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= American Athletes and Bankruptcy = ''note: This article mainly discusses the research that has been done on American Football and Basketball athletes, and touches on baseball, hockey and olf athletes. More research must be done on the other professional sports as well as international athletes. Additionally,'' future work should correlate different sports as compare the drastic numbers in bankruptcy in all sports and see of there are differences in the sports themselves and well as differences in team versus individual sports.

Numbers and Data on American Sports Money Made and Lost
Financial challenges is a common phenomenon among professional athletics as many have inadequate or lack essential skills for effective personal financial management. According to research conducted by the Global Financial Literacy Excellence Center bankruptcy among NFL athletes start manifesting as early as two years after their athletic careers end and 1 in 6 athletes will file for bankruptcy. Approximately 16% of NFL athletes become bankrupt within a period of 12 years following their retirement. Some of the findings were that the median income of a NFL player is $3.2 million while their average yearly pension at age 55 is $30,000. Research also found that NBA athletes  are estimated to have average career earnings of $24.7 million when playing for an average of 4.8 years and were found to declare bankruptcy within a period of 7.3 years following their retirement. Additionally, within a period of 15 years after retirement, approximately 6.1% of NBA players go bankrupt.

Through their research on American athletics, GFLEC pointed out the financial challenges facing professional athletes. Despite the total wealth accumulated during their careers, many players go bankrupt. Professional baseball players make an average of 4.4 million annually and their careers last an average of 5.6 years bringing their career earnings to at least 22 million dollars. To compare, the average American who makes 53 thousand dollars annually according to a 2014 Census report. For the individual who works 30 years, this accumulates to 1.59 million dollars which means that the average baseball player in less than 5 years makes 14 times the average American makes over their entire career!

While there have been athletes who have declared for bankruptcy while still receiving their athletes paycheck, 78% of retired NFL players and 60% of NBA retirees are in some type of financial trouble or have filed for bankruptcy. There are many reasons why athletes go broke, ranging from poor financial decisions, divorce to terrible decision making and extravagant spending. This article will focus specifically on poor financial advise and lack of business knowledge, extravagant out-of-this-world lifestyles, unawareness of career timeline, misplaced trust, and family related issues.

Bankruptcy Definition
Bankruptcy refers to the legal proceeding whereby an individual publicly accepts their inability to pay their outstanding debts. Bankruptcy among the athletes is often reflected in their inadequate savings following their retirement. For a more through description of bankruptcy search bankruptcy or Bankruptcy in United States.

Reasons why athletes end up bankrupt
An article by Leigh Steinberg states that 80% of retired athletes especially in the NFL end up with financial problems within the first three years after retiring. It is estimated that the average median annual income for a player within the league is approximately $750,000 with an average of a 4 year career. However, these athletes end up with financial struggles after the end of their careers. The following are some of the reasons why athletes and ex-athletes end up broke and bankrupt following their retirement.

i) Poor financial advice and lack of business knowledge and financial trust

Poor financial advice and lack of business knowledge and financial trust happen because these NFL players fail to access competent financial planning advice. NFL players receive no training in matters regarding the tax system, budgeting, and long-term financial planning and management and having a keen understanding of these areas is crucial. Therefore, players receiving large amounts of money need to get advice from specialized expertise. According to Linda Holmes (2012), most star NFL players break into stardom by their early twenties either immediately after leaving or before joining college which means that a majority of them generally have no business experience, different from peers who inherit wealth or have business experience. Thus, these NFL players have no existing networks to individuals who have experience in handling substantial amounts of money. As a result, when they receive such great amount of money, they likely end up spending it as they are at a stage in life where having excellent long-term planning skills is almost impossible. NFL legend and Hall of Famer Johnny Unitas for example, invested $3.5 million into buying National Circuits which six years later floundered and he together with his partners could only sell it at $1 million.

ii) Extravagant lifestyles

The extravagant expenditure culture of athletes especially in the NBA and the NFL where money is spent on expensive cars, clothes , houses , and jewelry is another contributor to bankruptcy trend among athletes. Additionally, athletes they incur lots of costs including high tax rates, agent, and lawyer fees. Thus, they end up forgetting to plan a budget for those seasons they are off especially those players within professional sports playing that are paid weekly. Consequently, these players end up making bad decisions that are based on “the lure of the tangibles” and go beyond the athletes’ overgenerous purchases when they agree to invent in businesses they do not have knowledge of or the proper expertise.

iii) Family-related issues

Another reason why American athletes go bankrupt is due to the massive role of support they feel obligated to undertake for both their nuclear and extended families as well as friends. The pressure of sharing of their success with a large number of people consequently lead to their downfall. One of the family-related issues is athletes having multiple kids with different women resulting in long-term child support for every one of them. Travis Henry a former NFL player whose career started in 2001 through 2007 for example, has 11 children, each with a different woman. As a result, Henry faced considerable child-support expenses, estimated to amount to over $170,000 annually.

