"Financial literacy" is a popular term being thrown around these days. It basically refers to having some awareness of how money works, especially with regard to personal finance. While the phrase itself is decades old, plenty of people are still not getting the memo. There are some very simple ideas that sum up financial literacy. They include not spending more than one earns, not accumulating unreasonable debt for frivolous things and making sure to save money for emergency and invest money for the future. All simple concepts, right? Well, it remains baffling how many people refuse to catch on to these lessons.
It is no surprise that normal people go broke due to financial ignorance. We all know of someone who got a high-paying job, tried to vastly upgrade his or her lifestyle, and promptly got fired; losing everything and having to move back in with mom. It is a surprise however, that athletes continue to go broke. Actually, it should be a surprise, but it no longer is. A two day seminar on investing and an afternoon of discussion on the topic of spending and debt would probably prevent some of these people from making bad decisions with money, but who wants to sit through that?
While not all of these athletes have actually gone full-on broke, all have made poor financial decisions that have set them back. Here are fifteen formerly prominent athletes who and their examples of financial ignorance.
15 Johnny Unitas - Bad Business Investment
Widely considered to be one of the greatest quarterbacks in the history of the game, and a pioneer in the development of the passing-centered offense, Johnny Unitas had an incredible career. His time in the league spanned three teams, the Pittsburgh Steelers, Baltimore Colts and finally a single year with the San Diego Chargers. It was with the Colts that he was selected to the Pro Bowl ten times, with seven All-Pro honors and three NFL Championships.
Unfortunately, he and his wife filed filed for bankruptcy back in 1991. They filed for Chapter 11 bankruptcy so that their business could continue to operate, despite the bankruptcy claim. Unitas and several business partners had taken out loans totaling in the millions back in the 1980's for a circuit-board manufacturing business which never achieved the success they had hoped/intended. He guaranteed the loans personally, after the city of Baltimore and State of Maryland came looking for their money.
14 Diego Maradona - Taxes
The first of a couple of athletes who "forgot" to pay their taxes, Diego Maradona, one of Argentina's greatest soccer stars, found out back in 2009 that he owed nearly 40 million Euro in back taxes.
He didn't get the memo that the government always gets its cut. Otherwise, large men with weapons may break down your door and kidnap you and your family. It's just the world we live in. He played for Napoli in the mid-late 1980s, but according to Italian authorities, he never paid taxes on any of the money he owed during that period. Furthermore, the majority of money owed is in the form of interest. This goes to show, if you're going to try to give a country's corrupt pigs the run-around, have a plan rather than just not paying.
13 Sheryl Swoopes - Poor Investments
She can't dunk, but she has excellent fundamentals. Sheryl Swoopes is considered one of the greatest players in the history of the WNBA, and the first player signed to the league. If you got the Futurama reference, you should be proud and you can be our friend.
All joking aside, while many WNBA athletes make next to nothing, the sponsorship revenue was there for Swwopes. At the height of her popularity she was worth about $50 million. Unfortunately, she had the financial sense of a meth-addicted hillbilly teenager and managed to not only lose all of that, but owe about $700,000 when she finally declared bankruptcy. Impressively, showing humility seldom seen from professional athletes, she admitted that she was the only person to blame for her financial woes.
12 Lawrence Taylor - Drugs and Spending
If you've seen Oliver Stone's football film Any Given Sunday then you already have some good background knowledge for this story. Lawrence Taylor (who played Shark, the inside linebacker in the film), essentially played himself. The "play-through-the-pain" attitude, the drug use, and the spending habits, were all realities of his later career and life after football.
The long answer to the question "why did Lawrence Taylor go bankrupt?" would involve a tragic story about spending, the fall from the limelight and a terrible addiction to drugs.
11 Lenny Dykstra - Criminal Activity
It doesn't matter if you're an All-Star, Silver Slugger award recipient, and/or a World Series winner; you run a business as poorly and illegally as Lenny Dykstra, you will not last long. The Mets/Phillies outfielder started some businesses after his career had ended. He started a jet charter company and a magazine. He talked a big game and walked a big game, but ultimately, his businesses and their supposed prosperity ended up being a complete house of cards.
He filed for bankruptcy in 2008 after having claimed a net worth of around $50 million earlier that year. He also claimed to have had nearly no assets, but this was determined to be a lie. He was charged with quite a few things, but ultimately pleaded guilty to money laundering, fraud and concealing assets, which landed him in jail for just over half a year.
10 Derrick Coleman - Puked His Money into a Pit Called Detroit (Sorry, Detroit)
While I have little sympathy for those who spend millions on frivolous garbage while under the influence or those who just break laws and try to cover it up, Derrick Coleman spent a great deal of money trying to rejuvenate certain parts of Detroit. He grew up in the town and, as such, had an emotional attachment to seeing it flourish. A few years ago he filed for Chapter 7 bankruptcy after having taken loans from numerous sources throughout the city. His heart was in the right place, as he was trying to breathe life into a city that had been treated like Charlie Sheen's liver, but a bad investment is a bad investment and in the world of money, good intentions don't count.
9 Curt Schilling - Video Games
The former MLB pitcher started a video game company; 38 Studios, with a massive loan from the state of Rhode Island. The company accepted the loan with the promise of starting a large company that could bring jobs to the state and be maintained for years to come. They produced their first game, which sold over a million copies. It was called Kingdoms of Amalur: Reckoning. A million wasn't a bad number for a new company. Their second release however, required significantly more funding, and in 2012, state officials realized that the company basically had almost no money left. Schilling filed for Chapter 7 bankruptcy in that year. Much like Coleman, it was a good try and Schilling and his team were trying to build a good product, but it wasn't meant to be.
8 Evander Holyfield - Gambling and Kids
One of boxing's greats, Evander Holyfield had an estimated net worth of up around 150 million pounds while competing. He is now known for his charitable side and regularly feeds the homeless back in Manchester, England. For a few years there however, he was in financially dire straights.
He managed to lose nearly all of his money after his boxing career had ended. His gambling was an issue and he was known to toss money away like it was cool, but really it was the multiple divorces and having kids in the double digits with those multiple women. Each divorce involved lawyers and each kid required monthly cheques, and none of his women had anything but expensive tastes. His house was a problem too. It was worth around $14 million, but required nearly $1 million worth of upkeep every year, not to mention a monthly electricity bill around $20,000. These things eventually add up and that led to a serious change in the direction of his life.
7 Scottie Pippen - Poor Planning
While he may be one of the finest defenders the NBA has ever seen, Scottie Pippen has had nothing but bad luck when it has come to money. At this point he has more accolades to his name than dollars. Okay, that's not true but you get the point. He's known as one of the cheapest of the major basketball stars and earned over $120 million throughout his career (not including endorsements), but when it came to maintaining his wealth, there has been no success. Through generally poor planning along with investment and business ideas that did not bear fruit, it is now estimated that Pippen is worth around $50 million. Still not bad. After several media outlets reported that he was broke back in 2010, he launched a defamation lawsuit that was thrown out in 2014.
6 Charles Barkley - Gambling
Charles Barkley has achieved success as a commentator and analyst after the end of his impressive career. His vice, however, is gambling. By his own admission, he has lost over $30 million over the years and on occasion, $1 million at a time. The crazy part is that he doesn't regret it. He has indicated that while he has lost a ton of money, he still considers gambling to be a great time and has no desire to quit. He did take a two-year break from gambling but indicated that he does not have a problem, and says that even if he loses $200,000, he can stop and still have a good time.
5 Michael Vick - Dog Fighting Case
From one of the most exciting players in the National Football League to a pariah even years after doing prison time, Michael Vick's career, and the hatred he still endures even today, shows exactly how much people love dogs. Michael Vick grew up in a culture that didn't consider dog fighting to be all that heinous and he and his friends continued to enjoy the terrible act into their adult lives. They paid the price and Vick tried to downplay his own involvement with little success.
In terms of the price however, he spent tens of millions for his legal defense and had to file for bankruptcy protection back in 2008. He finished paying off all of his debts back in 2014.
4 Kenny Anderson - Bad Investments
A fourteen year veteran of the NBA, Kenny Anderson has pretty much lost all of the $200 million he made (salary and endorsements, according to his ex-wife) throughout his career. He worked as a basketball coach for a Jewish private high school in Florida for a while but lost his job after a DUI. So, sadly, the bad decisions have continued.
In layman's terms, Anderson invested his money poorly and spent far too much, most of it on luxury cars. Recently, he has been chosen as a member of Dennis Rodman's team of athletes who are trying to improve relations with North Korea through basketball.
3 John Elway - Ponzi Scheme
Two time Super Bowl winner and current GM of the Denver Broncos, John Elway is our number three. He is known to have entrepreneurial interests outside of football and owns both restaurants and car dealerships. He got taken for a ride about ten years ago by a scammer named Sean Mueller. Mueller is now serving a lengthy sentence for a few counts of racketeering, fraud and theft. You know that saying "if it sounds too good to be true, it might be?" Well, this is exactly what that phrase is talking about.
Mueller bragged in the early 2000s that his day trading techniques were so profitable that he could invest customer's money and offer 12-25% annual returns with little to no risk. The problem was, he was mostly full of it. He suffered serious losses in 2008 and 2009, and never told his investors. Elway was the biggest investor in the scheme and had trusted $15 million with Mueller
2 Tiger Woods - Got Caught Cheating
There are tons of lessons that can be learned from Tiger Woods' scandal. He should have kept his cell phone better hidden or had several, one of which sat in a safe that he kept within a bigger safe that he kept in a dark corner of a room his wife didn't know about. He also should have not cheated in the first place and if he had a wandering eye before they were married, he probably shouldn't have gotten hitched at all. But I digress.
The divorce cost him an estimated $100 million and significantly more money in endorsements, as his reputation took a big hit. Of course, Tiger is nowhere near broke, nor was he ever, but his divorce is one of the biggest of all time in terms of financial loss. Michael Jordan's 2007 divorce still stands as the most costly for an athlete as his ex-wife Juanita ended up getting over $160 million, but that divorce was more of a "mutual dislike" situation in which neither made any huge mistakes. I could have listed Jordan here for not having a prenuptial agreement but I mentioned him here, so that's like a two-in-one deal. If you're mad, let me know in the comments section.
1 Mike Tyson - Lifestyle/Spending
In case you haven't noticed, the worst mistake a person can make with regard to their finances is spending too much. If it's old news to you that a person should not spend more than they have coming in, congratulations, you have a shred of financial intelligence and your parents should be proud.
At one point, Iron Mike had over $400 million to his name. In the mid 2000s however, he was in tens of millions of dollars in debt. An entourage consisting of hundreds of people, along with several millions of dollars worth of cars, clothing, jewelry, tigers and a trainer for the tigers comprise a short list of thinks at which he shoveled money. His drug habit didn't help the situation of course, but whether high or not, Tyson was a train wreck for a few years, belching money at stupid purchase after stupid purchase. He stands as a shining example of why parents need to teach their children about money as early as possible.