Athletes Who Went Broke: What Went Wrong & How to Avoid Their Mistakes
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The sports field is littered with stories of athletes who went broke.
They once had life-changing wealth, but poor choices caused their fortunes to fade away.
Unfortunately, athletes make a lot of financial mistakes. Despite lucrative playing careers, they often end up with no money and no retirement plan, wondering what went wrong.
So, why do so many athletes go broke?
Today, we are going to dig into some answers to that question.
Then, we’ll explain how athletes and their families can safeguard their financial future and avoid the pitfalls that lead to bankruptcy.
But first, let’s explore a list of broke athletes.
Famous Athletes Who Went Broke
We’re not sharing these stories to gloat about the misfortune of once-rich athletes. Instead, we’ll focus on discovering how these athletes lost their money.
That’s because our mission as wealth advisors for professional athletes is to help players own their wealth and avoid wealth-destroying mistakes.
We encourage everyone to become an informed participant when it comes to managing their money, and there’s a lot to learn from these stories.
Each story represents a financial lesson.
Curt Schilling
Curt Schilling, a former Boston Red Sox pitcher, won three World Series championships during his career. Most casual sports fans know Schilling as the baseball player with the bloody sock.
According to Bloomberg Businessweek, Schilling made over 114 million during a storied career that lasted over two decades. But keep in mind, that figure doesn’t account for how much he pocketed after paying agent fees and taxes, among other expenses.
Unfortunately, Schilling poured much of his earnings into a video game company he founded: 38 Studios.
How much? $50 million. When the studio collapsed, so did his finances.
"I'm tapped out," Schilling told WEEI-FM, a Boston radio station. "The money that I had earned and saved in baseball was all gone. ... I put everything in my name in this company. I believed in it. ... But I'm not asking for sympathy. That was my choice."
Admirably, Schilling pursued his dreams with the same intensity that he pursued strikeouts. But his mistake was putting everything he owned at risk by investing in one business. A business that was in a hyper-competitive field like the video game industry.
Essentially, Schilling gambled his fortune away. And he became one of many athletes who went broke.
Currently, Schilling is a commentator for BlazeTV, a streaming service that provides news and entertainment.
Mike Matheny
As a catcher, Mike Matheny played Major League Baseball for 13 years. He played for the Milwaukee Brewers, Toronto Blue Jays, St. Louis Cardinals, and San Francisco Giants. During his professional career, he made more than $18 million.
Outside of baseball, Matheny invested in a commercial real estate portfolio. He thrived until the 2008 housing crash. That’s when his real estate investments collapsed.
The problem was most of Matheny’s fortune was tucked into real estate investments. So when the real estate market crashed, his wealth did as well.
Also, circa 2013, Matheny lost his court battle with a bank over a failed real estate investment. After the ruling, Matheny stated that the court loss could cost him his entire net worth. At the time, court records showed that Matheny owed at least $4.4 million.
“You could throw a dart at any kind of real estate and you were going to do well,” Matheny told St. Louis Post-Dispatch, as he recalled the years before the housing collapse. “The next thing you know I’m in over my head.”
Sadly, Matheny and his family were evicted from their home. And they weren't allowed to bring along the memorabilia from Matheny's baseball career.
But Matheny's story had a happy ending. Currently, he's the manager of the Kansas City Royals. He was able to repair his finances. He and his family were even able to return to the home that they previously lost.
Tony Gwynn
For 20 seasons, Tony Gwynn played in Major League Baseball for the San Diego Padres. Nicknamed “Mr. Padre,” Gwynn played the right fielder position.
In 1987, Gwynn filed for bankruptcy. He listed his liabilities at $1,147,000. His assets totaled $690,150.
Back then, sources told the Los Angeles Times that Gwynn was a victim of horrible financial advice.
In 2001, Gwynn retired from baseball.
In 2014, Gwynn died from cancer. At the time, his widow owed roughly $2.5 million on the couple’s mansion. According to The San Diego Union-Tribune, the home was valued at around $2 million at the time.
In 2018, the lender took full control of the mansion. In 2019, the home finally sold for $1,429,500.
Mike Tyson
In 1989, Mike Tyson became the youngest boxing world champion. At age 20, he crushed 33-year-old Trevor Berbick to grab the heavyweight belt. The fight lasted only five minutes and 35 seconds.
