Sports Stars and Bankruptcy: Why Athletes cannot hold onto their fortunes
There are many reasons why athletes and sports stars get paid a lot of money. One of the most fundamental reasons is because they bring in a huge amount of money for the team or sport they play in.
Over the years, numerous athletes have become phenomenally rich by playing the sport they love. But on the other hand, numerous athletes have lost all their money as well after living lavishly and spending everything that they earned. Some players took poor
investment decisions while others have just been plain stupid with their expenditures.
The recession has been hard on everyone, from ordinary people to even athletes and celebrities. But athletes who make huge amounts of money have other problems with the way they manage their money. In the past, athletes were just regular people, earning
a modest pay cheque every month and living in a little house with a small family. However, the industry has ballooned, top level athletes are paid vast sums of money on a weekly basis. Millions are made in salaries, endorsements and sponsorship deals. With
this huge amount of cash being pumped into sports, comes the desire to spend it as well. A lot of athletes are usually very young when they make their first million and they tend to spend it just as fast as they make it. Many athletes make poor financial decisions
which come back to haunt them once they stop playing.
There have been numerous examples of athletes who have made millions and lost millions. Some of them come from boxing, some from basketball and some from American football. Mike Tyson and Evander Holyfield both made vast sums of money during their careers.
Tyson made close to $300 million and Holyfield made $200 million from their endorsements and fight fees. After retirement, both boxers filed for bankruptcy where Tyson is living in a meager salary but the boxer believes that he has never been happier. Holyfield
on the other hand has refused to quit boxing, probably because he has payments to keep up with.
Basketball is full of sad stories as well. New York Knicks centre Eddie Curry made truck loads of money in his career but he is currently in debt even though he is in the middle of his 6 year $60m contract with the team. According to media reports, the player’s
monthly expenses were so high that he literally ran himself dry with no money left in his bank account. Track and Field star Marion Jones, lost all her money and had to sell her mother’s house to meet her daily payments. She is currently playing in the WNBA
to revive her dwindling financial reserves.
There are several reasons that athletes so frequently go bankrupt and lose all their money. There are some frightening statistics that say that 60% of basketball stars go bankrupt in 5 years after retirement and 78% of American footballers lose their fortunes
in 2 years. The reasons for these devastating stats are that firstly, many athletes make some very poor financial investment choices.
Instead of investing sensibly and making small portfolios on the stock market, they go huge with dodgy inventions and unheard of companies. These companies usually go bust and the athletes lose everything. Athletes have also been known to spend insane amounts
of money at every turn. Instead of buying modest houses and cars that they can easily maintain, they buy mansions and luxury vehicles that run them to the ground. Many marriages end up in divorce as well due to a big reduction in wages post retirement. When
they do get divorced, settlement claims are so huge that they can wipe out an athlete’s entire fortune in one go.
Along with divorce come their children. Many athletes have numerous children with different women and child payments eat large chunks out of their finances. Holyfield alone has 11 children from numerous women. Furthermore, athletes also throw their money
on entourages, they end up hiring their friends and family members and these people usually have no experience in what they are hired for. These various reasons deplete financial fortunes faster than the ongoing recession did in most cases.
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