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In the midst of studying for my state and national real estate license exam yesterday, I took a coffee break and ended up in my recliner with the Apple TV remote in hand. It was mid-morning, and Mrs. Superhero was out of the house running errands, which provided a golden opportunity: I could watch a documentary without protest.
After scrolling through my List in Netflix, I settled on Broke, an ESPN Films 30 For 30 production, directed by Billy Corben. If you’re unfamiliar with the film, this brief summary should get you up to speed:
According to a 2009 Sports Illustrated article, 60 percent of former NBA players are broke within five years of retirement. By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress. Sucked into bad investments, stalked by freeloaders, saddled with medical problems, and naturally prone to showing off, many pro athletes get shocked by harsh economic realities after years of living the high life. Drawing surprisingly vulnerable confessions from retired stars like Keith McCants, Bernie Kosar and Andre Rison, as well as Marvin Miller, the former executive director of the MLB Players Association, this fascinating documentary digs into the psychology of men whose competitive nature can carry them to victory on the field and ruin off it.
Director Billy Corben (The U, Cocaine Cowboys, Limelight) paints a complex picture of the many forces that drain athletes’ bank accounts, placing some of the blame on the culture at large while still holding these giants accountable for their own hubris. A story of the dark side of success, “Broke,” is an allegory for the financial woes haunting economies and individuals all over the world.
After watching the film, I was left with two prevailing questions:
Why does this happen to professional athletes?
What can be done to stop this trend?
THE ROOT OF THE PROBLEM: SUCCESS
Throughout the much-esteemed film, Corben presents athlete after athlete who made millions of dollars only to lose it all (or come dangerously close) just a few years into retirement. From NFL stars Bernie Kosar and Leon Searcy to MLB legend Curt Schilling, the film presents a sobering view of what success can do to the unprepared, immature adult ego.
A vast majority of the athletes’ lives chronicled in the film follow an archetypical pattern: grow up in poverty, develop superior athletic skills, make it the pros, behave irresponsibly with money, retire/face career-ending injury, and go broke. While the average person has no sympathy for the rich athlete, I felt sympathy pains throughout my viewing of the film.
Each of us encounters our own unique hardships and triumphs in life; some people face more of the former than the latter, which often leads to devastating consequences in the future.
For example, consider the life of NBA legend Allen Iverson. The son of a teenage mother, “The Answer” grew up in Virginia and faced a near-constant stream of adversity. Shortly after his birth, his maternal grandmother passed away; the only fatherly-figure in his life was imprisoned and in-and-out of jail; and during his youth, eight of his best friends were murdered.
Iverson lived the ghetto life, and he had grand dreams of getting out and rescuing his family and his future. Sports were the only safe haven in the talented athlete’s life. An undersized athlete, Iverson starred on the football field and later on the basketball court.
He felt that basketball was his ticket out of poverty.
Yet, a 17-year-old Iverson nearly missed his chance entirely when he was arrested for his involvement in a mob incident at a local bowling alley. Iverson denied involvement in the incident, and he was fortunate to have been granted a release by the governor of Virginia after serving four months in prison.
Fate eventually worked in Iverson’s favor, as he was awarded an athletic scholarship to play basketball at Georgetown. Two years later, he was drafted by the NBA’s Philadelphia 76ers, who offered Iverson a $9.4 million rookie contract.
Despite his successes, including winning NBA Rookie of the Year, NBA scoring title, and All-NBA First Team honors in his first three seasons, Iverson struggled to keep his life in order. His image was tarred by his inconsistent practice attendance, selfish play on the basketball court, frequent thug-like appearance, and an arrest for marijuana and weapons charges after a traffic stop.
After being traded to the Denver Nuggets in 2006, Iverson’s career began a slow fizzle: he bounced around to other teams, including the Detroit Pistons and Memphis Grizzlies before returning to the 76ers. All in all, Iverson reportedly earned more than $200 million during his playing career; yet, he is broke today, by most accounts.
In my opinion, Iverson’s meteoric rise to riches and stardom and subsequent fall from the NBA throne can be attributed to (and blamed on) his sudden success. Iverson grew up without a fatherly figure or suitable substitute mentor in his life, and furthermore, he was conditioned to expect hardship, despite his dreams of making it out of poverty. When that success finally came, an immature Iverson was ill-prepared to handle it, nor did he possess the understanding to reflect upon the contributing factors to his success.
Psychotherapist Joyce Marter sums up Iverson’s problems in a single sentence: “We can only be prosperous in love, health, time and money if we are conscious, well and balanced.” At nearly every step in his professional life, Iverson lacked the consciousness to reflect and understand that his successes would not last forever.