That was the start of Iron Mike’s reputation as a fearsome heavy hitter, brutalizing opponents with vicious blows.
Not too long after hearing the bell ring, Tyson put challengers to sleep.
Millions of boxing fans couldn’t get enough. So, Tyson became must-see TV. The result? He made a large fortune.
Unfortunately, Tyson didn't only have a habit of quickly wasting opponents. He also had a habit of wasting money, spending it as if there was a limitless supply.
According to NBC News, Mike Tyson once owned six mansions and 110 cars. He had garages packed with Rolls Royces, Bentleys, and Mercedes.
While at his boxing peak, he employed more than 200 people. Tyson’s staff included chauffeurs, gardeners, and chefs. That’s a lot of his money spent on employees who support his lifestyle rather than boost his income.
Furthermore, Tyson spent plenty of money to satisfy his alleged substance issues.
So, when his boxing career collapsed, his fortune did as well. He became one of those athletes who went broke.
"I took care of everybody else," Tyson once said. "But I never took care of myself."
In 2004, Tyson owed $38 million in debt. He had at least 246 creditors trying to collect money owed. That included the IRS, along with dozens of lawyers, doctors, and accountants.
To make matters worse, Tyson also had to deal with the fallout of promoters ripping him off during his career.
According to The New York Times, Tyson settled with his former promoter Don King in 2004. In exchange for Tyson dropping his $100 million lawsuit against King, King agreed to pay him $14 million. But Tyson wasn’t allowed to get a cent of that money. It all had to go towards his $38 million debt.
Remarkably, Tyson turned his life around. Now he’s a successful businessman.
Diego Maradona
Diego Maradona is considered one of the greatest soccer players ever. In fact, in the 1980s, many considered Maradona the world’s best soccer player.
During his career, he played in four World Cups, which his team won in 1986.
As a professional soccer player, Maradona earned a lot of money. Unfortunately, Maradona allegedly failed to pay taxes for all that money earned.
The Italian Tax Authority came for him in 2009, demanding that Maradona pay $54 million in back taxes. Financially, this crushed Maradona, causing him to file for bankruptcy.
But taxes weren’t Maradona’s only issue.
Cocaine was the other.
In fact, Maradona once received a 15-month suspension from the Italian League. That was his punishment for testing positive for cocaine.
Three weeks after that suspension, Maradona was arrested for cocaine possession. Through it all, Maradona consistently denied that he had a drug problem.
Either way, Maradona’s run-ins with the law and his suspension likely hurt his finances.
On November 25th, 2020, Maradona passed away.
Lenny Dykstra
Lenny Dykstra is a former New York Mets baseball player. At the start of his retirement, Dykstra lived a comfortable, modest life. He took few risks with his money, preferring to collect the $1 million a year he made from his successful car-wash business.
In a nutshell, Lenny Dykstra was cautious with his money. However, he wasn’t known for caution while on the field during his 12-year baseball career. In fact, Dykstra’s nickname was “Nails” because he would charge into the outfield walls like a bull.
Unfortunately, later in retirement, Dykstra adopted his “Nails” persona when it came to finances.
Dykstra sold his successful car wash chain. The sale produced $51 million. He used a large portion of that money to start an exclusive magazine: The Players Club, which sought to give financial advice to wealthy professional athletes.
Unfortunately, Dykstra’s magazine business tanked, crippling him financially.
What’s more, Dykstra had an intense desire for luxury.
“Lenny’s whole thing was that he always wanted to be bigger, in every way,” Kevin Dykstra, his brother, told The New York Times during a telephone interview. “After baseball, he was just never happy with what he had. He had a $4 million house, but he had to get Gretzky’s house. He had nice cars, but he had to have a Maybach. He flew first class, but he wanted his own private jet.”
By the way, that Gretzky mansion cost Dykstra $18.5 million. He purchased that property in 2007.
Two years later, Lenny Dykstra filed for Chapter 11 bankruptcy. He claimed that he owed more than $31 million. And that all he had was $50,000 worth of assets. That $50,000 represented approximately .16 percent of what Dykstra owed creditors.
In 2011, Dykstra was indicted for bankruptcy fraud. Federal investigators alleged that Dykstra had sold many of his valuable items instead of using them to repay his creditors.
In 2012, Dykstra took a plea deal on those bankruptcy fraud charges. That same year, he was sentenced to three years in prison for grand theft auto.
