Many people make poor financial decisions in their 20s. I was one of them. When I landed my first job at 22, evaluating missile guidance systems, I stuffed the boring 401(k) paperwork into my desk drawer, never to be read. The Dow Jones Industrial Average was then about 1,500. It is now more than 10 times higher.
Professional athletes face the same problem in a much more dramatic way. The lucky ones earn millions in their early 20s, in on-field careers that typically end before age 30. They face the sudden burden of managing large amounts of money — money that they hope will last a lifetime.
Their wealth is also public. They have people in their lives who want or need financial help. They are targets for unscrupulous financial professionals as well as well-meaning friends and relatives who steer them into wildly inappropriate investments.
As a result, around 78 percent of retired NFL players experience serious financial problems within a few years of retirement. About 16 percent go bankrupt within 12 years. It’s easy to assume the resulting disasters are the product of stupidity or irresponsibility. It’s easy to point to athletes who blew their money on women or bling. Sometimes racial and class stereotypes come into play, too, now with the added twist of head trauma.
But these stereotypes are unfair. It’s rare for elite athletes to succeed based on their physical gifts alone. Most people who excel at that level are intelligent and focused. But they are so focused on using their talent and discipline on the playing field that they don’t learn to methodically manage their money. Most are also like most other young adults, too: typically naive and impatient in basic financial matters.
I discussed these issues with Donté Stallworth. Stallworth attended the University of Tennessee, where he studied psychology on a football scholarship. He was drafted by the New Orleans Saints in 2002, and played wide receiver in the NFL for 10 years. He now works as a journalist and a football commentator. His Twitter feed @DonteStallworth conveys the complexity and the craft of professional football, as seen by an expert practitioner of the game.
The interview has been edited for length and clarity.
Harold Pollack: How did you feel when you first started making serious money as an NFL player?
Donté Stallworth: The first check that I got from the NFL was $1 million. I thought: "What is this?" Obviously, I had already signed my contract and knew what to expect, but when I was working in the summer in college, the biggest check I ever had received was for maybe $300. The check just looked fake. I really didn't know what to do with it.
HP: Isn't it a little insane to get a $1 million check? Things would be so much better if you had gotten a check for maybe $500,000 and the remainder had been put in an annuity that would give you a monthly check for the rest of your life. Why don't they pay it that way?
DS: Being able to reflect on things now, that seems like a great idea. I don't think the NFL or the NFL Players Association would change how things work now. But from a financial adviser's standpoint, and even from a player's standpoint, that is something that the player should probably take ownership of.
Throughout the season, if the guy is making, let's say, $4 million, $5 million, you get all of that money in eight checks, every two games. I’ve started to believe that it would be better if players at least got that money spread out over the course of the entire year, not just the football season.
You get these checks and they're $60,000 or $80,000. That messes with you, mentally. You really don't understand that once you're done playing, these checks will stop. When you get back into the "real world," your boss may not even be making $150,000 or $200,000 per year. That's not even the NFL league minimum nowadays.
What NFL players do with their millions
HP: So you get that $1 million. What do players actually do with it?
DS: Many guys, especially the higher-drafted guys who are getting a lot of money, will buy their parents a home, buy themselves a home. Then they’ll buy a car and get their parents a car. After that, it's kind of up in the air.
I did everything in my power to make sure I was up to the best of my football ability: my speed, my strength, my route running. My main focus was on football, trying to put myself in position to be drafted first wide receiver. Looking back, I wish I had taken that same approach to my finances before I was drafted. I didn't. A lot of guys didn’t.
I wish I would have taken the same approach to learning about finances and learning how to budget, taking the same approach that you do when you're watching game film, when you're lifting weights and running for three hours, conditioning. I don't think we put in that same time to learn about our finances as we do on the football field.
Some guys are totally on it. Right away they put themselves on a budget. There are many smart guys who do know the ins and outs of investing. These are the smarter ones; Jonathan Vilma, for one. That guy is on top of everything.
HP: How do you know what to do when you suddenly have that much money? It's hard to get into your head, "I can do this, but I can't do that."
DS: That's key. When you initially get this money, you have to take ownership to understand: "I have all this money now, but it's not going to last forever." If you're lucky in the NFL, you get to play past the average of three years. I was blessed to play 10. You have to understand that you could be making three, four, five million dollars a year. Then the next year it's all over. You'll never make that type of money again.
A lot of guys live like they're going to be making $5 million for the next 20 years. The smarter guys would say that you want to put yourself in a position where you don't have to work when you're done. Live like a prince now if you have to, so you can live like a king later.
HP: How do athletes decide where to put their money?
DS: Ninety-nine percent of the guys know nothing about the investment world. You'll hear from so-and-so that, "Tom Brady is doing this," or, "We've worked with Brett Favre."
They throw names out there. When you're a rookie or a young guy, you're thinking: "If Tom Brady's doing this, of course I should be doing it too."
That is how a lot of guys get taken advantage of. It's the people that you trust, the people that you meet. You're automatically a target. There are people whose lives are solely based around clinging to athletes. They try to find ways that they can get money out of people. I've seen it, I've lived it. It's just horrible.
A lot of my friends were caught up in this casino scam. This guy scammed guys out of millions. This was years ago, and they're still trying to work out the logistics of getting their money back.
Learning to say no
HP: You were also a public rich person, a celebrity. What is it like to not only have money but to have everybody around you knowing that you have money, to have your money be a topic of public conversation?
