Athlete Bankruptcy Paper Example

Athlete Bankruptcy Paper Example

ABSTRACT TOPIC.

Professional athletes are some of the richest people in the world. Their salaries are more than most individuals will see in a life time.  With this you would come to believe that athletes should be set for life, but if and only if one is smart about it. A sportsperson needs to have a backup career or at least have some investment that will guarantee their family of a happier future free of financial problems.The research will compare both learned athletes and those who did not attend school and determine the chief difference between the two as well as figure out a way in which to reduce post retirement bankruptcy for athletes. In additional,we will also compare some sportspeople who are still wealthy after their retirement to those who are broke and figure out what it is they do different from them. The fact that they are making more money than the average public guarantees them to live high end lives thereafter but this is not the case as indicated by a number of retired professionals. By the end of this research, we should be able to have some insight on athlete bankruptcy, the causes, consequences and factors to help curb the issue. Athlete Bankruptcy Paper Example 

PURPOSE STATEMENT.

Most of the athletes have reportedly filed bankruptcy reports in less than five years. Mike Tyson, for example, has been one of the most prominent golfers of all times hence making him one of the richest professional athlete. He reportedly tore through $300 million on a series of pet tigers, jewels, cars and homes. He later in 2003 filed for bankruptcy (Roberts, 2015). Most of these athletes have associated their bankruptcies to causes such as: – poor investments, spouse, children and divorce, poor spending habits, lack of preparation after sports career and the need to support family which are mostly brought about by illiteracy, lack of knowledge or simply ignorance on such matters.Athlete Bankruptcy Paper Example

This research will highlight various ways in which a player can remain financially set long after his/her playing days are over. One should be sure to have a standby plan in the case of anything. Theybackup plan entails investment, and career or plan on how to live debt free and avoid bankruptcy. Other experts who earn high income might also be interested just to learn more about financial planning and management so they too will not fall victim.  This study will not curb the issue 100 percent but I am hoping it will lower the percentage of bankruptcy among athletes.  

LITERATURE REVIEW.

Study shows that 1in 6 National Football League(NFL) athletes go bankrupt. Athletes squander their money as if it is never going to end. They learn when it is already too late how much damage they have made. These NFL athletes declare bankruptcy after they have ceased playing followed by major money difficulties. In additional, recently conducted and released by the National Bureau of Economic Research (NBER) stated that almost 16% of the athletes studied became bankrupt in less than twelve years of their retirement (Andrew, 2008).Athlete Bankruptcy Paper Example

Sportspeople are of different caliber. Various sports require distinct ways in which they are handled and have separate causes for retirement. In some sports example Safari rallies, one is more prone to accidents than others. This fosters in one shortening their career, not by default but because it is a must. Some early withdrawals in sports transcends from family issues, drug abuse, injuries and medical issues. For instance, Brandon Roy was a three-time All-star at the NBA in for consecutive seasons was forced to retire early due to injuries resulting from the surgery of his knee where his degenerative knee condition required a number of medical procedures. Marc Savard was a vast growing hockey player who suffered a concussion during his time playing after being blindsided by Pittsburgh’s Matt Cooke and although he tried a comeback, he shortly after had to retire for good. He still deals with post-concussion syndrome symptoms.

. An athlete is someone who competes in sports involving speed, endurance or physical strength. He/ she could be an amateur or a professional. With professional athletes, they are well built due to extensive training that they do physically and strict diet regimens to ensure that they are fit to compete. These athletes require personal discipline to ensure they remain fit and safe to indulge into their various sports. This study shows why so many professional athletes file bankruptcy post retirement and how it can be helped (Lawrence, 2009).

Reasons why athletes file for bankruptcy after retirement.

• Lack of financial knowledge.

Just like any other college graduate who was not trained on budgeting, athletes should have a team of very good financial advisors by their side. They need expertise who will guide them on how to save their immense income and where best to invest their resources. With lack of pecuniaryadvisors or infinite knowledge on monetary management, most athletes will overuse and misuse their money in uncalled for situations and circumstances.Athlete Bankruptcy Paper Example

• Poor investment decisions and managers.

