It’s often difficult for the “average” American consumer to understand how celebrities, like movie stars and professional athletes, can go from making millions of dollars per year to filing for bankruptcy, and perhaps a little bit of schadenfreude is what supports the media frenzy every time another celebrity files for bankruptcy.
NFL players, in particular, appear to suffer the most from this instant change in financial status. According to new research published by the National Bureau of Economic Research (NBER), professional football players file for bankruptcy at a rate that is astonishing for the amount of money they’re paid.
The Washington Post recently explained that the average NFL player is in the league for six years and typically earn about $3.2 million. Nevertheless, within 12 years of retiring from professional football, 16% of players end up filing for bankruptcy.
Furthermore, as a recent Fortune article suggests, the remaining 83% of former NFL players who don’t file for bankruptcy aren’t necessarily living the same extravagant lives that they could afford while actively playing. The most recent NBER specifically addressed bankruptcy, but it’s safe to assume that the percentage of retired NFL players struggling with finances is much higher than one out of every six players.
The latest research suggests that bankruptcy rates for NFL players are not related to the length of a player’s career, nor are players more likely to file for bankruptcy if they earn less money than their peers in the NFL.
Instead, TIME states, the short careers of football players (the majority retire by age 30) combines with many other factors to create a financial meltdown:
Football players are more likely to suffer serious injuries, both mentally and physically, which can affect cognitive skills like organization and decision making;
Many professional football players never learn how to make investments or budgets, instead relying on others to make the decisions — which often results in bad investments and scams;
Although players may be “constantly scrutinized” for abstaining from “extravagant spending” while their career is still alive, it’s nearly impossible for retired players to continue the same spending habits after they retire — but it’s often difficult for them to adjust so quickly.
“I can recall filing bankruptcy for two former pro football players over the last 34 years,” says Charles Huber, Principal, Law Office of Charles Huber. “The last fellow I filed for was working as a personal trainer, at very minimal wage. He probably graduated from college with a degree, but once he was finished playing, he had no other marketable skills or experience. By the time he came to me, his savings were gone. All he had left were his memories of the glory days.”