16 percent of retired NFL players go bankrupt: Study

How deferred income helped one NFL player
How deferred income helped one NFL player   

Success in the National Football League doesn't protect players from bankruptcy.

Nearly 16 percent of NFL players drafted between 1996 and 2003 declared bankruptcy within 12 years of retirement, according to a new working paper released by the National Bureau of Economic Research.

Researchers from the California Institute of Technology, George Washington University and the University of Washington, discovered that initial bankruptcy filings began very soon after players retired from the league and continued at a substantial rate through the first dozen years of retirement.

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"Moreover, bankruptcy rates are not affected by a player's total earnings or career length. Having played for a long time and been well-paid does not provide much protection against the risk of going bankrupt," researchers concluded. For example, Terrell Owens, a six-time pro bowler drafted in 1996, made an estimated $80 million during his 15-season NFL career and filed for bankruptcy in 2012.

Terrell Owens of the Cincinnati Bengals in 2010
Getty Images
Terrell Owens of the Cincinnati Bengals in 2010

Researchers examined NFL players' financial behavior to test the traditional life-cycle model of savings. That theory hypothesizes that people optimize their consumption over their entire lifetimes, which would indicate that NFL players would have set aside a large portion of their income for when they retired from the league. "Our findings are different from what the life-cycle model predicts," they wrote.

The National Football League Players Association implemented a financial wellness program six years ago to help players prepare for a lockout by league owners, which happened in 2011. It offers an online financial learning center, a phone line for money help and, since last year, a regular assessment of NFL players' financial well-being.

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In an earlier interview, Dana Hammonds, director of player affairs and development at the NFLPA, pointed to the unique challenges professional players face when trying to plan ahead financially. "I think the biggest issue for the athletes is understanding how long the money will last and not knowing when their careers will come to an end," said Hammonds.

The association did not respond to requests for comment on the report before deadline.