Why Many NFL Players Fumble When it Comes to Personal Finance

nfl-logoAlmost every breathing human being covets the life of a professional athlete.  The perception is that for a few hours a week, a professional athlete can earn millions of dollars a year in addition to the fame and lifestyle.  The skill set required is usually running fast, throwing far, or being able to shoot a sphere into a cylinder, and most Americans are in agreement that sports professionals are extremely overpaid.  In this blogger’s opinion, that couldn’t be farther from the truth.

Let’s take a look at the average NFL player’s career and how much the decision to play professional sports has helped a player’s finances over the course of his lifetime.

Usually, the age when a player first recognizes they have the talent to become a true college athlete is around 14.  If a student thinks they have the skills, there’s a pretty good chance that academics take a backseat to practice and conditioning.  Of the 100,000 seniors in High School that play football every year, roughly 9,000 (Or 9%) are given full or partial scholarships to Division I or Division II schools.  Let’s assume a student is good enough to get a full scholarship to a good University.  Already, the student has saved  ~$120,000 on a 4 year degree.

Again assuming that the college athlete is good enough to go professional, school is an afterthought.  While NCAA regulations require at least a 2.0 GPA to play, there are majors such as “turf management” that can make college classes a breeze.  Sadly, the free ~$120,000 that was received for an education is miserably wasted.  With eyes on the prize athletes dream of draft day where they will sign their first contract, sometimes for millions of dollars.

Now, of the 9,000 seniors that play college football, roughly 200 make it to an NFL camp each year.  (0.2% of High School athletes and 2.2% of college athletes receiving scholarships.) For the lucky 200, the average length of your NFL career is three years.  The average NFL salary each year is $775,000.  Doing the quick math, the average gross gain from an NFL athlete through salary is $2.325M.  Not bad for three years work huh?  Let’s start subtracting.

First, 99% of NFL players need an agent to negotiate these contracts, and the average agent fee is 6%.  Let’s knock off $140,000 to bring the salary to $2.185M.  Next, Uncle Sam loves professional sports because he gets 35% of what everyone makes.  There goes another $765,000 that brings the total to $1.42M.  After a few meager endorsements for an average NFL player, lets say the total amount made from being a professional athlete is $1.5M.  So what next?

The reason an NFL career only last three years is usually because of major injuries.  Knee surgeries and broken bones can plague an athlete for the rest of their lives and as far as dangerous professions go, the NFL is certainly one of the highest on the list.  So at the age of 26, a man with little education and poor physical capabilities is asked to start his life all over again.  No real education usually means they are living in an expensive house with an expensive mortgage and driving a luxury car.  Chances are there’s little money left in a savings or an investment account. So what is an NFL athlete to do?  Go Bankrupt.  Almost 80% of NFL athletes are bankrupt after two years of being retired.

The dangerous combination of an unexpected injury and a lack of education continuously ruin the financial lives of professional athletes.  Very few understand the risks and only look forward to the future, without planning for it.  Rather then wasting time in class learning the difference between Bermuda grass and Kentucky bluegrass, all athletes on scholarship should be mandated to take 20 + credit hours on personal finance and money management, even if they never turn professional.

So the next time you watch the NFL draft or read about a player that just signed a multi-million dollar contract to push the guy in front of him for a living, don’t think he’s way better off than you.  While that may be true in the moment, it probably won’t be true in the long run.

Published or Updated: December 20, 2014

Comments

  1. Studenomics says:

    “Almost 80% of NFL athletes are bankrupt after two years of being retired” that is just down right scary.These guys are so flashy when they are young. They have it all. Fancy cars, big homes, indoor pools, etc. Then at the end of the day they have less than us. A personal finance disaster in my eyes.

  2. Patrick says:

    I heard something similar mentioned in passing on ESPN a few weeks ago. It’s an unfortunate truth about the game. The NFL is one of the few major sports that actually requires rookies to attend a financial seminar, but my guess is the majority of them blow it off. That’s unfortunate, because the NFL has one of the worst professional sports pension plans. The MLB has the best by far, and their careers tend to have less devastating ends. The moral of the story is this: if given a choice, choose pro baseball over pro football!

  3. Wow, the “average NFL career is 3 seasons”! I never knew that but I guess with as many injuries as there are then it makes sense.

  4. Goes to show that personal finance know-how is required at ALL levels of income.

    The same analogy can sort of be used for many investment bankers.

    They burn out after 2-3 years, and while they make some CRAZY money during that time, they’re exhausted in the end, having essentially worked the equivalent of 2 jobs.

  5. Daniel Chew says:

    That is terrible. I thought they would be earning more than a meagre 1.5M. Goes to show that many things are not what it seems. Some people may look rich but they are not and those who are rich does not look rich at all.

  6. Julie says:

    As usual, the credit for the undereducation of professional players in sports lies squarely first at the High School level. Then, the majority of the blame can be laid at the College/University level. Everyone, from the parents, coaches, and, especially, the people who make all the decisions regarding curriculum; these include the deans,alumni, and in some cases, the professors themselves, who, for the most part, are pressured to “go along to get along”. I have even heard cases where it was intimated that tenure may be in jeopardy if the teachers/professors speak up for the student’s own good or refuse to “give the student athlete a break” regarding grades.
    Finally, let’s look to the Professional Sports Organizations themselves. First, it was the MLB, then the NBA, and finally, the NFL who allow players to be drafted before their degree is “earned” I consider that they did the most damage, because NFL athletes have a much shorter career overall because of the nature of the game of football itself. I won’t even go into the subject of the NHL and the sheer brutality within the very rules of this so-called “game”. Until things change at the top first, the problem of financial stability, as well as the the future viability of the players physical well-being as the years go on will increasingly become untenable.. I truly believe that if children as well as the parents at the grade school level are taught the real truth of sports participation, they will understand all the risks as well as the benefits, especially at the professional level. where most of the disability occurs..This is another problem that needs to be addressed: that players future medical needs are met, no matter at what level they occur. Funds must be allocated to ensure that when a player gives their “all”, as was recently illustrated by Bret Favre’s heroic play during the NFC championship, that the League gives their utmost to address any phsical needs the player will have in the future because of the overstress and strain put on the body of the athlete that, under normal cicumstances, would never be tolerated, regardless of the “top” physical shape in which they keep themselves.
    Listen, my husband and I are sports enthusiasts, and we were as thrilled as anyone when our Saints won the Superbowl. But, at the same time, we appreciate anything that can be done to lessen the probability of players getting hurt, regardless what team they play for, ours or theirs. I have been a fan of Bret Favre since he played college level, since he grew up in Kiln MS, which is only about 70 miles from where I live. I wanted so much for the Saints to draft him but it was not to be. When the Vikings played down here in the Superdome against our Saints, I can honestly say that I prayed he would not get hurt. & breathed a sigh of relief when he got right back up.What a guy!

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