Authors: Rick Johnston, Frank Messina, Stephanie Yates

Corresponding Author:
Frank Messina, PhD, CPA
1150 10th Avenue South
Birmingham Al, 35294

Rick Johnston is an Associate Professor of Accounting at the UAB Collat School of
Business. His research interests involve capital markets and the creation/use/regulation of
Information. He has published in the Journal of Accounting and Economics, Journal of
Accounting Research, Management Science, and Contemporary Accounting Research.

Frank Messina is the Alumni & Friends Endowed Professor of Accounting at the Collat School of Business, University of Alabama at Birmingham and a Certified Public Accountant. He is also the university’s NCAA Faculty Athletics Representative.

Stephanie Yates is the Director and Endowed Professor for the Regions Institute for Financial Education (RIFE) at UAB. The RIFE focuses on increasing financial literacy in students and adults throughout Alabama and beyond.

Your Financial (Life) Game Plan

Athletes face incredible financial uncertainty despite the potential to earn significant incomes. A key unknown is the duration of their playing career. A large body of anecdotal evidence suggests many athletes are financially challenged or bankrupt shortly after their playing career ends. This article explores some of the causes of these financial troubles and highlights some key considerations for athletes to consider to avoid such an outcome.

Keywords: athlete, financial literacy, financial planning

Sports playing careers will not last an entire adult life. Most athletes have a relatively short professional career and it can end abruptly without notice. So the question is — will you have the financial resources to be comfortable after a playing career? Or alternatively, how will you afford to live for the next 50 years or more? The answer to these questions may not be known to you now, but you need to work on answering them. This article provides some key considerations to help you. It is intentionally high level to make for an easy read and quick reference regarding your financial game plan.

Lack of financial literacy, knowledge and understanding of financial matters, is not unique to athletes. What is unique to athletes is the potential to earn above average wages over a short period of time, making the need for financial literacy that much more important. In this article, we address some of the key decisions that an athlete needs to consider along with some guidance related to those decisions. If there are two big takeaways from this article, they are (1) give some thought to a life plan, i.e. what will you do after your playing days, and (2) lifetime financial security is more likely by taking responsibility for it and involving yourself actively, including selecting and monitoring the right advisors.

Learn from Financial Failures
Reggie Wilkes, a financial advisor at Merrill Lynch and a former linebacker with the Philadelphia Eagles was quoted as saying “70% of professional athletes are financially challenged or bankrupt within three or four years of retirement.(1,9)”

Personal bankruptcy (a legal proceeding involving a person unable to pay outstanding debts) is relatively uncommon in the United States (less than 1% of the population files for bankruptcy each year). However, more striking is the bankruptcies of those who have done well. Lottery winners are a common example. Many jackpot winners find themselves destitute just a few years after winning big. Professional athletes are another surprising, but common example. Despite relatively significant salaries during athletic careers, many athletes often crash financially. A few of the most famous ones include, Johnny Unitas, Warren Sapp, Mike Tyson, Vince Young, Michael Vick, and Marion Jones(2).

ESPN’s 30 for 30 documentary entitled “Broke(3)” highlights the financial mistakes of professional athletes that led many to bankruptcy. In a series of frank interviews, former athletes describe the various problems encountered due to sudden wealth as well as the impact of career-ending injuries.

Many of these athlete financial failures relate to the following:

  1. Advisors – Many relied on family, friends, and others to handle their finances and put total trust in them with absolutely no follow up or accountability.
  2. Risky business ideas – Some decided they could succeed in business and invested in music labels, inventions, clothing companies, nightclubs, and restaurants.
  3. Extravagant spending – Many wasted their money on personal spending and financial backing for large entourages of friends and family members.

It’s not all Bad News – Many Succeed Financially
Arnold Palmer may not have been the best golfer of his time and his last win on the PGA Tour was in 1973, but he earned $42 million in 2015 at the age of 86.(4) Other financial success stories of athletes include players like Magic Johnson, Michael Jordan, John Elway and Hank Aaron who parlayed athletic incomes into financial security by investing wisely. Many athletes go on to very successful careers in business after their playing days; examples include Tony Hawk and Greg Norman.(5)

One key to long term financial security is saving; spending less than you bring in. Retired Seattle Seahawks running back Marshawn Lynch was rumored to have never spent any of his NFL salary opting instead to live entirely on his income from endorsements. Although Lynch denies this account, he has noted that he is able to live comfortably in retirement due to the fact that he spent very little of his NFL salary while he was playing professionally.(6) Similarly, Ryan Broyles limited his expenses to $60,000 per year despite a contract with the Detroit Lions that paid him many times more than that.(7) Success in life or finances does not happen by accident. It requires planning and hard work.

Getting Help Early with Your Life Plan
One is often surrounded by opportunity – the key is to take advantage of it. For example, college athletes have access to a wide variety of classes. Why not explore while you have the opportunity? Sit in on business, law or broadcasting classes. Pursue your other passions. Both college and professional athletes meet a variety of successful people, why not ask what they do and what opportunities might exist in their field. Be open to others willing to mentor you. It seems to work for LeBron James who spends time with Warren Buffett, one of the richest people in the world.

Managing Your “Brand”
Your life plan includes managing your “brand”. Think of income potential not only as wages as a professional athlete, but potential endorsement deals, commercials and future opportunities. Image and perceptions can be reality as they can have major financial consequences. How do you treat your coaches? They could be the pathway to future coaching jobs. How do you deal with the press? That could influence a career in broadcasting. How do you treat the fans? That could affect the likelihood of getting endorsements. Creating and maintaining a network of supporters will be beneficial throughout your life. Develop skills to build and support your personal brand (not tear it down). Another side of managing a brand is social media and associations or affiliations. As a recent NFL draft showed, nothing is private and it can have negative consequences. Think long-term!

