NFL Superstars' Financial Fumbles Hold Lessons for Rest of Us

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.

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.

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