This week, the Washington Post reported that Warren Sapp, a former star defensive lineman for several NFL teams, filed for Chapter 7 bankruptcy in a south Florida bankruptcy court.

What’s perhaps most notable about this bankruptcy filing is how unsurprising it is, despite the fact that Warren Sapp made millions of dollars during his playing career, and currently holds a lucrative position as a television analyst.

These days, professional athletes file for bankruptcy at a remarkably high rate, which reveals the potential financial perils of making a fortune as a professional athlete.

Facts and Figures: Athletes Filing for Bankruptcy

According to the Washington Post, bankruptcy seems to strike professional athletes at an alarming rate:

• Recent trends. According to a report from Sports Illustrated, an alarming 78 percent of NFL players and 60 percent of NBA players file for bankruptcy within two years of their retirement. These figures, needless to say, are dramatically higher than the rates of bankruptcy for the general population.
• Notable bankruptcy filings. These bankruptcy filings are not limited to run-of-the-mill players who only play for a few years and are forced to retire. On the contrary, many star players have sought debt relief in bankruptcy court. These players include notable athletes like Dennis Rodman, Terrell Owens, Allen Iverson, and Lenny Dykstra.
• The Sapp case. Warren Sapp’s case offers a prime example of an unfortunate athlete’s bankruptcy. Sources say that, in his bankruptcy filing, Sapp admits to having more than $6.5 million in debt. This incredible amount of debt led to his need for bankruptcy, despite the fact that he makes more than $100,000 a month through his work as a television personality.

So, with more than half of all professional athletes who play basketball or football having to file bankruptcy after their playing careers, what explains their struggles with money? There are many possible reasons for this odd phenomenon.

Reasons Why Athletes so Often File for Bankruptcy

Some analysts claim that professional athletes are not able to handle their money because they receive massive sums at cash at relatively young ages.

This certainly contributes to some players’ financial struggles, although professional sports leagues, like the NBA and NFL, have taken concerted efforts in recent years to offer financial planning classes to young stars.

Other observers claim that excessive spending on luxury goods and a lack of common sense contribute to many athletes’ financial woes.

These observations may also be true, and professional athletes in the future would be well-advised to consider the plight of their past peers before making financial decisions after they receive their first massive paycheck.

By Kyle Olson

By now, most of us have encountered a news story or blog post about the infamous “pink slime” beef by-product.

“Pink slime,” a concoction of unused pieces of cow used as filler in meat, first gained notoriety when an article cited use of the grotesque by-product in McDonald’s restaurants. The onslaught of media coverage and public outcry that followed caused a massive drop in demand from restaurants.

AFA, makers of “pink slime”, have filed for Chapter 11 bankruptcy, according to ABC news. The blame for their financial decline has been cast solely on the media's portrayal of the formerly unheard-of substance.

Bad Press Can Cripple An Industry

Numerous fast food chains, including McDonald's and Taco Bell, have already pulled “pink slime” from their products and supermarkets have stopped carrying meat containing the aptly named ingredient.

Companies such as Beef Products Inc., one of AFA’s main competitors, have also been affected by a massive decrease in sales.

Despite the uproar from critics, it was recently revealed that 7 million pounds of “pink slime” beef product is destined to be used in school lunch programs in the US. AFA’s claim that the media has ruined business for them may or may not be substantiated but what we do know is that “pink slime” was a huge moneymaker.

What we can glean as Americans from this abrupt shift in the meat industry is that no one is exempt from financial downturns.

These industry giants have gone from providing product to the nation’s largest fast food restaurants and supermarkets to not knowing if they’ll be able to stay in business. Even companies like AFA, who according to Reuters, produces more than 500 million pounds of ground beef annually, aren’t exempt.

Business Bankruptcy Can Mirror Individual Bankruptcy

• It’s no secret that Americans like their “things”. These things that we all hold so near and dear can cause attachment issues. Businesses can be the same way but we all must recognize that, whether you’re a Fortune 500 company or a plumber from Ohio, “things” are expendable.
• Do your research. It takes time and knowledge to decide what’s best for a large company like AFA and the same goes for individuals mulling bankruptcy. By taking the time to gain accurate information you’ll be better informed to make the right decision when the time comes.

Preparing for Bankruptcy

• Not unlike AFA’s quick downturn, many people can experience a sharp decline in income and be hit hard financially. As fast as one’s finances can get out of hand, it is important to have some preparation if possible.
• AFA’s reason for filing will be undoubtedly different from yours (unless you’re some sort of closet “pink slime” producer) but it is important to identify the problem. Carefully go over your financial info in order to see where your trouble lies. This may take some time and careful combing of your financials.