Money management a difficult lesson for NFL's rookie class
Wanted: A hot-shot athlete to star in the NFL. Fame included. Other perks involve fat paychecks, big houses, luxury cars, mega fans and VIP lists. Survive camp, make the big plays and you're home free.
Or maybe not.
As they begin life in the NFL, rookies also can ponder sobering fine print that tempers the allure of becoming rich and famous.
They could also wind up broke.
"I hope they save their money," says Keyshawn Johnson, former No. 1 pick, "and realize the NFL means Not For Long."
The average NFL career is just 3½ years. Yet the sweat equity routinely produces instant millionaires. The league's average salary in 2009 was $1.9 million. The $325,000 rookie minimum? That's seven times the average starting salary for a college graduate.
CALL TO NCAA: Ex-player Elliss says NCAA should teach athletes money skills
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Despite such cash flow, there is no shortage of current and former NFL players — like examples in other sports — stung by financial distress. Some have blown millions, even while aligned with financial advisors. Indulgent spending, poor investments, off-the-field transgressions and unscrupulous business practices are typical factors.
With the NFL's labor deal set to expire in March, the players' union has sharpened focus on financial education while urging members to prepare for a lockout. The league has programs, too, including a financial workshop as part of the annual rookie symposium held in June in Carlsbad, Calif.
"The greatest trap is trying to live up to the expectation of the NFL," says Troy Vincent, the former cornerback and union president who recently became the league's vice president of player development. "The perception has been built up over the years with video games, commercials and the glitz of the NFL. And for so many guys, once they get here, they think, 'I've arrived.'
"Well, the average salary might be $1.9 million, but that's including Peyton Manning, Donovan McNabb and Tom Brady. Most of the players earn a lot less."
Many pitfalls for rookies
As the neophytes learn playbooks, adjust to new cities and try to prove capability at a higher level, Vincent and others warn that money management strategies — transposed over a vague career timeline — should not be underestimated in the transition.
"Playing in the NFL and making a lot of money is like a dream come true," says Carl Carey, agent for Chicago Bears defensive end Julius Peppers, who signed a six-year deal that could be worth $91.5 million in March. "They're probably not wanting to hear about pitfalls, but they should."
Listen to Ken Ruettgers, who played 12 seasons with the Green Bay Packers after being drafted in the first round in 1985 and founded GamesOver.org, which assists retired players. Mindful of post-football hardships, he is wary as new players arrive.
"When I see guys introduced at the draft, I think of all the hands trying to get into his pockets," he says. "There are agents, advisors, fitness gurus, nutritionists, family, friends, neighbors. Anybody trying to sell something. It can be overwhelming."
Johnson knows. After 11 seasons in which he earned more than $50 million, he landed as an ESPN analyst and is invested in ventures including real estate and franchise restaurants. He's also a man who dropped $100,000 for his post-draft bash in 1996 at the House of Blues. Over the years, he has warned young players of how quickly a $1 million bonus check can shrink.
"After Uncle Sam comes first, your agent is going to get his cut," says Johnson. "Then there's your wife, girlfriend or baby's mama. You're going to hook up your family and homeboys, and get yourself some nice things, like jewelry or some sweet tire rims.
"By the time you've done all of that, you'd be lucky to have $320,000 left."
Trent Williams shudders at the thought of squandering assets. A left tackle from Oklahoma drafted fourth overall by the Washington Redskins in April, Williams' first contract will likely have at least $30 million guaranteed.
Like many rookies, Williams pledges to reward his parents. But he maintains he won't go overboard with spending, and will use meticulous caution for major financial moves.
"I can learn from mistakes that other people in this situation made, learn what not to do," Williams says. "Obviously, I don't want to go broke. We'll see."
According to a Sports Illustrated report published last year, 78% of NFL players will become bankrupt, divorced or unemployed within two years of retirement. League and union officials say they can't verify that staggering figure. Yet mindful that many patterns that lead to financial ruin begin early — it's not uncommon for draft picks to accumulate six-figure debt before signing their first contract — they acknowledge concern.