THE ANSWER: MANAGING SUCCESS IS MORE DIFFICULT THAN DEALING WITH FAILURE
Despite our culture’s prevailing focus on failure and how one should deal with it, I believe that Iverson’s example, along with countless others, reveals that managing success is more difficult than dealing with failure. Ironically, it appears that learning to manage success is the answer to the financial woes of athletes like Iverson.
In my experience as a public school teacher, the notion that failure leads to success is one theme which I have sought to impart upon my students. However, I fear that I haven’t equipped my students to properly respond when success comes their way.
Furthermore, in my adult life, I have realized that I had not been prepared to handle success. Like Bernie Kosar, Leon Searcy, and Allen Iverson, I viewed success as the end game rather than another pillar which begged to be built upon with further successes. Time and time again, success has led me to let down my guard, become lazy and proud, and forget about the practices, actions, and habits which contributed to my success in the first place.
The point is, we should not take success for granted. Failure can be whatever you want it to be, including a “valuable learning experience”. Put both to work for you, confident in the knowledge that your failures are as valuable to your long-term success and happiness, as your successes can be.
Despite the cultural tendency to focus upon failure, managing success was once a greater focus. Winston Churchill famously said, “Success is not final, failure is not fatal: it is the courage to continue that counts.” Over time, however, the failure-success paradigm has come to look like this:
If we are truly striving to put both failure and success to work and learn from both, we need to change this paradigm. Success cannot continue to be the end of the road, so to speak. I believe the following is a much more realistic, applicable, and beneficial Failure-Success Paradigm:
This model (which, along with the previous graphic, I created using Microsoft Paint) illustrates that the pursuit of success is an on-going process. Furthermore, it captures the multidirectional, cyclical nature of both failure and success while illustrating that one can easily lead to the other.
Now that we have an appropriate paradigm for failure and success, we can take a more detailed look at the second question posed at the outset of this post (What can be done to stop this trend?).
I feel confident that we have established that one of the worst things a man can experience is success without periodic struggle. After all, it is in the midst of a battle, large or small, that we remember what it is we are fighting for in the first place.
In looking at the trend of professional athletes going broke, we can attribute the problem to several faults:
-The athletes exposed themselves to unnecessary debt by borrowing money.
-The athletes yielded to unrealistic expectations to fund the lifestyles of family and friends.
-The athletes allowed themselves to inflate their own lifestyles to unmaintainable levels.
-The athletes trusted the wrong people to manage their assets.
Instead, the athletes would have been wise to:
-Manage their income well to minimize debt (or avoid it completely).
-Support friends and family within reason, while maintaining that they do not owe anyone anything.
-Live a lifestyle well-below their means.
-Entrust themselves to become financially literature (i.e. understand their own investments and manage their own finances).
Additionally, I believe that each professional sports league and the related player unions/association ought to feel tremendous pressure and obligation to improve the state of its financial literacy programs offered to players. The NFL maintains its Financial Education Program (FEP) and the NBA requires its Rookie Transition Program, but it is evident that these programs are insufficient.
At the same time, it is incumbent upon each player to exercise individual responsibility and rationality in dealing with his finances.
RECOMMENDED APPLICATIONS FOR THE AVERAGE JOE
In the midst of watching Broke, it was surprisingly easy for me to sit back and point my finger at the mistakes of the profiled athletes. However, by the end of the documentary, I came to realize that most of us, myself included, have made similar mistakes, albeit with fewer zeros and commas, from time to time.
In order to avoid these mistakes, I believe the average person can follow a few simple steps:
1. Do not attempt to leverage debt as a method toward seeking financial independence. Unnecessary exposure to debt is always accompanied by exposure to risk and loss. Maintaining a level of assets to cover your debts is one thing, but eliminating debt entirely is wise, if you can do it. Mrs. Superhero and I recently paid off over $17,000 of student loan debt in 54 days for these exact reasons.
2. Be generous within reason. I recommend giving 10% of your income (gross or net is up to you) as a constant reminder that money is a tool intended to meet your basic needs, build for your future, and bless other people. If giving 10% seems outlandish, start with 1% and build your way up to 10%.
3. Cultivate a lifestyle which is in line with your values and priorities. For most people, the path to financial independence will involve some sacrifices. Develop a system to keep your spending in check. Balance is key.
4. Seek to develop greater financial literacy every day. For some, this step will be the most difficult and most humbling. Some people will need to develop a budget for the first time; if so, Personal Capital is a great, free place to start. Others will need to assemble a list of debts and formulate a plan for paying them off. Many, myself included, will need to continue to grow in their knowledge of investments. Others may simply decide to automate their investing through platforms like Betterment or pursue investments through eREITs via Fundrise.
Readers, which do you find more difficult to manage – failure or success? How do you approach both?