Bankrupting Athletes

I came across an article in Sports Illustrated called How (and Why) Athletes Go Broke that details how so many pro athletes wind up losing all of their money. Here are some mind-boggling facts:

• By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.
• Within five years of retirement, an estimated 60% of former NBA players are broke.
• Numerous retired MLB players have been similarly ruined, and the current economic crisis is taking a toll on some active players as well. Last month 10 current and former big leaguers—including outfielders Johnny Damon of the Yankees and Jacoby Ellsbury of the Red Sox and pitchers Mike Pelfrey of the Mets and Scott Eyre of the Phillies—discovered that at least some of their money is tied up in the $8 billion fraud allegedly perpetrated by Texas financier Robert Allen Stanford. Pelfrey told the New York Post that 99% of his fortune is frozen; Eyre admitted last month that he was broke, and the team quickly agreed to advance a portion of his $2 million salary.

Isn't that insane? It's so tempting to ridicule these athletes, but what would that be like to have a huge influx of cash when you most likely grew up poor and have little education? In the article the author makes the point that athletes are more like lottery-winners than anything else just because of the nature of how they earn the money. Normally it comes as a windfall and hasn't been toiled over and the wealth hasn't grown with them over time. I wish I could find a good academic study detailing the numbers better, but rates of depression and suicide (among other negative health outcomes) are higher for lottery-winners than the normal population.

Anyway, it's an interesting article. Check it out.