Why Athletes Go Broke
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Sports Illustrated ran a good article last spring on How (and Why) Athletes Go Broke, which an awful lot of them do. There are really two classes of jock bankruptcy — the stars who made enough millions to live on for a lifetime and went broke spectacularly, and the guys who made only a million or two in a career that ended before they expected. The latter are especially prevalent in the NFL, which chews up players rapidly.

Wonderlic test scores suggest that NFL players average about 5 IQ points higher than their race's average. They tend to be above average in work ethic, too. And they're pretty good at following instructions. Merlin Olsen, the great defensive lineman who later starred as the dad on the long-running "Little House on the Prairie" TV show tells the story about his first day on the set. The director is telling him "Just act natural," until finally he explodes and explains that he's a professional football player not a naturally talented actor, but the one thing you can say about professional football players is that they are coachable, so get him a good acting coach who will teach him how to move and how to react on camera.

(By the way, I wonder what percentage of guys with the natural ability to make the big time never do because of lack of intelligence or lack of self-discipline, and thus ends up in jail or at fails to do the rehab to come back from an injury.)

So, that suggests that professional athletes are not all that unrepresentative of the average American's ability to handle a financial windfall, which may explain a lot about where the money went during the Housing Bubble.

The article makes the point about how athletes tend to invest their money into something tangible — real estate, small businesses, or inventions — rather than into the more abstract realms of finance.

Traditionally, the one sure-fire business for a congenial retired jock was to own a bar or a restaurant. If you have a lot of famous friends who want to have dinner with you while you schmooze with autograph-seeking patrons, you can make a nice amount of money off the tourist trade (as long as your accountant isn't conspiring with the manager of the restaurant to rip you off) who come to see celebrities in person. Michael Jordan, who does not have a congenial personality, did well off a restaurant in Chicago for awhile — his solution was to have the backers build him a giant fishbowl-like private dining room in the middle of the restaurant where the masses could watch him dine with his friends without being pestered.

One issue is that big league athletes don't really have an off-season anymore in which they get work experience. Hall of Fame quarterback Roger Staubach spent his off-seasons from 1970-1977 working in the real estate business. He recently netted about $100 million from the sale of The Staubach Company. But nobody works at a future career in the off-season anymore because they all have to workout several hours per day — the offseason is when you build muscle — even if you're making the NFL minimum and probably will only play a few years.

A lot of NFL players go broke within a few years of retiring, but one thing to remember is that many of them don't know they've retired yet, and I'm not talking about Brett Farve. For example, I was recently looking at the Wikipedia lists of Jewish athletes, but it turned out to be hard to figure out how many are currently playing in the NFL since most of the ones who have recently played are currently listed as "a free agent," which suggests they hope their careers aren't over yet. Presumably, they spend a lot of time each day staying in shape, and maybe flying around the country to audition for coaches looking to fill a spot on the bench opened by an injury. That can be an expensive lifestyle, especially if you feel it's crucial to your confidence that you roll like an NFL player, not a member of the reserve army of the unemployed.

A problem that most black and many white pro athletes have is that they typically don't have any nuclear family members that they can (reasonably) trust to manage their money for them. In contrast, a high school friend of mine, whose father was a respected lawyer, became a CPA. One of his younger brothers grew up to be a star baseball player who graduated from Stanford and then made about $20 million in salary in the 1990s. With his brother managing his money and his father available for advice on legal matters, the ballplayer did fine. But the number of parasites lurking around jocks is legion.

I suspect a hidden resource of some powerhouse college athletic programs is that they tap their rich supporters to offer career paths to valuable kids who might not be pros. For example, one of the hidden strengths of the USC defense is that USC's fourth-string quarterback, the guy who in practice pretends to be the upcoming opponent's quarterback, is a tremendous all-around athlete named Garrett Green. Very few programs have a fourth-string quarterback who can credibly imitate in practice Terrelle Pryor of Ohio State.

Green went to my old high school, Notre Dame of Sherman Oaks, CA, where he averaged 11 yards per pass attempt and 10 yards per carry. I saw him outrun the entire defensive backfield of Compton Dominguez on an 80 yard touchdown keeper in the CIF championship game. Green would be a star anywhere outside of Division I (he was heavily recruited by Harvard) and would probably be a starter for the Vanderbilts and Rices of semi-big time football. But he doesn't quite have the height or arm strength to be a plausible NFL quarterback, so USC has him playing special teams, holding on field goals, filling in at wide receiver and defensive back, but mostly playing opposing quarterback in practice for the first team defense to work out on.

Green already has his USC bachelor's degree and is getting a Master's in real estate development. I wouldn't be surprised if USC boosters who are big time real estate developers made clear to him that he has a definite career path ahead of him in hometown real estate development if he sticks its out with USC as their utility infielder rather than transfer to somewhere where'd be a starter.

It strikes me that one competitive advantage a college football program could develop is to have superrich alumni offer to manage the money of pro athletes who attend their schools. If I was some single mom whose kid was being widely wooed by college coaches because he was a sure bet for the pros, I wouldn't mind if the Oklahoma St. coach, for example, said that T. Boone Pickens has volunteered to have his accountants provide very conservative money management for free until your son is, say, 28. It probably violates all NCAA amateurism rules, but it would seem like a reasonable perk to me.

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