Most athletes being human let too many people close to them. These people will require favors from them or will want to sell them real estates and because of their friendships, they will invest blindly into a project which could cost them a ton of money. Bad private equity leads to financial meltdown of an individual whereby you find athletes raising money for all kinds of deals even if they do not benefit from them. Most managers of these people are their close friends, hence another reason to failure. Once they mix business and friendship, they lose a lot as they will not get their managers/friends to pay them back the money they have squandered in other affairs. For instance, Rod Strickland had his business manager being his father who got a real estate deal from a good friend of a friend and was duped a lot of money (Caryna, John)

• Career duration.

As we all know, most sports has an age limit in which one should play. For example, in football, basketball and baseball, one is not able to play for long especially in the onset of old age. Athletes have a small window of making their millions therefore one should make and save as much as they can for as long as they will be able to. Once this period is over, one is expected to survive on savings which would eventually lead to financial squabbles. Another unfortunate event of a short career for athletes is in the case of an injury, one can be benched for a short time or even barred to participate in the sports by the doctor as it could be harmful and dangerous (Roberts, 2015).Athlete Bankruptcy Paper Example

Professional athletes blow their savings in a very rapid way and are spendthrifts when it comes to their finances. Some of them believe that they have infinite wealth so they lavish in the most expensive of luxuries. There is much need for excitement and a social way in which one should carry themselves. These social standings will make athletes compete with each other for attention and fame leading to bankruptcy not long after.

• Family matters.

Athletes are easily lured by people especially in their moments of celebration or defeat. Without a prenuptial agreement, one ends up becoming broke due to the amount of money their spouses are entitled from them in the case of a divorce and a lot of funds are drained in legal fees as well. Most athletes also end up paying a lump sum of money for child support for their children outside their marriages. Example, Shawn Kemphad at least has seven children with six women, Jon Kilgore has fifteen children with four women and Travis Henry has nine children with nine women.  Their spouses too need to live a certain celebrity lifestyle hence the constant upkeep (Mike, 2009).

• Supporting family.

Some athletes feel obliged to support their families, extended families and even the villages or home towns in which they hailed from. Sharing their largeness with many others is not a crime but then how much you share determines your financial status. Most of these sportspeople share their wealth vastly and end up filing for bankruptcy within a short period of time.Athlete Bankruptcy Paper Example

• Lack of preparation for second career.

Some athletes do not think much after their life in the field, may it be basketball, football or any other sport. Instead of using their long off seasons to lay a firm foundation into other careers, they sit back and relax thinking that they have what they need for the rest of their lives. When one retires early, with no other career to focus on, all they will do is use up all the savings money and before five years are over, they are broke dead (Preston, 2013).

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The question to ask is why are athletes, who are making more money than the average public, are more likely to go through financial distress in their retirement.It may seem financial advisors arevery crucial forathletes and one of the issues  to take care of, but it doesn’t seem to be the case. It is vital to understand the reasons why athletes are paid a high salary, before breaking down the reasons why they are experiencing financial difficulties and what are the common factors between them.

A player like Ray Lewis, during his career, decided to teach young adults on the rules and specs of football. He was both training and making some side money for when he retires. He, when asked stated that money lasts but only with careful money management. In his retirement, Lewis has been active on his business ventures and charity works(NFL,2011).

During a given year, an estimation of 1.2% bankruptcy rate is approximated in America. These athletes get signed into multimillion-dollar contracts to a pro team in a number of years. The amount of dough they get from endorsement deals is unbelievable. Most of these athletes have money problems but are not comfortable disclosing it. There is fear among them as each one is expecting their colleagues to go into lottery of goingbroke. These situations are brought about by a sequence of bad decisions and no matter how much one athlete losses, the others will not learn and end up falling into the same pool (Pablo, 2009).Athlete Bankruptcy Paper Example

As far as I am concerned, professional athletes are easily targeted. They have lots of money, are visible and others have limited experience. As hard as it is imagining how careless one can be blowing through millions is a short period of time, I have applicable working experience, solid financial background and well educated on financial issues but maybe I should try fitting into their shoes and for a moment wonder how it is like. Maybe their financial miseries is no fault of their own or of rash spending.

Some of the bankrupt athletes include: –

Kenny Anderson- in spite of earning a salary of $250 million, he filed for bankruptcy the same day he left NBA and later became a K-12 school teacher.

