Why Athletes Go Broke – Review of Broke, an ESPN Films Documentary

This past weekend I was hanging with some friends who like to talk sports and all they could talk about was the latest film in ESPN Films’ 30 for 30 series.

This particular film is called Broke, and it’s all about why a majority of professional athletes face financial troubles so quickly after retiring.

Last night I was able to watch the film, take some notes, and I’m presenting a review here for you guys.

About Broke

The 90 minute documentary film Broke is directed by Billy Corben, who also directed Cocaine Cowboys and another 30 for 30 film, The U (this particular film was where Corben got to know Bernie Kosar and shortly thereafter learned of Kosar’s financial troubles, which ultimately helped to inspire Broke).

The other motivation for the film: a 2009 Sport Illustrated article, How (and Why) Athletes Go Broke by Pablo S. Torre (who is in the film). The quote from the article that helped set the premise for this film:

“By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce. Within five years of retirement, an estimated 60% of former NBA players are broke.”

The film oddly seemed to call in question the validity of these numbers, but then didn’t ask Torre about them. Then the film went on to say that it didn’t matter about the validity of the numbers because of the anecdotal evidence pointing towards this being a “widespread” problem.

Film Style and the Honest Athletes

The film opens with a montage of several players discussing everything from the excitement of getting their first check to what they spent their millions on to how they ultimately ended up broke. This whole intro segment really capsulates the entire film.

This is what the film will be – switching quickly back and forth between former football, baseball, and basketball athletes lamenting about their story with money. I like the style of the film, but I thought 90 minutes of this was difficult to consume. I would have appreciated a deeper, slower dive into some areas.

The athletes featured in the film include,

• Leon Searcy (NFL Offensive Lineman),
• Andre Risen (NFL Wide Receiver),
• Cliff Floyd (MLB Outfielder),
• Keith McCants (NFL Linebacker),
• Bart Scott (NFL Linebacker),
• Jamal Mashburn (NBA Forward),
• Curt Schilling (MLB Pitcher),
• Homer Bush (MLB Second Baseman),
• Sean Salisbury (NFL Quarterback),
• Eugene Lockhart (NFL Linebacker),
• and Bernie Kosar (NFL Quarterback), who I thought stole the show.

Note that not all of these player had financial problems, they were just the primary one’s sharing their story on film.

Okay, let’s talk about some of the substance of the film. Corben doesn’t spend 90 minutes trying to make excuses for broke players, but he does seem passionate about getting to the root causes of their financial troubles. I think you’ll be as surprised as I was at the many factors that make it so difficult for professional athletes to hold on to their wealth.

The film begins with news reports and stats at how quickly all the professional leagues have risen in value. In 2012 the average NFL, MLB, and NBA teams were worth $1.1 billion, $605 million, and $393 million, respectively. The leagues are all worth substantially more than they were 20 years ago, and this wealth has trickled down to the players in the form of huge salaries and big time signing bonuses.

The How and Why Behind Athletes Going Broke

The rest of the film is structured into segments that, when combined, make it easy to understand why so many players end up where they are.

All About the Benjamins – In this segment the players all discuss their first checks, huge bonuses, endorsement deals, and what they did with some of those initial paychecks. Many players bought their parents a house and car. Many talked about this being their “pay day” after devoting their childhood and collegiate years to one sport. Bart Scott, current NFL Linebacker with the New York Jets admitted to being clueless about money and taking his first check to a retail check-cashing service vs a bank.

Bling, Bling – The “bling” culture had a huge influence on many of the players. They talked about ‘making it rain’ with $100 bills in the strip club and ‘pimpin out their cribs’ like the popular MTV show. Several players said they would spend a mortgage payment or more every time they went out to the club.

Keeping Up with the Joneses – Just like we look across the street at what our neighbor is driving, pro athletes look across the locker room and see what other athletes are doing. The problem arises when the athlete you are looking at is the highest paid player on the team, by far! There is a huge difference in pay on the team and many players spend years trying to keep up with their higher paid team mates.

