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.