with pro athletes buying houses and cars for their closest supporters. Yet, however quickly a few million dollars runs out for a single athlete, it runs out even quicker for their family and friends. At the end of the day, spending is one of the most important factors in personal finance, and is an area where many of your favorite athletes fall short.

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