Ninety-nine million dollars – and according to Deadspin.com – running back Adrian Peterson is as broke as a joke after having made nearly $100 million over his career. The No. 7 draft pick in 2007 and almost-certain future Hall of Famer running back went on to play for the Minnesota Vikings for 10 seasons, then bounced around to the New Orleans Saints, the Arizona Cardinals, and then to the Washington Redskins. He’s been to seven Pro Bowls and made First-Team All-Pro four times. By all accounts, it’s a terrific career, however with a major knee injury and a subsequent shoulder injury, legal troubles, financial troubles, and as many as seven children, the money can go pretty fast.
But $99 million?
The Perils of Peterson
How did Adrian Peterson get in the hole and burn through his earnings? It’s hard to say, but his attorney spoke to CNBC and alleged that Peterson is the victim of a massive fraud. Saying that he trusted the wrong people and was taken advantage of by people he trusted. It’s not a new thing, unfortunately. Athletes at every stage in their careers have to trust those around them, and sometimes that trust is misplaced whether with family, friends, colleagues, or professionals. As it stands, Peterson is facing a suit in Pennsylvania for $5.2 million in debt with another $1.4 million in interest and legal fees, and has a judgement for $2.45 million in Maryland. That’s about $9 million, but where did the rest of it go?
We’ve Been Here Before
Sports figures have worked their tails off to get to the pros. Some enter professional leagues right out of high school, bypassing the college sports machine, but those are few and far between. Many go to college on a scholarship, aiming for the big schools that feed the pro leagues. In their college years, they play for the school, gaining visibility and the attention of league scouts. It’s a long shot when hustling to make it to the pros, and there are numerous controversies surrounding the NCAA machine and the way it treats hopeful and hustling young players.
Among the biggest controversies is the quality of education received by a largely young and black population, with scandals including the 2015 academic scandal at UNC. The NCAA holds that it has no responsibility to ensure the quality of education given to athletes. Likewise, the chance of injury while playing for a college team can also mean losing a scholarship – no play, no school. It’s a dirty secret that most college recruiters won’t talk about. Finally, the NCAA is fighting to prevent young players from receiving pay, compensation, endorsements, or controlling their own likeness with merchandising opportunities – all while raking in billions along with the Division l schools.
Even the NCAA admits that going to the professional or Olympic level of sports is a long shot. Only 1.6 percent of college football players make it to any professional team. Out of over 73,000 college football payers, just 16,000 or so will be draft-eligible. When you get to the draft, much less making a high draft number, it can feel as if you’re unstoppable. You’re there! You made it! You are set for life, man!
Not So Fast
So, that big check? Get ready to see it chomped. You’re going to need staff to manage this thing.
- Sports agent. Takes between 4 and 10 percent of an athletes playing contract. In the NFL, agents may not charge more than 3 percent. Deals with contracts in sports, entertainment, endorsements, and so on. Most agents have 100 or more clients.
- Sports manager. Manages the entire business side of a pro player’s career. Charges anywhere from 10 to 15 percent.
That’s a minimum of 13 percent out the door before you even get to taxes, and most players fall into the top tax bracket of 35 to 37 percent.
Feeling okay? You look a little woozy. Yes, that’s almost 50 percent of that big payday out the door without counting state taxes where they have them. But don’t worry – your attorney and accountant will make sure that you’re probably not going to pay that much.
How much is an attorney and an accountant?
You know, let’s look at the next subheading.
“Everything Tastes Better When Rookies Pay for It.”
In 2013, a brutal scandal landed on the NFL. The Miami Dolphins, and presumably other teams, faced a racially tinged bullying case and also financial abuse of rookies by veteran teammates that allegedly drove some into bankruptcy. Details of the case included $30,000 dinner bills, rookies paying for veteran teammates’ travel, Rolex watches and using rookies as personal ATMs. It was a scandal of the moment, with sources telling the Miami Herald that the practice at the time was league-wide, withboth team management and the players’ union knowing all about it – they simply didn’t care enough to stop the abuse despite being in violation of the league’s code of conduct.
Is this kind of hazing still going on?
I have no idea, but it’s hard to change a culture. If it is ongoing, rookies are keeping quiet.
Seventy-eight percent of NFL players file for bankruptcy within five years of retirement. Danny Schayes, a former NBA player with a nearly 20 year playing career, has famously said, “Guys go broke because they surround themselves with people who help them go broke.” Football players with career-ending injuries also need to consider the possibility of CTE and affiliated disorders, as well as how those other injuries will age in, and the type of treatment needed.
Young athletes need financial advice from someone trustworthy and professional as well as financial literacy education. More than that, a fiduciary financial advisorshould be a part of every young player’s support system, able to act apart from agents, managers, friends and family. More than being independent, a fiduciary is held to the highest standards of conduct and care, acting with loyalty and good faith, fully disclosing facts about investments and risks, not misleading clients or engaging in conflicts of interest, or misusing client assets.
The Help You Need from a Firm You can Trust
We’re different in all the good ways. We have a zero-down bankruptcy, are open for walk-in consultations, and your first consultation is free. We care about our clients and their wellbeing, not just our billing. Our Fort Lauderdale and West Palm Beach offices are open six days a week and by appointment on Sunday. We want to help you with debt, bankruptcy, reading through contracts, anything that can affect your financial and future wellbeing. Call us.
About Chad Van Horn
Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn