Troy Roberts The Financial Rise, and Ruin, of the nfl athlete

The Financial Rise, and Ruin, of the NFL Athlete

Michael Vick is one of the most well-known athletes of our generation. Some will remember him for his abilities on the football field. Vick was known for shredding defenses by extending plays, and wearing down defenses. Others will know him for the role that he played in a dog fighting ring. Vick was convicted of Felony Dog abuse, and served 1 year in Federal prison for the role that he played in this crime. However, I want to discuss the story of Michael Vick from a financial standpoint. One that tells the story that so many other young men run into as professional athletes.

In the 2001 NFL draft, the Atlanta Falcons had their eyes set on the standout product from Virginia Tech University. Michael Vick was an outstanding athlete, and pro scouts couldn’t wait to get their hands on a player that could completely change the course of a game. After drafting Vick, the two sides agreed to a $62 million dollar contract, plus a $15 Million dollar signing bonus over six years. In 2004, the Atlanta Falcons signed Michael Vick to a 10 year, $130 Million dollar contract. This deal now made Vick the highest paid player in the National Football League. But that wasn’t the end of Vick’s good fortune. After playing his rookie season, Michael Vick was approached by Coca Cola, Hasbro, Nike, and Kraft, for endorsement deals. Vick’s jersey sales continued to rise. By 2005 he was consistently the second highest selling jersey in the NFL. By 2005, Forbes Magazine ranked Vick the 4^th Highest paid Athlete in the world, Raking in $37.5 million dollars per year.

At this stage in his career Michael was one of the nation’s favorite players to watch. Known for his flashy play, bright smile, and friendly demeanor, Michael quickly rose to the top of the NFL. In July 2007, however, Vick was brought to court on charges that he had participated in, as well as run a dogfighting ring. In August of 2007 the NFL suspended Vick indefinitely for his role in this crime, and in December of 2007, he was found guilty, and admitted to US Penitentiary in Leavenworth, Kansas. Eventually Vick pled guilty, and was sentenced to 1 year in a federal prison. Due to this behavior, Michael lost his endorsement deals. Companies no longer wanted to have Michael’s face on their product. His spending habits however, did not change. After serving just 7 months in federal prison, Vick filed for Chapter 11 Bankruptcy, listing debts from $10-$50 million dollars.

Michael Vick, the NFL’s highest paid player was broke, within 7 months of being out of the NFL. After taking a look at the amounts of money he gave to his family, you start to understand why. In Vick’s case, he bought his little brother, Marcus, a new car every year on his birthday. For his mother, Brenda, he bought her a 7,800 square foot mansion. In a September 2008, in a bankruptcy hearing, Vick stated that in that month he had paid $31,293.87 on various mortgages, cars, clothes, private schools, and other expenses for a circle of 30 friends. At the time of his arrest Vick confirmed that he was paying for 123 different cell phone bills for colleagues, friends, and family. Unfortunately for Vick, his bad spending habits didn’t end at simply paying bills for friends and family. Vick gave his friend Charlie Reamon a job as his “Financial Handler”, and personal assistant. Another friend Adam Harris was hired by Vick to be his personal representative with his then sponsor, Nike.

Vick had more problems than just his family, and friends waiting to accept his money any way that they could. Vick was also plagued with a series of bad investments. In 2006, Vick invested $40,000 into a janitorial company run by one of his friends, that was quickly left destitute, losing Vick his whole investment. This was not the only losses that he experienced on the investment front. Vick lost $150,000 on an airport medical service company, as well as another $827,000 that he lost investing in two wine bars that eventually went under. He lost another 1.4 million dollars on an investment into a car rental business. The list goes on and on. Vick lost millions every year on one bad investment after another.

Vick is not the only Athlete to take this path. Studies show that 78% of NFL players are broke within 5 years of retirement, while 60% of NBA players are broke after 5 years of retirement as well. The majority of these players are drafted between the ages of 18-22. Most of these athletes go from humble beginnings to having millions of dollars overnight. Not to mention that only half of the players in the NFL have college degrees, while 38% of NBA players have degrees. If you combine the lack of Financial Education, with the immaturity of these young athletes, it seems like a recipe for disaster. Investors target these young players, luring them in with promises of doubling their wealth, and the players invest and lose millions into bad businesses.