(ThyBlackMan.com) Many of us saw the ESPN 30-for-30 episode called “Broke.” This was a tragic and borderline comedic display of professional athletes who’ve gone from riches to rags in no time flat. These stories make me sad because, despite the lessons we’ve learned from the past, we will continue to make the same mistakes going forward.
We also know that, according to Sports Illustrated, 78% of all professional athletes are either facing bankruptcy or are under financial duress within two years of their playing days being over.
An athlete or entertainer going broke is like that person who has an unplanned pregnancy: They know it happens a lot, but never thought it
would happen to them.
So, for the sake of those who actually care, I thought I’d make a quick list of reasons that so many athletes and entertainers go broke:
1) A lack of education and financial literacy: In my 20 years teaching Finance at the collegiate level, the saddest thing I’ve ever seen is when a man believes that because he can dribble a basketball, he doesn’t have to learn how to read. The world is littered with stories of athletes and entertainers who put education on the backburner in exchange for expertise in their craft, only to find themselves eaten up in a world where only smart business people tend to get ahead. No matter how good your financial advisors happen to be, if you’re not able to hold them accountable, then you’re as helpless as a tiny lamb in a den full of wolves and lions.
2) Believing that life is one big party: I’m astonished at how often I read about athletes and entertainers going on expensive vacations and spending big stacks of dough “making it rain” at the club. The club is not only a good place to get arrested or killed, it’s also an establishment that believes you’re stupid enough to spend $500 on bottles of cheap liquor. Let’s be real: Only weak, uninteresting people waste their time trying to impress other people by throwing money away at the club. Following the crowd can be expensive.
3) Thinking that the money train will never end: Many professional athletes stand on psychological thrones of invincibility. Some of these gladiators are wired to believe that they will be the first athlete of all-time to play until he’s 70 years old. It’s sad to watch so many men decline in the midst of crippling denial: Taking that last fight past the age of 40 to catch up on back child support, or playing in the NBA at the age of 42 because they can’t do anything else. Entertainers are also taught to think that their career is always on an upward trajectory, when your best days may actually be behind you. The belief that your income is rising can often cause an increase in debt obligations and fixed expenses, leading to additional financial decay over the long-run.
4) Buying everything for everybody: An athlete who turns himself into a walking welfare office is doomed to be financially crushed. Saving everyone with your money might feel like the charitable thing to do, but it has to be done within limits.
5) Making really bad investments: I’ve seen athletes try to invest their money, but unfortunately, they may do it the wrong way. Putting money into your cousin’s liquor store or night club might seem like a good idea, but it’s usually better to spread your money around into a set of sound investments that diversify your portfolio.
6) Making no investments at all: The simple idea that wealth is a source of capital meant to be invested can be lost among many athletes and entertainers, who might not understand how money works. Cash is not something that’s meant for you to hoard under your bed or spend buying Gucci sneakers. Cash is “capital asset,” meaning that if you have enough of it, you can make it work for you. To give you an example, Bill Gates earns more in interest alone in one weekend than LeBron James earns by working for an entire season in the NBA.
7) Stacking baby’s mamas up to the ceiling: Poor family planning is a great way to go broke. Baby mama number six seems easily affordable when you’ve signed that $70 million dollar deal, but it starts to hurt when your team drops you in the off-season. Firing off your sexx organs like a water hose might seem fun while you’re doing it, but it will usually put you in the poorhouse. Planning your kids is the best way to reproduce, not just letting them jump out of random wombs like little pop tarts.
8) Keeping up with the “Jones an nem”: Status symbols such as cars, clothes and the highest fashion make sense to people with low self-esteem. But many of these high fashion companies secretly laugh at black people who give away all their wealth so they can use material possessions to buy back their humanity. The point is that you’re a special and unique person even without the $500 shoes, so we should feel sorry for that person who takes pictures of her red bottom shoes on Facebook. Excessive materialism can leave you empty and wanting.
9) Not having a Plan B: What are you going to do when you retire at the age of 33 and can’t dunk a basketball anymore? Do you know how to do anything other than run, jump and score points for white people? If the answer is “no,” then you may be relegating yourself to a life of poverty after sports. Not everyone can get the opportunity to be the next Charles Barkley.
10) Getting “turnt up” every weekend: Drugs, alcohol and all the other things that we use to ruin our lives can be found at the center of many financial tragedies. Mr Allen Iverson, the poor guy who was pound-for-pound the greatest athlete in NBA history, found that alcohol and gambling led to his early demise. Other drugs, such as cocaine, heroine and all that other stuff will eat a hole in your bank account. They are also very expensive habits to have after your playing days are over.
Staff Writer; Dr. Boyce Watkins
Dr. Boyce Watkins is the founder of the Your Black World Coalition. For more information, please visit http://BoyceWatkins.com.
