From Riches To Rags -- Almost

It is not uncommon to hear about athletes who used to be on top of their careers--and making a lot of money--who are now bankrupt or broke. And it is not surprising to find that the reason these athletes go from riches to rags is the same reason anyone else would go broke--mismanagement of money. Unfortunately for these athletes, they have more people around them telling them what to do with their money that they end up putting it in the wrong place, with the wrong people. 

Noted sports agent Leigh Steinberg recognizes the great financial challenge faced by these athletes: they don't have enough knowledge of the fundamentals of financial management such as budgeting, keeping track of expenses, and so on. Hence, they either tend to hire the wrong people to handle their money, or they put too much confidence in them.

Magic Johnson knew better. As the old Greek saying goes, "Know thyself." Johnson first realized that he knew nothing about financial literacy, then sought the help of those who do—money makers like Peter Guber, who was then CEO of Sony Pictures, and Hollywood agent Michael Ovitz. Now, Johnson is in the position to share this bit of wisdom to highly paid players like Dwayne Wade, Shaquille O'Neal, and Alex Rodriguez.  Whenever these players tell him or even imply to him that they are planning to hire relatives or friends to handle their money, Johnson says that there is hardly anything to talk about—that kind of decision would surely lead to financial failure.

It is the combination of the influences of peers, advisers, and the amount of money involved that makes it difficult or even confusing for these athletes to decide how to take care of their fortunes. What they need is sound advice on financial management. According to an article that came out on Sports Illustrated, written by Pablo S. Torre, close to 80 percent of former pro-football players are in financial trouble due to marital or unemployment issues, or worse, bankrupt.

In addition to bad financial management advice, these players' own lifestyles also play a part in their being bankrupt. They give in to the pressure of having to spend much on material things or give to those around them, as a proof that they do have money. 

These athletes are in great part responsible for being in a difficult financial situation. They make bad decisions, too, and it is not surprising that some people do not feel sorry for them.