Says Vincent, "If they knew better, they'd do better."
Luther Elliss remembers hearing cautionary statistics at a financial seminar, shortly after being drafted in the first round by the Detroit Lions in 1995. No matter.
"There were a few of us, myself included," Elliss says, "who looked around and said, 'Not me. I'm too smart for that.' "
Now Elliss — who played 10 seasons and earned more than $11 million from 2000-2004 as one of the NFL's highest-paid defensive tackles — is broke.
Elliss and his wife, Rebecca, filed for Chapter 7 bankruptcy last year and in January walked away from their suburban Detroit home. The couple, which adopted six of their 11 children, also foreclosed on a home in Utah.
"It's not always drugs, gambling, the high life or women," Elliss says. "In my case, it was, 'Why did I get involved in these risky businesses?' "
Elliss says he guaranteed money for several ventures, supporting partners he hadn't known for more than a couple of years. When the businesses failed, he absorbed massive losses.
In recent months, Elliss has shared his experiences at the union's financial advisor's conference and as part of a financial education video package for players — hoping that his efforts can help others avoid mishaps.
How pressing is the need for better financial education? Dana Hammonds, the union's director of financial programs, says that in addition to some players entering the league unaware of basics such as a requirement to pay social security taxes, she has witnessed too many cases of misinformed financial moves.
Hammonds says that numerous players, for example, have invested heavily in annuities without realizing funds couldn't be withdrawn without paying surrender fees as high as 50%.
"You get these young guys," Hammonds says, "and they have no idea what they've gotten themselves into."
Although about 450 financial advisors (who passed background checks and are required to attend seminars on a biennial basis) are registered through the union, Elliss says finding a trustworthy advisor is a daunting task for suddenly wealthy players.
"And there's a dichotomy," he added. "They get paid when they invest your money."
During the NFLPA's advisors conference in Hollywood, Fla., in May, Elliss, urged advisors to involve spouses more and suggested they tailor presentations for better financial education.
"I stressed to them that you can't come in a three-piece suit, talking over our heads with all these fancy charts," Elliss said. "We really need someone to be real and come down to our level. Teach us how to fish."
"My advice?" offers Deion Sanders, the former all-pro cornerback, "Find someone to mentor you who doesn't have their hands in your pocket."
Players must balance risk with reward
Then there's the psychology. Several former players point to ego as a factor. In some cases, that is reflected with a reluctance to admit lack of financial acumen when needing to make informed decisions. Other times, it fuels over-confidence that triggers risky choices.
"If your uncle is getting into the restaurant business, you support him," Elliss said. "That's our nature. We're willing to take a risk."
That same mind-set might also leave financially inexperienced players vulnerable to scams. Carey contends that Peppers, drafted No. 2 overall in 2002, was targeted early in his career by an unidentified rap group. A few weeks after Peppers became part of the group's entourage, traveling to concerts and video shoots, Carey says Peppers was approached about entering a financial arrangement.
A 21-page contract was faxed to Carey, who was incensed by what he considered "a one-sided arrangement" that could have led to a disaster. The deal was nixed.
"They were about to take him," Carey said. "Those were rough moments for us."
Rodd Newhouse, who established a firm that caters to professional athletes, 44 management, says he's seen numerous real estate deals where players overpaid in either the purchase price, closing costs or mortgages.
"This swindling is a huge issue," said Newhouse, who previously worked in the Arizona Cardinals' personnel department. "The educational emphasis is in the wrong place."
Newhouse consulted a player with bills paid by an advisor.
" 'How much do you pay your financial advisor?' " Newhouse asked. "He gave me the worst possible answer.
" 'I don't know.' That's scary."
Warnings directed at the newest players are hardly new, though the dollars at stake have swelled. Ozzie Newsome, the Hall of Fame tight end and Baltimore Ravens general manager, heard similar themes as a No. 1 pick in 1978.
"You have to survive your mistakes," Newsome says. "How many times have you heard of billionaires who failed in their first two or three businesses? Sometimes, it takes failure before you can be a success."