Divorce is the other family-related issue often cited as a contributing factor to the bankruptcy of athletes says Mauren Callahan. Legal fees involved in divorces ends up draining the players’ funds and dissipating their assets. For instance, Mike Tyson the hard-punching heavyweight boxer was estimated to have a career earnings worth about $400 million. However, despite earning close to $30 million for each of his matches, Tyson was filed for bankruptcy in 2003. One of the reasons why this superstar went broke was due to his divorces that drowned $400,000 every month with legal fees, pet care finances, and limos. NBA star Michael Jordan divorced shortly after retirement and his divorce cost him 168 million dollars and custody of his kids. Fellow basketball star Shaquille O'Neal pays a reported 20,000 dollars monthly to his first wife Shaunie O'Neal.

iv) High expectations and Unawareness of Career Timeline

One the one side, athletes often lack awareness that their careers will end very rapidly, on the other side, they hold high expectations. According to Steinberg (2015), most athletes forget that their existing rate of compensation is temporary and that it can abruptly come to an end following skill inadequacy or injuries at any point during a contract. Thus, their spending habits reflect their implicit assumption that there will always be a constant stream of income. As a result, they get consumed in the notion of ways in which a pro-athlete is expected to live as well as provide for those close to them. Additionally, due to the expectations of having a constant stream of revenue, athletes rarely plan a second career should the first fail or come to an end. Often times NFL athletes have prolonged off seasons that they can utilize to set a solid foundation for their lives following retirement. Yet, most players fail to give it thought and end up missing on the direction and structure that their athletic career has provided them.

v) Misplaced Trust

Misplaced trust is the other factor that often leads athletes to end up bankrupt. According to Andrew Farrell (2008), for most star players, having a big paycheck makes them susceptible to exploitation. This survey revealed that 77.5% of athletes are exploited by those they trust the most, family and friends. Additionally, 71.9% of athletes are also exploited by their advisers. Steinberg indicates that often times, young NFL athletes are approached in college by agents and financial advisers who offer financial enticements to lure them into signing contracts with them. Other financial planners go even further asking the athletes to sign an authorization that enable the advisers to withdraw money or make investments on behalf the player. For example, hockey legend Bobby Orr, sued his agent Alan Eagleson for money mismanagement where Eagleson plead guilty to the charges of scheming and defrauding National Hockey League to the tune of over 1 million dollars.

Psychological Theories and Ramifications with Regard to Athletes Bankruptcy
i) Instant Fame

Roy Samuel, researcher and sports psychologist at the University of Florida talks about the scheme of change for sport psychology practice, otherwise known as SCSPP. These worries derive specifically from external factors such as fans, critics, money-oriented friendships, and competition. As a result says Samuel, athletes cognitive functioning and decision are compromised. According to Marry Loftus instant fame often leads an individual to become a celebrity following the person’s projection of a conspicuous and pleasing exterior or when they attract attention to themselves. Loftus claims that athletes who garner instant fame have incessant worries about losing it. With the instant fame, these athletes have their own concerns which include focusing on their own personal lives. Following the achievement if instant fame that is characterized by their large earning spikes, the "accomplishment" clouds the stars’ vision which then leads them to make a series of poor decisions that often prove particularly harmful to the athletes’ well-being. Some of the bad decisions includes indulging in extravagant usage of money such as keeping up with trends of latest tangibles. However, these large earning spikes which often exceed what average college graduates can earn in a lifetime, last only for a few years as reported in a Cal Tech study. Nonetheless, by the time these athletes retire from the NFL, they are either broke or filing for bankruptcy due to the bad decisions influenced by instant fame.

Shelby Christensen (2013), argues that fast money available to athletes has psychological effects on the individual. Personality Psychology has studied how instant fame affects the self- conscious. Mark Schaller reports and fame has a paradoxical influence as on one hand its attractive and tempting while on the other its stressful and unpleasant. Being famous is linked to two scenarios. One is that the celebrity is cognizant that the public is aware of them which then leads them being objectively self-aware, meaning that these famous people view themselves through the lens of the public. The second is that by virtue of their fame, these celebrities are perceived as an exclusive group which in return results to intense self-attention by the individuals. These two scenarios have consequences in that with increasing self-consciousness, celebrities tend to engage in a global evaluation of their self which is at a more abstract level. In addition, besides engaging in global evaluation of self, these celebrities have a tendency to compare themselves with those successful others or against their individual ‘ideal self’..

ii) Poor Money Management

Neuroeconomics have studies people that are about to make money and found a remarkable correlation in brain pleasure centers, similar to those who use cocaine. Kabir Sehgal in his book Coined talks about how these predictions can predict spending trends among individuals. In theory, athletes who are under contract and have a steady income, be it for one season for for multiple sessions make financial decisions based on this theory and feel that since they have the income they are able to make "justified" but poor money-based decisions. According to Tuttle (2015), athletes become bankrupt at a surprisingly high rate especially with regard to the amount of earnings they make as star players. According to Carlson et al. (2015), the earnings these athletes are more than what an average graduate from college can get throughout their life. However, due to poor money management, these players often end up broke or bankrupt. Some of the ways that they poorly manage money include their ignorance to sound investing advice. Most NFL stars do not bother to focus on their future after retirement and are impatient. Thus, they fail to save money from their high earnings for when they retire which then results to them becoming broke following the end of their careers. Raghib Ismail for example notes that at the beginning of his career, he was impervious to financial advice given to him. Other reasons contributing to poor money management is the bad advice these athletes get that then lead them to make poor decisions especially with regard to investing. Some NFL players find themselves stuck in sketchy investments while others are scammed a lot of money by their advisers.