Dykstra was released from prison in 2013. He had served six and half months.
OJ Simpson
Many people know OJ Simpson from his infamous 1995 murder case. But before Simpson’s run-ins with the law, he was known as a legendary NFL football player. In fact, he was inducted into the Pro Football Hall of Fame in 1985.
After retiring, Simpson headed to Hollywood to start his acting career. He starred in popular films like “The Naked Gun” series. At the time, the public loved him.
However, Simpson’s life changed once he was accused of murdering his ex-wife Nicole Simpson and her alleged companion.
The whole trial received national coverage.
Cameras filled the courtroom, recording details for the public to consume. The media was there every step of the way.
After eight months, Simpson was acquitted of all charges.
Two years later, a civil jury handed Simpson a guilty verdict. They stated that Simpson was liable for the murders of his ex-wife and alleged lover. Simpson was ordered to pay $33.5 million to the Brown and Goldman families.
Eleven years later, Simpson was sentenced to 33 years in prison for trying to rob a Las Vegas hotel and casino. What was he trying to steal? According to Simpson, his own sports memorabilia. Simpson ended up serving nine years.
In 2017, Simpson was released from prison.
Nowadays, Simpson is active on Twitter and the golf course.
Why Do Athletes Go Broke?
In the long list of famous athletes who went broke, there are a few common themes. Their stories provide clues to how they ended up in their predicament.
What we’ll do now is dig deeper. Let’s discuss some of the reasons athletes go broke.
Misplaced Trust
One of the worst mistakes you can make is trusting financial crooks with your money. Sadly, too many have been taken advantage of by swindlers.
The problem?
Many professional athletes start their careers without proper financial education.
Professional athletes receive hundreds of thousands of dollars, sometimes millions, all at once. For a young athlete getting their first signing bonus, it’s like winning the lottery.
Because they don’t have experience managing a fortune, they can get careless with that money.
Financial fraudsters are fully aware of that fact. They manipulate young athletes, finding slick ways to take their money.
And this doesn’t only happen to young athletes. Financial manipulation happens to veteran athletes as well.
In a Washington Post article about Chase Carlson, an investment fraud lawyer to star athletes, it’s estimated that fraud-related losses sustained by athletes add up to a staggering amount.
“Some advisers steer their clients toward foolish investments. Others straight-up steal. Some do both. A 2018 report from the financial firm Ernst & Young estimated that from 2004 through 2017, athletes across all sports alleged fraud-related losses of nearly $500 million.”
The Washington Post Magazine
Now, you’re probably wondering how this could happen. How could they be fooled so easily?
It’s simply a matter of trusting the wrong people. Many of these slick advisors are smooth talkers. They have a gift of gab, a gift for deceit.
Often, these shady advisers recommend phony investments to their clients. The type of investments that only they profit from.
“It seemed like guys were inviting in scammers, or had no clue about what they were investing in,” Chase Carlson told The Washington Post. “I started to see that they needed help.”
But crooked advisors aren’t the only thing you need to watch out for.
Bad Advice
Some athletes hire family and friends as financial advisors or business partners. Often, people without any financial background or business expertise. That can be a huge mistake.
While family and friends might have your best interest at heart, professional advice is essential when it comes to any major financial decision.
And even when they go to a professional, many athletes don’t bother to find a financial team with the right experience and credentials. They go with a team-mate’s recommendation or a cookie-cutter brokerage advisor without doing their research.
If you hire a novice to handle your finances, they’ll have to learn on the job. That means they are likely to make plenty of mistakes with your money. Even if they have the best intentions in the world.
That's why athletes should always do some background research to find an experienced financial team. They need custom advice that considers the big picture, including tax planning, investment strategy, and estate planning -- not someone focused on selling investment products.
After you hire any advisor, make sure you keep an eye on your finances. Always ask questions. Make sure your advisors keep you informed.
Household Troubles
For an athlete, household troubles can crush their bank account. One of the biggest is a messy divorce.
According to Sports Illustrated, the divorce rate for professional athletes can range between 60% and 80%.
And when the athletes get divorced, their spouse usually gets half of all their earnings.
Prenuptial agreements can protect athletes from that fate. That's why David Falk, Michael Jordan's former agent, instructs his clients to sign them before getting married.