Newsome surely realizes dynamics driving the NFL equation.
"With the average career less than four years, some people never get that second contract."
Or maybe not.
As they begin life in the NFL, rookies also can ponder sobering fine print that tempers the allure of becoming rich and famous.
They could also wind up broke.
"I hope they save their money," says Keyshawn Johnson, former No. 1 pick, "and realize the NFL means Not For Long."
The average NFL career is just 3½ years. Yet the sweat equity routinely produces instant millionaires. The league's average salary in 2009 was $1.9 million. The $325,000 rookie minimum? That's seven times the average starting salary for a college graduate.
CALL TO NCAA: Ex-player Elliss says NCAA should teach athletes money skills
ROOKIE LESSON: Oher: Rookies need to learn how to say 'No'
Despite such cash flow, there is no shortage of current and former NFL players — like examples in other sports — stung by financial distress. Some have blown millions, even while aligned with financial advisors. Indulgent spending, poor investments, off-the-field transgressions and unscrupulous business practices are typical factors.
With the NFL's labor deal set to expire in March, the players' union has sharpened focus on financial education while urging members to prepare for a lockout. The league has programs, too, including a financial workshop as part of the annual rookie symposium held in June in Carlsbad, Calif.
"The greatest trap is trying to live up to the expectation of the NFL," says Troy Vincent, the former cornerback and union president who recently became the league's vice president of player development. "The perception has been built up over the years with video games, commercials and the glitz of the NFL. And for so many guys, once they get here, they think, 'I've arrived.'
"Well, the average salary might be $1.9 million, but that's including Peyton Manning, Donovan McNabb and Tom Brady. Most of the players earn a lot less."
Many pitfalls for rookies
As the neophytes learn playbooks, adjust to new cities and try to prove capability at a higher level, Vincent and others warn that money management strategies — transposed over a vague career timeline — should not be underestimated in the transition.
"Playing in the NFL and making a lot of money is like a dream come true," says Carl Carey, agent for Chicago Bears defensive end Julius Peppers, who signed a six-year deal that could be worth $91.5 million in March. "They're probably not wanting to hear about pitfalls, but they should."
Listen to Ken Ruettgers, who played 12 seasons with the Green Bay Packers after being drafted in the first round in 1985 and founded GamesOver.org, which assists retired players. Mindful of post-football hardships, he is wary as new players arrive.
"When I see guys introduced at the draft, I think of all the hands trying to get into his pockets," he says. "There are agents, advisors, fitness gurus, nutritionists, family, friends, neighbors. Anybody trying to sell something. It can be overwhelming."
Johnson knows. After 11 seasons in which he earned more than $50 million, he landed as an ESPN analyst and is invested in ventures including real estate and franchise restaurants. He's also a man who dropped $100,000 for his post-draft bash in 1996 at the House of Blues. Over the years, he has warned young players of how quickly a $1 million bonus check can shrink.
"After Uncle Sam comes first, your agent is going to get his cut," says Johnson. "Then there's your wife, girlfriend or baby's mama. You're going to hook up your family and homeboys, and get yourself some nice things, like jewelry or some sweet tire rims.
"By the time you've done all of that, you'd be lucky to have $320,000 left."
Trent Williams shudders at the thought of squandering assets. A left tackle from Oklahoma drafted fourth overall by the Washington Redskins in April, Williams' first contract will likely have at least $30 million guaranteed.
Like many rookies, Williams pledges to reward his parents. But he maintains he won't go overboard with spending, and will use meticulous caution for major financial moves.
"I can learn from mistakes that other people in this situation made, learn what not to do," Williams says. "Obviously, I don't want to go broke. We'll see."
According to a Sports Illustrated report published last year, 78% of NFL players will become bankrupt, divorced or unemployed within two years of retirement. League and union officials say they can't verify that staggering figure. Yet mindful that many patterns that lead to financial ruin begin early — it's not uncommon for draft picks to accumulate six-figure debt before signing their first contract — they acknowledge concern.
Says Vincent, "If they knew better, they'd do better."
