Why do professional athletes go broke?
78% of professional athletes go broke after 3 years of retirement
Pro athletes going broke due to ‘mix of situations’: Personal finance expert
NKSFB Sports Business Division partner Craig Brown discusses the reasons professional athletes go broke after retirement.
Being a professional athlete can be extremely rewarding and lucrative. However, a stark 78% of them will go broke after just 3 years of retirement, Craig Brown, an NKSFB Sports Business Division partner, told FOX Business' "Mornings with Maria" on Wednesday.
Brown oversees a team of business professionals who help more than 100 MLB, NFL, and NBA top-athletes and retired professionals manage their money.
He noted that the high number of athletes going bankrupt can be attributed to many reasons.
A "big factor," he said, is the significant amount of income they make in a short amount of time.
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Why do professional athletes go broke after retirement?
NKSFB Sports Business Division partner Craig Brown explains why professional athletes go broke after retirement and how his company helps athletes manage their money.
Brown also pointed out that there is an "overwhelming feeling" for the athletes to help people who have supported their careers.
"You oftentimes see these professional athletes looking to help out family members, to help out people who are close to them as they were growing up, which causes them to, a lot of times, instead of maybe building their own foundation and creating a solid position for themselves in the future, to try and help everyone else along the way," he explained.
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But there is hope for these athletes. Brown uses the "5% rule" to help provide financial stability and boost their portfolios for their golden years.
"If you look at a conservative portfolio, someone can generally earn about 5% as a return on that investment. And so if these individuals are looking at the idea of living off of 5%, then they're living off of the returns that their portfolio is making as opposed to the income and the checks that they're receiving from their game checks," he said. "If they can do that and stick to those rules, as many of our clients have, what it does is it allows them to be able to live forever off of that money."