Financial Planning for Athletes

New Orleans Saints’ running back Alvin Kamara banked his signing bonus, rather than spending it. More players should be coached to do the same.

“I got my signing bonus and I put that s— in the bank and I went and got some m—–f—ing wings.”

The above quote, from rookie running back Alvin Kamara, went viral on social media yesterday after being posted by The MMQB. Kamara went on to say, “Even if I wanted a boat, what the f— am I going to do with a boat right now?”

Kamara has a refreshing attitude toward money. We are often bombarded with media showing pro-athletes spending lavishly, followed by depressing follow-ups about financial ruin years later. Athletes have large sums of money thrown at them suddenly, and there is great temptation to buy all the luxuries they can now afford. A common assumption is that more money will always be coming next season. Unfortunately, that isn’t the case for most NFL athletes who have an average career of only 3.3 years.

“The average NFL career lasts 3.3 years, according to the NFL Players’ Association; 78 percent of players go broke within three years of retirement and 15.7 percent file for bankruptcy within 12 years of leaving the league, according to a paper published by the National Bureau of Economic Research.” ESPN

With a bit of financial coaching and spending discipline, even a player with a short career has the potential to live well for a lifetime. For example, if a player made the average NFL salary of $2.1 million, and had an average career span of 3.3 years, he would have earned almost $7 million during the span of his career. If the player limited himself to a $200,000 per year lifestyle during his time in the NFL, he would still bank away around $3.5 million over the span of his career. Assuming a real rate of return of 4.5%, this amount could allow the player to earn $157,500 annually in retirement.

The above figures do not account for a signing bonus or any endorsement deals. Likely, the numbers would be even higher.

Admittedly, this budgeted lifestyle isn’t the Lamborghini money that budding NFL players are hoping for. But many broke former players, in retrospect, would be happy to trade a few years of Lamborghini driving for the ability to drive a Mercedes for the rest of their life.