Luther Elliss remembers hearing cautionary statistics at a financial seminar, shortly after being drafted in the first round by the Detroit Lions in 1995. No matter.
"There were a few of us, myself included," Elliss says, "who looked around and said, 'Not me. I'm too smart for that.' "
Now Elliss — who played 10 seasons and earned more than $11 million from 2000-2004 as one of the NFL's highest-paid defensive tackles — is broke.
Elliss and his wife, Rebecca, filed for Chapter 7 bankruptcy last year and in January walked away from their suburban Detroit home. The couple, which adopted six of their 11 children, also foreclosed on a home in Utah.
"It's not always drugs, gambling, the high life or women," Elliss says. "In my case, it was, 'Why did I get involved in these risky businesses?' "
Elliss says he guaranteed money for several ventures, supporting partners he hadn't known for more than a couple of years. When the businesses failed, he absorbed massive losses.
In recent months, Elliss has shared his experiences at the union's financial advisor's conference and as part of a financial education video package for players — hoping that his efforts can help others avoid mishaps.
How pressing is the need for better financial education? Dana Hammonds, the union's director of financial programs, says that in addition to some players entering the league unaware of basics such as a requirement to pay social security taxes, she has witnessed too many cases of misinformed financial moves.
Hammonds says that numerous players, for example, have invested heavily in annuities without realizing funds couldn't be withdrawn without paying surrender fees as high as 50%.
"You get these young guys," Hammonds says, "and they have no idea what they've gotten themselves into."
Although about 450 financial advisors (who passed background checks and are required to attend seminars on a biennial basis) are registered through the union, Elliss says finding a trustworthy advisor is a daunting task for suddenly wealthy players.
"And there's a dichotomy," he added. "They get paid when they invest your money."
During the NFLPA's advisors conference in Hollywood, Fla., in May, Elliss, urged advisors to involve spouses more and suggested they tailor presentations for better financial education.
"I stressed to them that you can't come in a three-piece suit, talking over our heads with all these fancy charts," Elliss said. "We really need someone to be real and come down to our level. Teach us how to fish."
"My advice?" offers Deion Sanders, the former all-pro cornerback, "Find someone to mentor you who doesn't have their hands in your pocket."
Players must balance risk with reward
Then there's the psychology. Several former players point to ego as a factor. In some cases, that is reflected with a reluctance to admit lack of financial acumen when needing to make informed decisions. Other times, it fuels over-confidence that triggers risky choices.
"If your uncle is getting into the restaurant business, you support him," Elliss said. "That's our nature. We're willing to take a risk."
That same mind-set might also leave financially inexperienced players vulnerable to scams. Carey contends that Peppers, drafted No. 2 overall in 2002, was targeted early in his career by an unidentified rap group. A few weeks after Peppers became part of the group's entourage, traveling to concerts and video shoots, Carey says Peppers was approached about entering a financial arrangement.
A 21-page contract was faxed to Carey, who was incensed by what he considered "a one-sided arrangement" that could have led to a disaster. The deal was nixed.
"They were about to take him," Carey said. "Those were rough moments for us."
Rodd Newhouse, who established a firm that caters to professional athletes, 44 management, says he's seen numerous real estate deals where players overpaid in either the purchase price, closing costs or mortgages.
"This swindling is a huge issue," said Newhouse, who previously worked in the Arizona Cardinals' personnel department. "The educational emphasis is in the wrong place."
Newhouse consulted a player with bills paid by an advisor.
" 'How much do you pay your financial advisor?' " Newhouse asked. "He gave me the worst possible answer.
" 'I don't know.' That's scary."
Warnings directed at the newest players are hardly new, though the dollars at stake have swelled. Ozzie Newsome, the Hall of Fame tight end and Baltimore Ravens general manager, heard similar themes as a No. 1 pick in 1978.
"You have to survive your mistakes," Newsome says. "How many times have you heard of billionaires who failed in their first two or three businesses? Sometimes, it takes failure before you can be a success."
Newsome surely realizes dynamics driving the NFL equation.
"With the average career less than four years, some people never get that second contract."