iii) Loneliness and poor sense of self (leading to poor on-field performance)

Bryce Nelson notes that with fame there comes a strong sense of overwhelming loneliness and as a result these athletes tend to abuse substances to reduce the psychological pressures with regard to performance. With their fame, pressures to enhance performance are unrelenting and thus, usage of substance gives athletes an impression that drugs are a central part of their lives which in return results to their downfall. Thus, arguably, the major psychology ramification that comes with fame is the intense self-consciousness that affects athletes’ lives who then opt for the easiest strategies out of this averse state.

Possible Solutions
i)  Finding a legitimate financial planner

To help curb the challenge of becoming broke and bankrupt, one of the solutions is for athletes to seek specialized expertise from a safety net of advisers. Once a draftee is signed, the player should be encouraged to select a qualified financial expert with a clean track record to help them with planning a budget and developing mutually agreed strategies as well as giving them the legal protection they need. Additionally, alums, university panels, and parents should partake in screening of potential financial advisers and agents to help athletes make informed and better choices. An example of this type of procedure is a program developed by NFLPA that attempts to protect its players from financial manipulation by putting prospective financial planners through a detailed scrutiny and only accept referrals to those advisers that the organization has approved.

ii) Educate athletes on fundamental wealth management principles

Providing financial education to athlete is an essential tool needed to assist these professionals in all American sports. Mandatory seminars can be put in place for draft picks aimed at warning as well as protecting the athletes. According to Dias Jr. (2016), most professional players have the limitation of inadequate access to education regarding the fundamental elements of wealth management and approaches to identify as well as meet the goals and needs for their lifestyles. Consequently, this makes them vulnerable to succumbing to extravagant spending as the players may often end up choosing one of their closest friends, family member, or a social acquaintance to oversee their financial planning. Therefore, providing athletes with basic knowledge regarding the core principles of wealth management can help them avoid becoming vulnerable to their lifestyles as well as prey to those around them. Wong (2010) and colleagues found that athletes that complete their degree are less likely to have money issues compared to athletes to never finish their degree.

Financial education is not the only way to help athletes. The NHL has an educational program funded through their alumni association that helps retired athletes obtain an educational degree. Ryerson University's Ted Rogers School of Management has a program focusing on personal finance, personal branding, leadership skills and transitioning to a new career. This is something that other professional programs should consider. While the NFL does promote the unaffiliated Player Care Foundation, which helps retired athletes, there is plenty more that the 16 billion dollar not-for profit can do

iii) Plan on a second career

Athletes should stop assuming that they will be in a position to get a second career in their field of athletic specialization such as coaching because only a few of these players actually manage to get the opportunity. Layers need to work on being prepared for after their playing days are over Therefore, besides maintaining their athletic abilities and good health, athletes should also focus on developing realistic plans for their second career through furthering their education as well as networking with people who have excelled in businesses. For example, athletes can enroll in programs such as the “Broadcast Boot Camp” held by the NFL that is designed to cater for the needs of stars interested in developing their second careers as analysts and anchors. An example of a pro that has excelled by taking advantage of the program is Willie Colon who was previously an offensive lineman for the Pittsburgh Steelers and New York Jets is an example of a former player who has taken this intensive training and made a successful broadcasting career after retiring.

iv) Adopt a technical approach

Athletes should adopt a hands-on approach when it comes to handling their finances whereby they should invest time into their financial management to have their financial planners explain their budget, investments, and how they all fit in the long term plan of the athletes’ life. Additionally, if an athlete does not understand why some investments need to be made then they should abandon the idea and not invest in it. The Financial Industry Regulatory Authority talks about the importance of each individual taking charge of their own portfolio and making sure that each individual has final say on all money related decisions. This is something that all athletes should make sure that they adhere to and that they don't leave any monetary decisions to anyone. More so, adopting the technical approach of investing and time to understand their finances and activities surrounding them will allow the players to be able to follow up as well as check account balances and statements and even care about investment goals and budgets.

Conclusion
Although pro athletes in the NFL and the NBA are often considered successful individuals in their early twenties, it has been scientifically shown that is it common for athletes to struggle with their finances and to file for bankruptcy as early as two years following the retirement. Extravagant lifestyles, family-related issues, and poor investment decisions are some of the contributing factors that lead to pro athletes becoming broke and bankrupt despite having been at the top in terms of financial success. Additionally, from a psychological perspective, fame and fast money have a significant implication on the lives of athletes as they become more self-conscious viewing themselves from the eyes of the public as well as comparing themselves against similar professional athletes. This in return can result to engaging in destructive behaviors for themselves and their families in an attempt to escape the loneliness and the self-consciousness. The best recommendation an athlete can follow is to start preparing for tomorrow, today.