As a philanthropic adviser to professional athletes for 15 years, I was often asked to provide insights into the lives of athletes. My answers were surprisingly simple: professional athletes’ behavior follows the same patterns as non-athletes. Yes, athletes are just like us.
Let’s review what appears to be a staggering statistic about athletes facing bankruptcy. A somewhat controversial 2009 Sports Illustrated article reported that 78 percent of NFL players face bankruptcy or serious financial stress within just two years of leaving professional sports and 60 percent of NBA players face similar financial fates in five years. Consider this information in light of research about lottery winners published in 2010 by researchers at Vanderbilt University, the University of Kentucky and the University of Pittsburgh. Their study indicated that the more money one wins the more likely one is to go bankrupt. The National Endowment for Financial Education estimates that 70 percent of people who unexpectedly come into large sums of money end up broke within seven years.
The reasons for lottery winners’ folly are all too familiar to those of us who have worked with professional athletes: poor or no financial planning, lack of financial literacy, and a deluge of requests from friends and family members requesting money.
Despite a lifetime of preparation to play in their respective sports, professional athletes are as statistically mentally unprepared as lottery winners for their financial windfall.
Critics often shake their heads at the number of family and friends hired by professional athletes. However, this trend is also not specific to professional athletes. A report by the Citizens for Responsibility and Ethics in Washington revealed widespread nepotism among our nation’s leaders in the House of Representatives. A few key findings:
When asked, many cite the same reason for hiring those close to them as professional athletes, one that is easily predicted: trust. As influence and income increase, trust issues become of paramount importance whether you are a politician or an athlete. Unfortunately, no studies exist to show whether this insular approach helps or hurts in terms of maintaining one’s wealth or increasing happiness.
As for generosity toward charities, a variety of studies have reviewed giving patterns related to geography, religion and ethnicity. Just about every study agrees that the wealthy give a lower percentage of their income to charity than their middle-income or low-income counterparts.
A 2012 study by The Chronicle of Philanthropy showed that households earning between $50,000 and $75,000 per year give an average of 7.6 percent of their discretionary income to charity while people who make $100,000 or more give an average of 4.2 percent. Interestingly, people earning $200,000 or more living in ZIP codes in which 40 percent or more of their neighbors make the same or more, gave only 2.8 percent of their discretionary income to charity. This research indicates that the wealthy may influence each other negatively in terms of giving and makes a strong case for publicizing donations made by the wealthy so that they may lead by example.
When reflecting on this disparity, one working in sports might consider the struggle of a player making $405,000, the minimum salary in 2013 for a player in the NFL, when trying to maintain a lifestyle that would be comparable to his multi-million-dollar-earning teammate. Athlete or not, wealthy communities may create a less philanthropic environment by valuing “keeping up” more than “giving back.”
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