Mo Money, Mo Problems – Like Biggie Smalls said, Mo Money, Mo Problems. This segment referenced the many lawsuits that athletes face, the taxes they have to pay (they have to file state tax returns and pay taxes in each state that they play a game in. This segment also discusses the way athletes are paid, over the course of the regular season, leaving the off season without any regular paychecks. Further reading: learn how to budget on irregular income.

Hustlers Paradise – Success in one area in life can often lead to unreasonable beliefs that you can easily have success in any area in life (i.e. the Midas touch). Many of these players believed since they were hitting home runs on the field, they could hit ‘home runs’ in business. This segment talked about the many business deals that are offered to players from friend, family, and anyone who can get in front of them. To young players, these ideas are fun, sexy, and fulfill that need to be seen as a public success. A quote from the film that I appreciated was that “it’s not sexy to invest in a mutual fund.” According to one person in the film, only about 30% of all business ideas succeed. Many of these players were only investing in businesses.

Who Can You Trust? – This is one area where I start to feel sorry for some of these guys. When you’re in your early 20s and you’re handed a million dollar signing bonus, who do you turn to for financial advice on what to do with this money? Many players turn to their agents (good negotiators, but not necessarily good money managers) or their parents (who aren’t skilled enough to handle the money wisely). I loved Bernie Kosar’s honesty about his Dad during this section. Other players turn to random “financial advisors” who turn out to be crooks. For example, Michael Vick’s advisor ran a Ponzi scheme. Further reading: find a fee-only financial advisor.

Mouths to Feed – For many of these athletes, their pay check isn’t just a way for them to escape poverty. It’s a way for them, their family, and their community to escape poverty. Bernie Kozar said at one point he found one of his cell phone bills and it had more than 60 lines on it! He was funding 60 cell phone lines for family and friends. Several players talked about how when they were playing they were making everyone’s mortgage payments and that family and friends knew when their pay day was better than them.

Baby Mama Drama – The saddest section of the film, was this one about all the fake and broken relationships that athletes deal with which result in out of wedlock kids and divorces. Many player lamented about their wives leaving them once they left the league or about how much in child support they still had to pay even though they weren’t making big money anymore. This segment also references a website, BallerAlert.com that notifies gold-digging women about the whereabouts of rich players (so that they can go to where they are and try to meet them). Further reading: can you afford a baby?

Banged Up – Many players think they are going to play forever and never deal with a costly injury. But injury can be a double whammy on a player’s wealth: shorten their career and lead to more medical bills, prescription drugs, and potential drug problems. The NFL players are particularly vulnerable to medical loss of wealth because they have the lowest salaries, the shortest careers, and are more likely to be injured at some point.

Game Over – The last segment dealt with the fact that many players just aren’t prepared for life after sports. They don’t have a backup plan, and when they are forced to retire they don’t have another source of income to turn to to help them deal with their new lifestyle.

Final Thoughts on Broke

The film summed things up by first discussing the typical pro athlete investment portfolio. A model portfolio, and I would agree, would contain primarily securities (stocks, bonds, and cash), followed by a little bit of real estate, private equity, and alternative investments. These athletes tend to skew the portfolio towards private equity and real estate such that they portfolio looks like this:

Further reading: learn about asset allocation.

The leagues have tried to help the players deal with their money by implementing financial advisor requirements and rookie transition programs. But these had many critics in the film.

One biting criticism, I thought, was aimed at the universities where these players come from. Our colleges and universities make millions from the efforts of these players over their careers, without ever paying the players, and more to the point of this film, without ever teaching them how to deal with money once they get it. I’m no pro athlete, but I can relate to this criticism, and I suspect many of you can too.

If you’ve seen Broke, what’s your impression of the film? Did the film change your opinion on what you think of pro athletes who blow all their money?

If you’d like to see Broke, visit the ESPN 30 for 30 site and check the next air time. There might also be a copy floating around on the Internet you can check out.