Young professional athletes are essentially lottery winners once they’ve signed a contract with a team. Seemingly overnight they become millionaires. One reason why so many athletes become broke after retirement is not for a lack of income, but rather a misunderstanding of needs and wants. Many athletes struggle to budget their income appropriately and don’t consumption smooth between in-season and offseason.
Common spending patterns include:
- Buying a home/car for self and family members
- Jewelry/clothes/shoes
The issue that many athletes face is the lack of realization that most professional careers are short term, but the costs of those items have lasting impacts.
Abdullah Al-Bahrani and Darshak Patel have a great paper in the Southern Economic Journal that looks at using ESPN 30 for 30 to teach economics.