But it’s not just the act of a divorce that hurts an athlete’s finances. It’s when the divorce takes place. Often, the divorce happens after the player has already retired. At this point, players have less opportunity to rebuild their net worth post-divorce.
But divorce isn’t the only household issue that can sap wealth from athletes. Child-support payments are another. Some athletes have to pay tens of thousands of dollars, each month, towards child support.
In fact, some athletes have to pay divorce settlements, alimony, and child support. When you combine all that, you’ll see how household troubles can cause athletes to go broke.
Great Expectations
John F. Kennedy once said, “For of those to whom much is given, much is required.”
In many cases, the people who surround athletes swear by this quote. Especially when it suits their own interests.
When professional athletes get rich, the people around them tend to expect a piece of the action. Whether it’s receiving a job, asking for a loan, or getting bailed out of financial trouble, professional athletes get a lot of requests.
The problem is that some players have a difficult time saying “no.” They believe that supporting those around them is their obligation.
Of course, there’s nothing wrong with supporting your parents or giving back to your community. It’s a core value for many athletes to lift up the people who played a big role in their success.
The key is making sure you’re not going into debt to do so. Make sure any financial support you offer aligns with your values and doesn’t put your financial health at risk.
That way, you can avoid becoming an athlete who went broke trying to make everyone else happy.
Lifestyle Debt
Some athletes operate from the expectation that they must live in luxury to be seen as successful. They drive fancy cars and splurge on mansions. They want to show that they’ve “made it.”
The problem is that some of these athletes are living beyond their means.
They take out huge mortgages and car leases, racking up their monthly expenses. However, if their income drops, they’re still responsible for paying those bills.
Some athletes pay high mortgages for family members and friends in addition to their own.
Add it all up. The result? Broke athletes.
Athletes who find a balance between enjoying success and saving for the inevitable end of their playing careers can be set for life.
Check out our article “What Do Athletes Do With All Their Money?” to learn about the best ways you can spend your finances as a professional athlete.
Greed
When some athletes get a taste of luxury, it becomes an addiction. They want more and more.
Suddenly, that house that they’re living in isn’t big enough. So, they buy a bigger mansion.
Suddenly, the car they’re driving isn’t flashy enough. So, they buy a new car. Sometimes more than one.
They might develop a taste for expensive outfits, giving expensive gifts, and taking people on expensive holidays.
Reckless spending on items that depreciate can eat away at a fortune pretty quickly.
Moderation is hard, when you’re barely in your twenties and getting your first taste of financial success. But again, every career has an end date.
Players who create a balance between spending and planning for the future avoid washing away their fortunes.
Not only does greed cause excessive spending, but it also puts athletes at risk of making bad investments.
Lured by the promise of a big return, this was a fatal mistake made by many broke athletes.
They put all of their money into a single high-risk business or fraudulent investment scheme instead of a sound, long-term investment strategy.
Vet Envy
When rookies get into the league, they notice how veteran players live in luxury. They see the vets driving expensive cars and living in beautiful homes.
What they don’t always remember is that the veteran players they envy are likely on a second or third contract. They’ve been getting big paychecks for years.
Rookies can’t afford to spend like the vets without quickly going into debt. Often, they’re borrowing money to pay for purchases, assuming they will have a long career.
They are using future money to pay for current expenses. Unfortunately, many new players start a habit of borrowing that’s hard to kick.
If they get a second contract, they’re prone to borrowing even more money to live in a larger house. They behave as if their third contract is guaranteed.
The problem?
Some rookies never get a second contract. But they’re still on the hook for all that money they borrowed.
They end up having to sell homes and cars far below the price they paid, just to cover their debts. And often, because they’re selling their items for less than they paid, they’re still in the red. That’s not even mentioning all the interest that accrued on those debts.
Next thing you know, they become another athlete who went broke. Making matters worse, they have no viable source of income.
Poor Financial Knowledge
The average athlete is young and inexperienced when it comes to money. That’s why it’s easy for con artists to take advantage.
Financial education isn’t something most schools emphasize. That being the case, you have to educate yourself.
You don’t need a finance degree -- just make sure you do your research to fully understand the risks of anything before investing in it.
Do even more research and ask the right questions before trusting anyone to handle your money or make investments on your behalf.
Even if you currently know very little about finances, it’s never too late to learn.
Negligence
Some athletes have a one-track mind: maximizing their athletic talent.
