60% of NBA players go broke, 5 years after retirement

I'm sorry for those who are broke, but a lot of these guys have no clue how to manage their money.

 

Andrew Bogut emails article link to Etan Thomas.

 

"leave me alone!!!!!"

 

refresh my memory again about this

 

its hard to feel sorry for these all these multi-millionaires, but damn! those are glaring statistics - the numbers dont lie. it is obviously a major problem which needs to be addressed. perhaps the nba needs to make all rookies go through some economics/money management classes?

imo, you have to be a total fool to make the money the average nba player makes and still go broke after 5 years. i just dont know how its possible to reasonably spend that much (reasonably being the key word).

i would be interested in seeing the stats broken down by college education - straight out of high school vs. 1-2 years vs. 3-4 years.

 

That's a damn shame. Especially considering interest/safe investemtents could earn you about $60,000 a year for life for every million saved.

Save $5mm, that's $300,000 per year net.

 

Don't these guys have some type of retirement/pension plan that they pay into while in the NBA that should ensure they aren't completely broke?

 

how many of these players are in the league more than 3-5 years though?

 

Bogut being himself (a bit of an ass) in an interview generalized and exaggerated about how 80% of NBA players go broke because of their lifestyle. Etan Thomas took issue and wrote an open letter in reply.

Bogut's interview:
http://www.smh.com.au/news/basketball/the-bling-and-i/2007/06/16/1181414603971.html

ET's open letter:
http://www.slamonline.com/online/2007/07/an-open-letter-to-andrew-bogut/

 

Back in October, Jason Caffey, who made an estimated $29 million during his eight-year NBA career, was in bankruptcy court seeking protection from his creditors, among them the seven women with whom he fathered eight children.


Geez how hard is it to recognize a golddigger? You think these women would give you the time of day if you weren't in the NBA making Millions? Use some common sense and protection!

 

Even if they get a first round contract, they should have PLENTY of money to live comfortably if they use their money correctly.

 

I thought they recently implemented mandatory investment classes for rookies. Or maybe I'm thinking of a different league, like the NFL.

 

That's the problem right there. All of these guys are young, sometimes 19 years young, a lot of them are uneducated or undereducated and a lot of them come from poor families, and they want to buy everything that they could never afford. Some are just plain stupid to begin with, regardless of their backgrounds

After taxes, agents fees and retirement, almost 50% of their money is gone. So a guy making $2MM a year is really making closer to $1MM, which doesn't go a long way when you have a Maybach, a Benz, a mansion, an entourage and hundreds of thousands of dollars of jewelry and clothes and hangers-on.

I can totally see how they blow through it. If you just lived like most people your age with regular jobs (with some upgrades b.c you can afford it) in your early-mid 20's, these guys could be set for life.

But they get bad advice, feel obligated or want to give money to friends and family, some seem to hate to wear condoms , and they think that the money will keep coming in, when in reality they are an injury or bad season away from their current contract possibly being their last.

In a way I pity them, but in a way I don't b/c they don't have to live that ridiculous of a lifestyle. It's entirely possible to have a nice home, one or two nice cars and have a good time and still have a ton of cash to put away. No need for 6 cars, $50,000 earrings, 10,000 square foot houses when you are 24 yrs old, etc...

 

I can't open the link, so I'm not exactly sure how everything is defined.

If you define an "NBA player" as anyone who's ever had an NBA contract, so guys like Mike Harris would count, then 60% is not very alarming.

I mean, 4 years at around $500k seems pretty reasonable for a scrub NBA player. That's not a lot of money, after taxes, unless you are very good at investing. I mean, most of these players usually don't have a secondary skill that can land them a cushy job after the NBA.

 

I think you are correct. There was a Chinese article about Yi could not join the class before he signed with Bucks.

 

Income: That's top 1.5%. Median income is ~$50k (~$41k after taxes, using 2008 schedules) per year. $500k after taxes is about $346k. So, that salary for four years of work is equal to 33.75 years of work by a median American, or about 16 years of work by an American in the top 10% (100k+). It's a good sum of money. I think minimum salary is actually $250k in NBA (not sure). So drop those numbers by a half and you get - roughly - the multiple of years worked that minimum wage in the NBA gets you, compared to median and top 10%.

Skill Set: That's part of the problem these teenagers, their families AND the NBA need to address. Some college coaches already somewhat push it (Coach K and others contending that one year of school isn't enough), but not to an effective degree. Also, the classes they take are jokes.

Questioning his definitions and checking his numbers is a good point.

Assuming the guy's not a quack, and 60% is close to the correct number, if you said "not surprising," I would have agreed with you. Not alarming? No sir, this is very, very alarming.

personal note: over exuberant purchases by athletes and other stars should be laughed at rather than lauded. Thanks MTV Cribs. I'm only 24 and I have something to hate you for.

 

It's not really all that surprising. Wealth is a mentality. The same thing happens to many lottery winners. The guys that can keep their wealth are the ones that had to learn to manage money when they were broke. Some millionaires go to bankruptcy twice before they stabilize.

 

As for income, there's also the agent fee to think about.

Even so, I do understand even scrubs make a lot of money by most standard. But it's different when you basically get your life worth of salary in just a few years, rather than having it spread out over your lifetime. The mindset of the person receiving the money is different. Especially if we're talking about ~22 yr olds coming out of college, where they've been the best players on their team and could do whatever the hell they wanted.

As for the "alarming" comment, I said that based on the assumption that ANY player who's ever had an NBA contract is considered an NBA player. There are tons of players who get invites, non-guaranteed contracts, and go on to play out their careers in Europe or disappear. Very few players actually manage to stick around for a while.

Now if 60% of players who actually play in the league for a while, say 3-4 years, go broke, then it becomes alarming.