Why do so many NFL players go bankrupt?

[celeb_2006]

Why do so many NFL players go bankrupt? - Shutdown Corner - NFL - Yahoo! Sports

Within two years of retirement, 78 percent of NFL players are bankrupt or in severe financial distress. Unlike Rocket Ismail, most of those players can't blame it on the negative karma associated with getting a bear hug from Michael Irvin. How is this possible? The minimum salary for rookies in 2009 is $310,000. That jumps to $460,000 for two year veterans. How can men who earn so much have so little after retirement?
The Business Insider looked at that question today and listed 10 ways that sports stars destroy their finances.
Most of the reasons fall under the umbrella of one of the ways, "Act Dumb". (These include "Do Drugs", "Fight Dogs" and "Have Too Many Children". Two outta three ain't bad, Michael Vick(notes).)
Other paths to financial ruin like "Put Money in a Ponzi Scheme" or "Invest Too Much In Real Estate" can be more about bad luck than anything, but never underestimate the power of habitually poor judgment. (Or stupidity. Tomato/Tomahto.) Case in point, here's a blurb from the "Making Bad Investments" entry:

Rocket Ismail also squandered a fortune funding an inspirational movie; the music label COZ Records; a cosmetics procedure whereby oxygen was absorbed into the skin; a plan to create nationwide phone-card dispensers; a Rock N' Roll Café, a theme restaurant in New England; and recently, three shops dubbed It's in the Name, where tourists could buy framed calligraphy of names or proverbs of their choice.

That sounds like the business plan of Kramerica Industries. Any one (or two) of those things by themselves would qualify as bad investments. Put them all together and you can understand how Ismail blew through $20 million in salary. (Of the calligraphy store, Ismail says its failure can be blamed on Hurricane Katrina. The cosmetics procedure: "sharks in the beauty industry". The Rock N' Roll Cafe: It being a Rock N' Roll Cafe.)
Ismail's case is more the exception than the rule though. The 78 percent number is buoyed by the fact that the average NFL career lasts just three years. So, figure a player gets drafted in 2009, signs for the minimum and lasts three years in the league: He will have earned about $1.2 million in salary. Factor in taxes, cost of living and the misguided belief that there will be more years and bigger paydays down the road, and it becomes a lot easier to see how so many players struggle with money after their careers end. Nobody plans on playing just three years in the NFL, you know?

[sputnik]

i don't think football players are known for being particularly smart.

[DolceVita]

78%?! They need to buy some brains with their cash then..

[A*O]

If the player earns $1.2 million over 3 years, spends it all on sex, drugs and rock n roll and then finds himself without a job aged 25 without any work skillz it's hardly surprising.

[Beeyotch]

I think most of them come from poor backgrounds. So if all your life you had nothing, lived from paycheck to paycheck with non-existent money management skills (and yeah probably aren't all that smart), then suddenly became a millionaire you're probably going to spend it all. That money burns a hole in their proverbial pocket. Doesn't the NFL offer money management classes? Their agents should at least point them in the right direction.

[kingcap72]

NFL players squander their money on bling, cars, houses and women instead of saving/investing it. And whatever cash they have left, their business managers steal because the players are too dumb to watch their finances.

[JadeStar70]

They live WAY beyong their means and think the money train will never stop. No pity here.

[HWBL]

Just watch MTV cribs when they have today's celebs, be it athletes, rappers,
actors, whatever. Most of the time you don't even know the names of these
people, but their houses, their cars and their stuff is insane.

[A*O]

If you retire from sport aged, say, 30 with $10mill in the bank rather than wisely invested; and assume you will live another 40 years, that gives an annual income of $250,000. It's a healthy amount for sure but it's not enough to maintain the crazy lifestyles these sports stars indulge themselves with - a garage full of new Ferraris, gold bathrooms and probably a couple of expensive divorces thrown in. If they come from a background where money was tight then the temptation to spend, spend, spend is totally understandable but most professional sports people have nothing to offer once their brief careers are over and so all they can do to occupy themselves if blow their money on superficial crap. I'm sure their clubs/teams offer all kinds of financial advice on how to manage their millions but if the young and dumb prefer to ignore that advice my sympathy is very limited.