That mindset can help you on the battlefield. But it can be disastrous for your finances.
Here’s an example.
Louis Delmas, drafted by the Detroit Lions in 2009, lost money to a crooked financial advisor. When he spoke to federal investigators, he told them that he had wanted to “focus on football.”
Players who only focus on their craft make themselves vulnerable to financial crooks. You should always track your finances.
“It’s not unusual for athlete advisers to set up monthly budgets, handle mortgage and car payments, and essentially babysit their clients’ financial lives.”
Again, keep your eyes on your money. That’s even if you’re working with experienced wealth advisors. In fact, an elite advisor will insist that you stay updated.
If you happen to have advisors who don't want to keep you updated, that’s a reg flag.
They should provide regular statements for any investment accounts or businesses your money has funded. Likewise, they should have no issue with you taking those statements to review with independent legal and tax advisors.
So, we’ve covered some of the big reasons athletes go broke. Now, let’s discuss how they can prevent it.
What Can Athletes Do to Prevent Bankruptcy?
As former athletes and current wealth advisors, we’ve seen first-hand what happens when athletes aren’t on top of their financial game. These are the tips we share with pro athletes at any stage of a playing career who want to start owning their wealth.
1. Educate Yourself
As an athlete, you practiced hard for years before entering the pros.
Exercise the same diligence with your financial education before making moves with your money.
You can start by listening to podcasts about wealth management for athletes. We’ve created episodes on everything from tax planning and investing to the psychology of money.
As Warren Buffett once said:
“The best investment you can make is an investment in yourself…The more you learn, the more you’ll earn.”
You don’t have to spend years studying. You can also “learn while doing” if you have professional advice and ask plenty of questions.
But you need to know enough to hire an expert team that will serve your best interest, not their own.
That’s the difference between working with a financial advisor at a brokerage firm, as many athletes do, and the family office model of wealth management.
Wall Street brokers are paid to sell investments. A wealth advisory team at a family office is paid to protect and grow your net worth.
Listen to this episode for more on how to make sure you’ve got the right team in place to advise you.
2. Keep Track of Your Money
Always keep an eye on your money. Even if you’ve hired a team you trust with your life, keep track of where your money is going.
Don’t just rely on someone to pay your bills and manage your finances with no oversight. Just as you would never sleep during a game, never sleep on your money.
You’ve worked very hard for it. You deserve to keep as much of your money as possible. And you deserve to know where your money goes.
Sadly, many of the issues that athletes have faced could have been avoided. If only they tracked their money and followed this next tip...
3. Don’t Neglect the IRS
Always make sure you’re in good standing with the IRS. Make sure the IRS gets its cut of your earnings. Otherwise, you’ll have to deal with frightening consequences.
Some athletes have owed the IRS an obscene amount of money.
Take Mike Tyson as an example. According to The New York Times, he once owed the IRS $13.4 million.
So, please don’t make the same mistake. Strongly consider hiring a skilled Certified Public Accountant to make sure you stay on top of your taxes.
Athletes can also reduce overall tax liability if their financial team includes a qualified CPA.
And remember, make sure all the financial experts you hire have a successful track record.
4. Think Long-Term
Please don’t just concern yourself with the present. Consider the future.
As you know, professional athletes have a short window to make huge money. Some careers last less than three years.
That’s why you should try to maximize every dollar earned. Why?
Because you deserve financial security.
You fought to make your dream possible.
Blood, sweat, and tears.
You have a unique opportunity to create generational wealth.
Athletes who think long-term leverage their success into multiple income streams, investing in their future and the legacy they want to leave behind.
Don’t flush away all your hard work. Don’t become one of those athletes who went broke.
Contact us so we can help you unlock the full potential of your wealth.
FAQ
Now, let’s answer some frequently asked questions about athletes who went broke.
What professional athlete lost the most money?
There’s a strong argument for Mike Tyson.
According to Forbes, Tyson earned $400 million during his professional boxing career. But in 2003, he filed for bankruptcy. Although Tyson made a lot of money in the boxing ring, he spent a lot of that money outside the ropes. In 2004, Mike Tyson was $38 million in debt.
What percentage of NBA players go broke?
According to Sports Illustrated, roughly 60% of NBA players go broke within five years of retirement.
What percentage of NFL players go broke?
Sports Illustrated once reported that 78% of NFL players go broke within the first two years of retirement.
