Why 80% of professional athletes end up broke: family, bad investments, romance, and drugs
Our mission is to guide athletes to more intelligent investments, to guarantee a prosperous retirement
Sergio Ramos, Messi, or Xavi Hernández are some athletes who were poorly advised and nearly lost their fortunes.
Sergio Ramos, and the eternal captain Christian Vieri (45), former Italian striker of Atlético de Madrid and Inter Milan, squandered their fortunes on women, poker and failed businesses. Iván Zamorano (52), one of the most remembered players of Real Madrid, admitted that his economic problems were due to bad investments.
And last week LOC revealed that bad investments were behind the economic woes of Sergio Ramos and Florentino Pérez.
A Sports Illustrated article estimates that 80% of sports stars end up financially ruined: they get rich very quickly and throughout their professional career they are involved in love scandals, lawsuits or business failures.
Major stars of basketball are familiar with making six-figure paychecks, but not so familiar with using them well. In 2017, the "PKF Attest Guide for Professional Athletes" was published in collaboration with the Association of Spanish Footballers (AFE). Alberto Rodríguez , co-author of the guide, has commented to us by phone: "After many years of observation, we saw that athletes stumbled on the same stones over and over again."
When the money appears, so do the snake-oil salesmen: promising fortunes through wineries or refined oil, and clothing lines with the signature and endorsement of the athlete. Real Madrid captain, Sergio Ramos (33), and Barça star Leo Messi (31) have both been involved in projects that never ended up taking off. A few weeks ago it was found that work in the restaurant that Messi planned to open has been paralyzed for months. Part of the building was not included in the planning of the project and they are now unable to make reforms, demolitions, or substitute any elements of the plan.
The Madrid captain, meanwhile, has enjoyed both good and bad investments. After his 2008 loss of three million euros with the bankruptcy of Lehman Brothers, Ramos has been relying on better advisors, LOC discovered, for his art collection, the 'Sergio Ramos Collection'. His artistic endeavors began five years ago, and since then Manolo Valdés, Katz and Banksy are some of the works in his collection.
Ignorance of economic issues is often the key to the disaster. "It is estimated that around 60% of elite athletes make some business investment during their professional career in which they lose 100% of what they invested," says the guide. In light of this figure, the PKF Attest guide recommends that the flow of money should always be moderate and tend toward savings. "Before joining the national team, one star player told us - with enough common sense - that he spent 6,000 euros a month and saved the rest."
As reported by PKF Attest, the majority of retired players who are "well on track" can thank investments in assets with good returns. Still, many of these acquisitions are "luxury houses, that only generate expenses once the player stops playing," says Rodríguez. However, what is recommended to retired players is the purchase of land for rental to distribution chains, hospitality businesses, retail, entertainment, art...
The beginnings of an elite footballer’s career are overwhelming, and having parents close can be the anchor that holds them to reality, or drags them down to ruin. "They have opinions on everything, sometimes with judgment and sometimes without. Parents try to do their best, but they don’t usually have the appropriate knowledge to help," says Rodríguez.
The most famous case in Spain was that of the Barça player Xavi Hernández (39) who suffered a setback in his company in 2014. Under poor advice from his father, the Catalan invested in unfortunate real estate options, and was badly impacted by the crisis. Raúl González (41), the former Real Madrid player, also felt the impact of a similar case.
Last year, the Commercial Court ordered the liquidation of Europe Scar Sport, the family-owned company of González, the former merengue, which carried a debt of 13.8 million euros. Raúl’s mother was appointed as sole administrator in 2013, and his brother-in-law, Carlos Redondo, was taking care of his business.
Advisors and representatives are figures of great value in the professional career of athletes. The retired goalkeeper of F.C Barcelona, Víctor Valdés (37), had "a single representative", his father. His previous agent, Gorka Arrinda, told the newspaper Marca: "The influence of his father is absolute."
LOVE DOESN’T PAY RENT
Affairs, weddings, and divorces have caused scandal in the world of sports, in every category. At the end of 2006 the American basketball player Michael Jordan (56) paid $168 million for his divorce agreement. Golfer Tiger Woods (43) also had to pay approximately $110 million for his divorce.
The stakes are even higher when there are children involved. According to Sports Illustrated, in the United States 80% of the players in the national football league (NFL) are broke within the first three years of retirement. Divorce is one of its main reasons. "The athletes end up with just half of what they have earned, thanks to alimony and child support."
The Argentinian Leo Messi has seen controversy over the fruitless business of his wife, Antonella Roccuzzo (31). A few years ago, together with Sofía Balbi (29), the wife of Luis Suárez (32), she opened a shoe store in the center of Barcelona. According to the newspaper Expansión, the company created by the international star and his wife, of which they are administrators, had losses of 150,000 euros.
Not all outcomes are so romantic. Flirting with illegal substances, gambling, or alcohol, became the ruin of some athletes. For Julio Alberto (60), former soccer player of Barça and Atlético de Madrid, drugs became his decline, and even today is what he is famous for. Now he shares a flat with his German shepherd and his books; he studies religions, gives speeches, and participates in several solidarity projects.
While Christian Vieri makes his belly viral on his Instagram account, Andreas Brehme (58), who scored the goal that gave Germany the victory in the 1990 World Cup, cleans toilets to avoid ruin and lose his home. Some waste their earnings, others invest it in the panacea and a select few succeed in their bet and are set for life.