Millionaires are Made Tonight

Today sparks one of those few days a year when many young men basically jump from being in the lower end of the wealth spectrum to the higher side. I am talking about a professional sport draft (most of them).

On the other hand, these events prove that money doesn’t solve everything. Tonight is the NBA Draft, and many men will sign multi-million dollar contracts. Some even before they are even 20. The lowest paid still are able to bring in $400k per year, but did you know that the average career of an NBA player is THREE YEARS?

What would you do?

Taking the three years and the minimum $400k, think of it like making has much possible money as you can during that timespan. Would you know what to do with that money? What would be the first thing you would do?

What most athletes do?

Often times the first thing athletes do is pay off that tricked out car that has already been given to them, buy a couple houses, and father some children.

The common mis-perception is that the more money you have the less problems there are; however, in most cases, people with more money have more expenses.

As NBA player, Shaq, was going through his divorce, his monthly expenses were released to the public. On rent and mortgages alone he spends $156,000 in a MONTH! Yeah he is one of the highest paid, but what about Jason Caffey? I am sure many of you have never even heard of him. He had a respectable eight years stint in the NBA and brought in around $29 million. Well after fathering eight children with seven different women, Caffey is now bankrupt.

Need more proof? How about Scottie Pippen. He was never the highest paid, yet he had one of the best runs along side Michael Jordon. Reportedly two years after retirement Pippen was trying to find a team because of his financial troubles.

These kids are given tons of money with little education and guidance. Who is to expect them to use it wisely?

So what happens when that athlete has his cars and houses, then suddenly is no longer wanted by any team or suffers a freak injury? If he didn’t properly manage that inflow of cash, then he his probably in trouble. It is estimated that 60% of athletes go broke.

There is really no job that pays like an athlete’s. Sure it can open more opportunities, but once that contract is no longer around what do they do from there. Not many people can offord to offer you $6 million a year or even $400k for that matter.

Most leagues are now trying to push financial management on their in-coming rookies by putting them through a financial mini-camp. The trend of players starting their own business or finding other ways to make money off their personal success is rapidly increase. Think about how many different things people can do with that fame and money.

Not All Athletes Screw it Up

The ones that are most successful are the ones who invest their money. Headlines like Kobe Bryant and LeBron James make nearly the same amount of money through endorsements and business as they do in their NBA contract. Even not so great players like Keith Van Horn are able to continue making millions after their career is over.

As I now begin to find myself older than these new rookies, I can’t imagine what I would do if I had suddenly made millions of dollars at 19 or 20. You also have to remember that most of these athletes are NOT expecting to only have a three year career. Majority of athletes think they are invincible and will play forever, and rightfully so; otherwise, maybe they wouldn’t have got to where they were.

So when you see those top picks walking across the stage tonight, how many of them will eventually become bankrupt?

image source -NBA.com