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Financial Struggles Common Among Professional Athletes
Author: Scarinci Hollenbeck, LLC
Date: January 29, 2014
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Professional athletes are some of the youngest millionaires in the country, and many don’t know what to do with all the money from contracts.
For this reason, some put the trust of their finances in a financial adviser, which can lead to them being taken advantage of, or worse, defrauded.
One of the most popular cases in recent memory is former Heisman Trophy winner, Vince Young, who recently filed for bankruptcy. Part of the reason Young was forced to do this is the result of lawsuits stemming from a $1.8 million loan obtained from Pro Player Funding during the 2011 NFL lockout.
Young has been unable to pay back that money, and – including interest – he now owes $2.5 million. However, Young claims that his former financial adviser defrauded and conspired with Pro Player Funding to obtain the loan, which ne never received.
Important Pre-requisites of a Financial Adviser
This situation, and many others, bring up the discussion as to how athletes can be protected. The NFL Player’s Association recently issued strong guidelines for financial advisers that could help mitigate some of the problem.
The following are some of the requirements:
- A bachelor’s degree from an accredited university
- Minimum of eight years of licensed experience
- Minimum of $4 million of insurance coverage, through professional liability, errors & omission or a fidelity bond
- No civil, criminal or regulatory history related to fraud
- No ending customer complaints
- Must not maintain custody of player funds unless deemed a qualified custodian
Simply instituting these guidelines is a good first step to protect athletes, but there could be more moves in the future. For example, it will be interesting to see if future collective bargaining agreements come with requirements for professional sports leagues to provide financial literacy courses.
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