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
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.