Just last week Iverson was reported to have been begging for change outside Atlanta’s Lenox Mall. A security guard asked him to leave, but with great difficulty, as Iverson was a childhood hero of his. Yes, Allen Iverson, the 1996 first-overall NBA draft pick and Rookie of the Year, 5-time NBA scoring title winner, MVP, Olympic bronze medalist and 5th greatest NBA shooting guard of all time according to ESPN. He earned more than $200 million in salary and endorsements over his 17 year career, but couldn’t seem to hold on to it.
But all is not lost. Thankfully, Iverson had someone truly looking out for his long-term, best interest during the height of his career. Known as “The Reebok Fund,” Iverson reportedly has a $32 million trust funded with earnings from shoe deals that he cannot touch until he’s 55. He’ll be able to start drawing on his NBA pension at age 45. He’s 39 now, so there’s still some figuring out to do in the meantime. But for many athletes, Iverson’s “meantime” is their perpetual future outlook. If it weren’t for the foresight of a trusted and savvy friend, Iverson would likely be looking at indefinite financial ruin.
A 2009 Sports Illustrated article reported that 60% of former NBA players are broke within five years of retirement. Among NFL retirees, bankruptcy and financial duress become harsh realities for more than three-fourths of athletes only 2 years after hanging up their cleats. ESPN’s 30 for 30 film “Broke“ premiered in 2012, revealing the dark side of success and painting a complex picture of the many forces that drain athletes’ bank accounts.
What’s sad is that this isn’t new news. The real tragedy is that this continues to happen to some of the most highly esteemed people in America. But why?
These days, with the almost inconceivable amount of resources available to professional sports leagues–especially to the NBA and NFL, whose teams are collectively worth more than $19 billion and $37 billion, respectively–you’d think there would be a support infrastructure built in to guide these guys from the time they sign their rookie contracts through their retirement. While both leagues have their own versions of a rookie symposium that touch on financial responsibility, obviously there’s still more work to be done… Mostly because you can’t teach a 19 or 21 year old everything he needs to know about life as a professional athlete (or a responsible adult, or even about basic personal finance) in 3 days. But more than that, THIS KEEPS HAPPENING!
Now certainly Allen Iverson’s financial situation is no more the fault of the NBA as any professional athlete’s “brokeness” is the fault of the league that gave them their fortune. Like anyone, Allen Iverson is fully accountable for his decision-making. However, given the unique position the NBA, NFL and other sports leagues have, there is more they can do to help their athletes learn how to make wise decisions with regard to money to avoid falling into the next generation of broke former superstars.
Not the league’s job, you say? Perhaps not. However, it IS in their best interest. Any professional sports league’s greatest asset is their athletes. Yes, the TV deals and brand equity may (now) be valued higher than any individual player or franchise, but let’s not forget there would be nothing to watch and nothing to brand without those guys (and girls!) putting their bodies on the line on the playing field. That being said, it is in any league’s best interest to protect their assets–even from themselves.
First, it’s the right thing to do. I’m a firm believer that, if you have the capacity to do help, you have the responsibility to help. You know, “to whom much is given, much is required.” The NBA, NFL, etc. have the resources (financial and otherwise) to convene the foremost experts on financial management, investment, and other topics to present a more comprehensive curriculum to teach athletes what they now need to know on a grander scale (due to the sheer amount of money they’re making). Further, this curriculum should certainly be presented in the Rookie Symposium but must be made available year-round to players in all stages of their careers to promote continued learning and educated decision-making beyond an athlete’s first year of play. Not interesting enough? How about getting the athletes (current and former) who have graduated with bachelor’s and master’s degrees in finance or economics to teach their teammates some of the do’s and don’ts of personal finance and investing? This would be less common in the NBA with players eligible for the draft only 1 year out of high school, but in the NFL where many athletes complete their college degrees before starting their pro football careers, this would be a great way to not only encourage continued education but deliver valuable information via trusted sources. They read the books in school and are living the life on the field–they truly get it.
Second, it makes business sense. There are no positive gains for a league’s brand equity when it faces law suits from former players over benefits or anything else. Moreover, when the league’s players do well on and off the field, it greatly improves the on-field product. How? Check out these stats from the American Psychological Association:
- 43% of employees say that home and family responsibilities interfere with job performance
- Conflict between work and family roles was found to lower the perceived quality of both work and family life which, in turn, influences organizational outcomes such as productivity, absenteeism and turnover.
- The existence of programs that facilitate work-life balance is related to organizational commitment and job satisfaction.
- Companies with higher growth in profitability have engagement levels that are more than 20% higher than those of their counterparts and provide more growth and development opportunities.
- In a 2009/2010 report, companies with the most effective health and productivity programs achieved 11% more revenue per employee, delivered 28% higher shareholder returns and had lower medical trends and fewer absences per employee.
So, putting this in NFL/NBA terms: an athlete that has personal development opportunities available through his team and/or league can leverage those opportunities to minimize negative impact from home and family stress on job performance; become more productive on the field; and yield greater profitability for the team. I think that makes a pretty good business case, don’t you?
Think about it: A player facing divorce has significant emotional duress to contend with that will likely affect his performance on the field. What’s more, there’s great cost to the whole process, from the lawyers’ fees to the ultimate price of settlement. An then the guy still has to figure out what to do with what money is left (if any). We’ve seen this situation far too often, in addition to those that are marked by extravagant spending and bad investments. What these guys need is guidance, and the teams and leagues they play for have the responsibility and even the selfish interest to do something about it.
New York Times writers Teresa Amabile and Steven Kramer put it this way: “Work should ennoble, not kill, the human spirit. Promoting workers’ well-being isn’t just ethical; it makes economic sense. Fostering positive inner lives sometimes requires…that managers address daily hassles and help with technical problems.”
Daily hassles and technical problems could, in this case, be described as everyday money decisions and the lack of knowledge to effectively deal with them. Teams and leagues have what it takes to solve the “technical problems” by providing players, current and former, with the tools they need for success. It’s just a matter of will at this point.