It isn’t much of a surprise anymore when you hear that a former NFL star is suffering from serious financial woes.
It used to be you’d wonder how someone who made millions of dollars every year could lose it all so fast. Now we know: They spend too much. They have expensive divorces. They get bad advice and make terrible deals.
And for many, their careers are short — just three to six years.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Some epic fails by NFL stars
But even seasoned superstars can run into trouble. In 2010, John Elway, the Denver Broncos’ Super Bowl-winning quarterback and current general manager, was among dozens of investors who got caught up in a Ponzi scheme and lost millions. When Cleveland Browns quarterback Bernie Kosar filed for bankruptcy in 2009, he owed $9.7 million to the bank for failed real estate deals, $3 million to his ex-wife, and thousands more in personal loans. Even the late, great quarterback Johnny Unitas, beloved in Baltimore, filed for bankruptcy in 1991. And just last fall, 60 Minutes reported that several players — including Ray Lewis and Terrell Owens — had lost millions after investing in a failed electronic-bingo-casino-and-entertainment complex in Alabama.
In other words, these guys make mistakes just like the average Joes who fill up stadiums to watch them. They just do it on a much grander scale.
Where they go wrong
Just like doctors, dentists and construction workers, athletes hang with their own, and they tend to invest in the same ways. They tend to like businesses that bear their names, raise their profiles and feed their egos — and when they do make an investment, they tend to go big, putting all their money into car dealerships, restaurants and sports franchises. Some of those work out … but a lot of them don’t.
Pro football players are good at what they do, but clearly many aren’t getting the right advice when it comes to planning for the future. If an NFL star walked into my office today and asked me for help, I’d sit him down and start asking questions.
- Have you worked out a plan for protecting your assets as well as growing them?
- Have you put together a trust?
- Have you thought about your future medical expenses and all those injuries that may have taken a toll on your body and your brain?
- Do you look at the real returns of investments versus what a friend or the stock market ticker is telling you?
And while we were chatting, I’d put the focus on these three points:
- Inflation: This is a particularly important factor for someone who has become accustomed to and hopes to maintain an upscale lifestyle. To keep up, he’ll have to double his income every 10 to 15 years, which won’t be easy once those big paychecks stop. But there are things we can put in place to make it happen.
- Taxes: It’s imperative to take taxes into consideration when planning for the long term, especially when so much money is involved. I’d suggest creating a family foundation, with money the player can tap into while he’s alive but that also goes on into perpetuity to support philanthropic causes he believes in. He can involve his family members, giving his kids a chance to learn about giving. And he can give the foundation his name!
- Guaranteed income: Restaurants fold, stocks drop and endorsement deals can dry up, but there are ways to be sure his money lasts as long as he does, including different kinds of annuities.
These are tough topics for young men who’ve dreamed of laying down cash for a new car or helping friends and family get past their money problems. They certainly aren’t designed to inflate an already healthy ego. But if these guys want to come out of their careers with more than memories, they’d be wise to find an adviser who will help them tackle a plan that’s less about risk and more about long-term rewards.
Lessons for the rest of us
Fans can learn some lessons from their favorite superstars’ high-profile fumbles. After all, they’re not the only ones who have to overcome setbacks. And we’ll all have to deal with similar issues in retirement.
Find a coach you can trust: Your adviser can help you put together a game plan that addresses inflation, taxes and income needs on your level of play.
Kim Franke-Folstad contributed to this article.
Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company and are not offered by Global Financial Private Capital.
This material is for informational purposes only. It is not intended to provide tax, accounting or legal advice or to serve as the basis for any financial decisions. Individuals are advised to consult with their own accountant and/or attorney regarding all tax, accounting and legal matters.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
-
I Need to Free Up $1,000 in My Monthly Budget, and I've Already Given Up Starbucks and Dining Out. What Else Can I Do?Here are some creative ways to save up to $1,000 a month, even if you feel like you've already made all of the obvious cuts.
-
Eight Steps to Help Get You Through the Open Enrollment Jungle at WorkWondering how to survive open enrollment this year? Arm yourself with these tools to cut through the process and get the best workplace benefits for you.
-
Seven Moves for High-Net-Worth People to Make Before End of 2025, From a Financial PlannerIt's time to focus on how they can potentially reduce their taxes, align their finances with family goals and build their financial confidence for the new year.
-
I'm a Financial Planner: These Are the Seven Tiers of Retirement Well-BeingLet's apply Maslow's hierarchy of needs to financial planning to create a guide for ranking financial priorities.
-
Why More Americans Are Redefining Retirement, Just Like I DidRetirement readiness requires more than just money. You have a lot of decisions to make about what kind of life you want to live and how to make it happen.
-
A Compelling Case for Why Property Investing Reigns Supreme, From a Real Estate Investing ProInvestment data show real estate's superior risk-adjusted returns and unprecedented tax advantages through strategies like 1031 exchanges and opportunity zones.
-
Are You Retired? Here's How to Drop the Guilt and Spend Your Nest EggTransitioning from a lifetime of diligent saving to enjoying your wealth in retirement tends to be riddled with guilt, but it doesn't have to be that way.
-
Government Shutdown Freezes National Flood Insurance Program: What Homeowners and Buyers Need to KnowFEMA's National Flood Insurance Program is unavailable for new customers, increased coverage or renewals during the government shutdown.
-
Separating the Pros From the Pretenders: This Is How to Tell if You Have a Great AdviserDo you leave meetings with your financial adviser feeling as though you've been bulldozed into decisions or you're unsure of what you're paying for?
