Lately, there have been a number of articles about professional athletes who have lost millions of dollars due to poor financial decisions. Athletes range from golfers to boxers to professional baseball players, and their poor decisions range from buying cars, women, and tigers to battling gambling addictions and making bad business investments. There are also those who have been scammed by their agent, their accountant or their ex-wives. Most of these problems are due to lack of education and some to lack of maturity. Whatever the case, perhaps, these issues have opened doors for entrepreneurs who are in the business of financial and risk management.
An alarming statistic indicates that 78% of NFL players go bankrupt or suffer financial problems within two years of retirement and 60% of NBA players go bankrupt within five years of retirement. retirement. These athletes know they have a lot of money and do not think about what will happen when they stop receiving those multi-million dollar checks. Many of them do not understand business and / or finance. Some of them may never have taken a single class from either of them in college. Some professional athletes may not have time to focus their finances. The stress of having to produce in the field does not leave much time to focus on matters outside the field, such as investments or retirement plans. Raghib “Rocket” Ismail, a former professional soccer player who signed the highest salaries of his time in 1991 at $ 18.5 million over a four-year period, once said, “I once had a meeting with JP Morgan and it was literally like listening to Charlie Brown’s Teacher. ” Not that I’m not a smart person, but without focusing on the details, many professional athletes find themselves stranded in the rain when money runs out.
Of the athletes who have gone broke, not all have necessarily lost their money by leading extravagant lifestyles. Some have tried to make investments and plan for their future but did not have people they could trust to manage their money or they tried to manage it themselves but did not have the time or knowledge to do it properly. Some of them have invested in high-risk businesses that failed and others have invested in businesses that had no chance. A gamer once invested in an invention that consisted of an inflatable raft that was attached to the bottom of a sofa so that people who lived in areas with a lot of rain could pump the raft and float on their sofa when their area was flooded. If this player had had someone in the financial / risk management business that they could trust and have a good reputation, then they wouldn’t have wasted their money on such a dumb investment.
The financial / risk management companies athletes should use are those that have a good reputation with all of their customers, not Uncle Joe’s accountant at the local mall. These companies should try to educate their clients on things they do not understand by offering consultation sessions and possibly workshops on financial management and personal finance. If they are trying to keep the athlete in the dark, they are probably trying to overcome them in some way. Every investment does not have to be a “homerun”. These companies must try to keep athletes’ risk within reason.
Financial / risk management is key to everyone’s financial stability, no matter how much money they make. If every investment a person makes is going to be high risk and high reward, then he might as well go to a casino because all he is doing is gambling anyway. Although it is bad that so many athletes are having this problem, it is opening doors for those entrepreneurs in the risk management business. Athletes must understand that even sports are business and must see themselves as independent contractors who must run and run their business.
