The San Antonio Spurs trounced the Miami Heat to win the NBA Championship. But even if they hadn't won, they'd still be rewarded with huge paydays. The annual base salaries of star NBA players are enough to make grown men and women weep, compared to the average hardworking employee salary. Miami Heat star LeBron James has a base salary of $19,067,500. Forbes reports LeBron's annual earnings around $72.5 million with his $53 million endorsement deals. No wonder he's nicknamed "The King." Spurs star Tim Duncan cut his salary in half from $21 million to $10.3 million to keep the Spurs together. I'm not ashamed to admit I have a real attitude about professional athletes making more money in one season than most of us earn in our entire lifetime. Yet, the majority of professional athletes with these staggering salaries end up broke after their retirement.
As someone who rose from the lower socioeconomic level to financial stability, it's difficult for me to imagine squandering millions of dollars in a matter of months, and yet the data show that is what often happens. A Sports Illustrated analysis showed that 78 percent of NFL players are bankrupt or nearly so just two years after their career ends, and 60 percent of NBA retirees lose it all in five years. There are similar stories across all professional sports. These are bright and talented individuals who excel on the football field or basketball court but know very little about managing money.
Retired boxer Mike Tyson earned more than $30 million per fight but squandered his $300 million fortune. The infamous Terrell Owens earned more than $80 million over the course of his NFL career but lost nearly all of it due to bad investments and child support payments. Owens pays more than $120,000 a month in child support and mortgages to four different women. NBA star Antoine Walker was the king of the road, with two Bentleys, two Mercedes, a Range Rover, a Cadillac Escalade, and a bright red Hummer. He generously gave allowances to 70 friends and relatives -- and squandered away $110 million. Allen Iverson earned $154 million in salary and another $50 million in endorsements over his NBA career. He too had massive monthly child support obligations and traveled with a 50-person entourage.
Of course, very few who rise from poverty to instant millionaire status are going to have much money management experience. That's why lottery winners also don't do well. But let's skip the excuses. Black professional athletes need to do better with their finances -- I'm reminded of the biblical teaching, "To whom much is given, much is required."
The extravagance and waste is inexcusable when young Black men and women across the country are struggling to make ends meet in minimum wage jobs while pursuing a college education. Twenty-eight percent of Blacks live in poverty and struggle each day to just get by. According to the 2012 U.S. Census, the average Black family's income was $33,762 and some of them even managed to save. Professional athletes must realize their social and moral responsibility to be good stewards of their finances and learn from the mistakes of those who were not. As an education advocate, I'd like to school them on a few things. Here are my top five.
•Don't spend everything you have today, counting on a lengthy tomorrow. The average career span for a professional athlete is about 10 years and 3.5 years for an NFL player. Retirement in the early thirties says you've got a long life ahead and a financial plan is essential.
•Make sure you get trusted advisors, legal and financial, from reputable firms. Former NFL Safety, Keion Carpenter advises, "Don't just rely on your financial advisor or Business manger to do everything for you. You are the CEO of your finances so act as such."
•It's natural to want to take care of family and friends who stuck by you through thick and thin. You have to take care of Momma. However, uncontrollable spending on family and friends can place you on the road to financial ruin. Do you really need to travel with 50 people?
•Please, please, if you're going to spend money on anything, buy some good quality condoms and use them. Child support payments have been one of the key devourers of many professional athletes' finances who've gone broke.
•Pay It Forward. Set up a scholarship in your name at higher education institutions for under-privileged Black youth or lend financial support to renovations in inner city schools. Sending a young brother to college is more rewarding than that Rolls Royce, which loses value as soon as it leaves the showcase. Leave a legacy that once you made it big, you reached back and helped others.
Fortunately, there are former professional athletes who are great role models for successful retirement. The infamous Michael Jordan has reached billionaire status according to Forbes. A 2006 first round draft pick, Vernon Davis became a successful businessman with the help of his famous former NBA mentor Earvin "Magic" Johnson, whose net worth is listed at $500 million. One of my favorite retired athlete success stories is former NBA player, Robert Elliott. Elliott was a three-time academic and athletic All-American at my alma mater, The University of Arizona, where he earned both a bachelor of science in accounting and an MBA. Elliott is an outstanding citizen, businessman, musician, philanthropist and family man, married 39 years to his wife, Beverely. He owns a successful accounting firm and was past president of the NBA Retired Players Association. Elliott recently authored a book, Tucson A Basketball Town.
With money comes responsibility. First round NFL No. 1 draft pick Jadeveon Clowney landed a $22 million contract with the Houston Texans. He'll earn additional millions with endorsement deals. But on The Tonight Show with Jimmy Fallon, Clowney revealed he is still broke and living at home with mom. When asked what he's going to do with his first paycheck, Clowney said he'd buy mom a house. Kudos to Clowney for taking care of mom. The $22 million dollar question is will Clowney have the financial literacy not to end up back where he started? Let's hope the new NBA and NFL rookies and other professional athletes put as much effort in developing their financial literacy as they do in developing their athleticism.