New Study Finds 1 in 6 NFL Players File Bankruptcy

June 5, 2015

To the chagrin of baseball fans, football has long been America’s Game. A recent Harris poll revealed that the National Football League, or NFL, is the favorite sport for 32% of sports fans, while baseball only garners “favorite” status among half as many Americans (16%).

Pro football is also the most lucrative sport with annual revenues estimated at $9.5 billion, and the average value of an NFL team currently valued at $1.43 billion, according to Forbes Magazine. Naturally, the players are compensated well, but the pay is not as good as you would think. Forbes reports that the average NFL player’s salary is “only” $1.9 million a year. Compare that to the average NBA (basketball) player salary at $5.15 million, MLB (baseball) player salary at $3.2 million, or NHL (hockey) player salary at $2.4 million.

The playing careers for professional athletes are also skewed against the pro football player. According to RAM Financial Group, a large financial services group that caters to professional athletes, the average span for a professional athlete is:

  • NFL: 3.5 years
  • NBA: 4.8 years
  • NHL: 5.5 years
  • MLB: 5.6 years

These numbers can be a recipe for disaster for the young professional football player. A new study published in the National Bureau of Economic Research reports that nearly one in six NFL players file for bankruptcy protection within a dozen years after leaving the sport.

Researchers collected data on roughly 2,000 players drafted by NFL teams between 1996 and 2003, then looked at earnings data and bankruptcy court records. Career earnings data were available for roughly 900 players.

“Players with median-length careers earn about $3.2 million in a few years. If they are forward-looking and patient, they should save a large fraction of their income to provide for when they retire from the NFL,” Kyle Carlson, Joshua Kim, Annamaria Lusardi and Colin F. Camerer wrote in a working paper released last month.

Instead, 15.7% of NFL players file for bankruptcy within 12 years of retiring from the league, with little difference based on career length or earnings. “Having played for a long time and having been a successful and well-paid player does not provide much protection against the risk of going bankrupt,” they wrote.

Few players file for bankruptcy while playing in the NFL. But filings gradually increase in the two years after retirement, “likely due to a combination of players rapidly drawing down limited savings and having leveraged investments.” The bankruptcy rate increases over time.

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