DS: It's tough, Harold. Not only are your family members and cousins, even distant relatives, expecting you to be the money guy, it's also friends and other people. When you are put in that situation at such a young age, it's hard to say no to some of your family, or to some of your best friends. A lot of times, guys don't say no.
I had one relative who I hadn't spoken to — not one time — the entire time I was in college. Then once I got drafted, she asked me if she could have $50,000. This was before I even got any checks or anything. I remember thinking to myself, "A ‘congratulations’ first might be a better way to go about this."
As a young athlete, before you made it to the NFL, you would always hear those stories. But you never would believe it was true. So when it happens, it's like, "Wow, $50,000. They're asking me like it's $5 or like it's $5." You get that often. It's very difficult to learn how and when to say no and not feel bad about it.
HP: How do you manage that? How do guys manage it?
DS: Some guys don't ever manage it. These are the ones who go broke the fastest. It took me a while to learn, until I had people I was able to talk to, people who were in the same position.
Let's face it, every professional athlete that I had come in contact with — especially guys who are making millions of dollars a year or close to that — has been in that position. You want to be in a position where you can take care of your immediate family, the people that you feel responsible for.
In my case it was my mother, and I was the one to take care of my immediate family. I also had close friends I would like to be in position to help if they needed it.
I won't say that I felt obligated to do it. But I have literally millions of dollars in the bank, and somebody is asking me for $1,000. It doesn't seem that bad. Then $1,000 will turn into $5,000, or it will turn into more frequent requests.
You automatically become that safety net. Instead of someone taking responsibility for their own finances, it's like, "Uh, I can spend this and if there is an issue I can just ask Donté for $500 and it won't be an issue."
HP: It seems to me that financially successful African Americans face a particular challenge. You’re more likely than I am to be connected to many people in serious need. There is also a culture of loyalty and mutual support that makes it easier for people to put the hand on your shoulder, or that makes you feel obligated when people need help. I don't know if that's real to you.
DS: That's very real. When you do come into this type of money, there are so many people to whom you become that safety net.
Then you have to worry about if you don't "loan" someone $1,500 or $2,000 — and it's usually a "loan" — people will decide that you've changed or you think you're too good. We could spend another hour talking about those situations. They happen often.
Helping pro athletes learn to manage their money
HP: Did you take any courses in college on budgeting or the stock market or anything like that?
DS: I didn't. I really wish I had. There are not many jobs where you're 19, 20, 21 years old that make you a millionaire, or at least wealthy, literally overnight. That just doesn't happen often in this world.
I would definitely advise the young guys to take some type of business course to help them understand their finances better once they make it to the professional level, or even if they don't make it to that.
HP: Do the players union or the teams help you transition into that?
DS: Yeah, the NFL does a pretty good job. They have preseason symposiums where they'll bring in all the drafted rookies. They give you advice on the wide range of things that you need to be aware of as a young adult coming to the world of the NFL: on-the-field issues, off-the-field issues, financial issues, legal stuff. Each team also has a player development director whose sole job is to make sure that everyone is on board, especially the rookies. The NFL Players Association also does a great job and has a great benefits package for players post-career.
HP: Do agents help you with these financial things?
DS: Some agents will recommend people that they know or have worked with. Others will totally stay away from it. They don't want anything to do with your finances.
HP: I can imagine how the agents might not want to get involved. They might wonder what might happen to your relationship if they hook you up with an adviser and things don’t work out.
DS: That's exactly what it is…
The NFL has a great program, too, if you're looking to get into some type of investment or want to start working with a certain financial group. The NFL works with the FBI to make sure people aren't scamming. They run background checks. I think the NFL is doing pretty much everything it can, outside of actually making these programs mandatory.
HP: Should college football programs be doing more to help their players financially?
DS: We can go into talking about how college kids should be able to have some type of compensation. That's a whole other conversation. I do believe it should start in college somehow. The NCAA should take more responsibility. They make hundreds of millions of dollars from college kids every year. There should be some better way to prepare these guys to be financially successful.
When the end is in sight
HP: As an athlete, you always know that your time is limited. At what point do players start thinking about what their subsequent career will look like when they can no longer be on the football field?
DS: That varies. The average NFL career is three or three and a half years. For someone like me, drafted in the first round, I knew (or at least assumed) that I would be around for a while. My own turning point was probably when I turned 30.
For my first seven or eight years, it just never dawned on me that I couldn't play forever. Obviously I knew that in the back of my mind, but it just never hit me. I was living in the moment, playing the game. You live from meeting to meeting, practice to practice, game to game, week to week, season to season.
When I got close to 30, I started to realize that I wasn't in my prime anymore. I could feel my skills very slowly starting to diminish. I wasn't as fast as I used to be. Then you start to understand, "Okay, this is the point where I maybe need to start thinking about what I'm going to do for the next 50, 60 years."
HP: What kinds of jobs do people take when they leave the NFL?
DS: Many guys like to stay close to the game because it's what you know. It's what you've done your whole life. A lot of guys get into coaching, whether it's on the college, pro, or even high school level. A lot of guys get into the television side and try to stay close to it somehow.
When you leave the NFL, it's almost like you're in the draft again, but you're kind of drafting yourself now. You have to understand everything that you've learned throughout your NFL career, how that can help you moving forward. A lot of guys get into the business and financial sectors. That’s good. Not only are they in a position to understand their own personal finances, but they're able to work on other portfolios and see how money is supposed to be handled. They can pass that information along to other professional athletes, and to others.
Harold Pollack teaches social service administration at the University of Chicago. He is co-author, with Helaine Olen, of the new book The Index Card: Why Personal Finance Doesn’t Have to Be Complicated.