With the right management, financial advisor and great networking, athletes can make bank. However, athletic careers can be extremely short-lived: the average NFL player has about 3.3 years, NBA is around five year, MLB players have about 5.6 years but one in five position players will only have a single-year career. Even if these professional athletes had a good gig where they were signed for millions and got a few good endorsements, most of them go broke once they get out the game (78% of NFL players are bankrupt within two years of retiring and 60% of NBA players have lost it all five years out).
The reason? Sometimes it is bad investments and friends asking for funding for a (bad) business idea, similar to when a host of MLB players discovered their investments had led them into an $8 billion fraud debacle, allegedly perpetrated by Texas financier Robert Allen Stanford. Some of this is also from very poor money management, like Mike Tyson, who blew through a $300 million fortune with his extravagant spending. Coming from a poor, socioeconomic background is often the reason for going broke. Being able afford to have food, clothes and shelter and doesn’t break the bank is an indescribable feeling to those who have not experienced it. Not having to choose between the three is a luxury for many.
There are countless stories of professional athletes going bankrupt after retirement and many who grew up in poverty but escaped do not wish to revisit that life, so perhaps that is why so many athletes are investing into startup companies.
For instance, Kevin Durant, Stephen Curry and Andre Iguodala, three Golden State Warrior basketball players, have taken advantage of living near Silicon Valley and invested in tech stocks such as Acorns, Postmates, Facebook, Tesla and Coach-Up (to name a quite a few.) According to CNBC, Curry even partnered with a long-time friend to start Slyce, a platform that is an intermediary between the athletes and fans, helping the former sift through inbound traffic and also allowing them to push out relevant content. It essentially helps athletes with their online branding as well as offers a more intimate connection between athlete and fans.
Serena Williams has invested in Daily Harvest, a food delivery startup that specializes in providing healthy, frozen food. The company is a female-led business that delivers single-serving, organic smoothies, soups, overnight oats and chia puddings made with farm-frozen ingredients.
Many people face trouble when they dive in and invest more than they can lose. Remember that big money decisions shouldn’t be rushed, especially without consulting with a legitimate professional. Keep in mind that it’s fine to invest in startups but like with everything else, but much like Warren Buffet, do the research first.