Vince Young (NFL)- he earned $45 million in endorsements and salary yet he currently is one of the latest athletes to go broke.

Antoine Walker (NBA)- he earned $108 million in salary, declared bankruptcy with assets of only $5 million and debts amounting to $13 million due to gambling debts and poor real estate investments.

Some of the successful athletes include:-

Karl Malone, was a NBA player who invested in a number of businesses during his career leading to expanding and diversification since his retirement.

Magic Johnson is a basketball Hall of Famer who not only kept his money but has also increased it. He has built thriving business empires.

MichealJordan, despite having a financial setback following his divorce, he picked himself up and invested in businesses and is currently the majority owner of the Charlotte Bobcats.Athlete Bankruptcy Paper Example 

PROPOSED STUDY.

Research shows educating athletes at a young age can help fix these problems. An article written by Wong Going pro in sports went over current National Collegiate Athletic Association (NCAA) subjects one being financials struggles for pro athletes (Wong, Deubert, 553-607).

1. Plan of study.

This study is independently intended to look into various ways in which professional athletes use up their money leading them into insolvency. Some of these athletes get into this situation because they have made poor investment decisions, trusted the wrong people or even families. The independent study has allowed me to look into some of the well-known athletes and how they have squandered it all.

Upon completion of this study, we should have: –

• Gathered and analyzed some of the causes or reasons which lead to sportspeople falling into debts.
• Acquired knowledge on what to avoid concerning your finances which will help you live debt free after your retirement.
• Become more conversant with ways in which one can have another career besides sports.

 

3. Activities to accomplish objectives.

To execute or successfully finish the named objectives, I shall conduct a research on a number of various major athletes of all times and they have used up all their money living lavish lives and others who have invested theirs in appropriate courses and how different these two are. Time to time reading of various books and magazines will help you know how best you can use your money.Athlete Bankruptcy Paper Example

 

4. Required reading.

Below are some of the proposed references of athletes who have lost it all. These extracts are also of investment books which give a clear insight on some of the best ways in which you could save up funds. These cites will enable you be more knowledgeable with the type of spender you are, which life best suits you and how to ensure you live the same life throughout.

5. Purpose of the study.

The purpose of this research is to find out the factors that lead to the financial downfall of many athletes. It was important to verify exiting studies while determining new areas of concern that leads to these variables. Available data of bankrupt and non-bankrupt former athletes will be collected and reviewed to see what these have in common. These factors could help create better programs for retired and currently playing athletes, so they can elude bankruptcy

An average professional athletes makes more money in a single season than we make in our entire lives. For instance, according to Forbes report in 2012, pro golf player Tiger woods made $50 million or more per year, boxer Floyd Mayweather made $85 million between June 2011 and June 2012. These are just two or the many stars who bag home millions of dollars and awards. However, most of these stars end up dead broke. They lose their cash at a very high and alarming rate and within five years of their retirement, these athletes are reported to file bankruptcies or under financial dilemmas as a result of divorce or joblessness.Athlete Bankruptcy Paper Example 

REFERENCE.

Pablo S. Torre (March 23, 2009). “How (and Why) Athletes Go Broke”

National Football League. (2011, January 27). The average NFL player. Bloomburg Business Week Magazine. Retrieved from http://www.businessweek.com/

Roberts, Daniel (April 15, 2015). “16% of retired NFL athletes go bankrupt, a report says”

Mike Tierney (March 11, 2009). “With Nine Mouths to Feed, Travis Henry Says He’s Broke”

Caryna, John. “Why a college degree is important for professional athletes”. Helium

Andrew Farrell (November 25, 2008). “Sports Stars’ Money Meltdowns”. Forbes. Retrieved January 7, 2011.

Torre, P. (2009) How (and) why athletes go broke. Sport Illustrated. Retrieved from http://sportsillustrated.cnn.com/vault/article/magazine/MAG1153364

Cliff Goldstein Why do athletes go bankrupt? Published: May 13, 2013 7:00 a.m. ET

Robert PagliariniMoneyWatchJuly 1, 2013, 7:27 AM

Five Reasons Professional Athletes Go BrokeChris Preston| Mar 25, 2013 |INVESTING, MARKETS. Athlete Bankruptcy Paper Example