Your Financial Coaches
Few athletes operate without coaches, and few athletes compete without a game plan. The same holds true with finances. You want an expert and the best you can find. Even before you receive your first paycheck, seek professional financial help. There are many financial professionals who can help such as a Certified Financial Planner (CFP), Certified Public Accountant (CPA), a Personal Financial Specialist (PFS) or a Registered Investment Adviser (RIA). These individuals can provide help with basic financial management (i.e. paying your bills), taxes and investing. Whomever you choose, be sure to check out their credentials and make sure that they are qualified to give advice in the area where you need help. For some players, agents may direct you to someone reputable. Various professional leagues have means of ensuring that players have access to good, competent advisors. Your teammates are potential sources of leads to good advisors. Advisors with experience with other athletes are obviously beneficial as they will understand your needs having dealt with them before.(8)

The big benefit of getting advisors early is to develop a financial plan for you and to acquaint you to the realities you will face over time. For example, taxes and agent fees are likely to cut your income in half, yes half! Your financial plan will help address how much you will need to live and how much can be directed toward savings for the future. The sooner you start saving, the better your chances of a secure financial future. Just because you have an advisor however, does not mean you do not have responsibility for your financial future. You need to monitor your advisors, meet regularly to discuss progress and adjust the plan, if necessary. You may feel overwhelmed at first, but you will gain knowledge through time.

Another benefit of professional advisors is the ability to be your “NO” person. As highlighted earlier, the reason lottery winners and athletes often have financial problems is the number of family, friends and even strangers who ask for help or to invest with them. With newly found wealth, many athletes think that they could not spend it all, so they are quick to share. Unfortunately, it has been shown time and time again that extreme generosity and bad investments often lead to financial demise. Such requests can be directed to your professional advisors, thus freeing you from being the one forced to say “no”. Also, allowing your professional experts to assess and address these requests and the opportunities offered.

Your Financial Plan
The rules are simple:

  1. Set explicit financial goals.
  2. Establish a budget or spending plan that will help you meet your goals.
  3. Check your progress toward your goals regularly.
  4. Adjust your plan as needed.

Do you want to retire at 30? Live on a beach after you are 40? Do you want to buy your parents a house? Do you want to give to charity? Goals are unique to each individual and evolve over time. Make sure that you set “SMART” goals. SMART goals are Specific, Measurable, Attainable, Realistic and Time-Bound. Your goals however, will also impact your current lifestyle.

Many athletes are often tempted to live it up and try to “keep up with the Joneses.” Your teammates may be more financially secure, having played for a while or having gotten a new or extended contract. DO NOT expect to be able to afford the same luxuries – be patient – your time will come! Should you deprive yourself completely? Of course not, but the key is not to be excessive, understand the financial uncertainty you face and act accordingly. As the uncertainly declines, with greater net worth (what you have less what you owe) and continued career time, your options will expand. A sound financial plan will help establish boundaries and secure your financial future.

What Happens to Savings that are Accumulating?
Another important role your professional advisors will play is to help you decide how to invest your savings. Careful investing is important, as it has the potential to grow your savings over time, to help meet your future needs. Your choices initially, will differ from what you might do later. For example, initial savings might be directed to an index fund which represents many high quality companies in the United States and generates returns (gains or income) similar to the entire stock market. A benefit of such an investment is liquidity. Generally you can sell quickly and get your cash back. In contrast, giving your cousin $50,000 to invest in a used car dealership is probably not a liquid investment, i.e. you may have trouble getting your money back on short notice, if at all. As your savings and net worth increases, then that is the time to expand your investment choices. Your need to be financially conservative will be lessened, and you can expose a small fraction of your wealth to different or greater risks with possible greater rewards. As stated earlier, part of your responsibility is monitoring your advisors; you should meet 2-4 times a year to discuss your investments, the performance of your investments and what the plan is going forward.

Life (Divorce) Happens
The best life plans take into account things that can happen in the future. When getting married, divorce is hardly ever considered. However, divorce can cause financial ruin. The divorce rate for professional-athletes is between 60-80%. Divorce can result in the loss of half of your net worth. Children can complicate financial issues as well in the form of child support.(9) Part of your life plan may need to address this possibility. Prenuptial agreements may not be romantic, but can be financially prudent.

Having a Will
No one is invincible. A will is another important item seldom considered by a professional athlete. It is a legal document that allows you to specify how your money is distributed after your death. As was recently shown with the music star Prince, not having a will causes all kinds of complications. Another example is former Alabama football player and Hall of Fame linebacker Derrick Thomas, who died in a car accident at the age of 33. He ignored his financial adviser’s advice to make a will. As such his entire estate was left for a judge to divide, touching off a legal battle among the five mothers of his seven children.(9)

Giving Back
On a more positive note, for those that have been given much, often they want to give back to their communities. One way to do that is by establishing a non-profit foundation. Do not hesitate to make this wish known to your financial advisers as they can help you ensure that it is structured appropriately, and it may save you paying some taxes.

Implementing your Life Plan — Make it Happen!
The message is simple — think beyond the court or playing field, dream big and work to achieve your professional and financial dreams. There are no assurances in life, but good outcomes are usually a result of having a plan for your life and finances. Ultimately, you are responsible for both. Do not be afraid to ask for help from the right people, you will appreciate it later in life!

Whether it is Olympians or professional athletes, financial knowledge and guidance can help avoid major difficulties as their competing careers end.


1. Ackermann, Matt, “Advisers’ Big Score in Pro Sports” American Banker, Vol. 174, 2009.



4. Forbes, “Michael Jordan Leads the Highest-Paid Retired Athletes 2015”, March 11, 2015.




8. “Thrown for a Loss,” CBS, 60 Minutes


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