Inside Slant: The truth (as we know it) on NFL player bankruptcy


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Over the weekend, nearly two dozen NFL players attended a league-sanctioned "boot camp" for franchising at the University of Michigan, one of many programs provided through NFL Player Engagement to help deal with high salaries responsibly and to prepare better for life after football.

We have all heard dramatic stories of players plummeting into financial ruin, either through bad investments, divorce, poor money management or simply lack of income in retirement. Many were dramatized in Broke, an ESPN 30 for 30 film that first aired in 2012. What has largely been missing from the discussion, however, is verifiable data on just how widespread the problem is -- or is not.

An important sliver of information is now available via a group of graduate students who were testing an economic theory known as the "life cycle hypothesis of consumption." If nothing else, it allows us to take a deep breath and understand the issue better relative to the general population.

The National Bureau of Economic Research released the findings last week in a paper that has not yet been peer-reviewed. Most notably: 1.9 percent of players drafted between 1996 and 2003 filed for bankruptcy within two years of retirement. After 12 years, 15.7 percent had filed. I'll provide some context for those numbers below.

Bankruptcy is not a fully inclusive view of financial ruin, of course. As in the rest of society, there is surely a percentage of players who don't file after going broke. Still, it is difficult to reconcile this data with the widely circulated number published in 2009 by Sports Illustrated: that 78 percent of NFL players were in bankruptcy or "financial stress" within two years of retirement because of joblessness or divorce.

To better understand what the latest research is telling us, I reached out to Kyle Carlson, a Ph.D. candidate at Caltech and the lead author of the paper.

"'Financial stress' could be almost anything," Carlson said. "You could say that just going from a salary of millions of dollars per year to making a salary of a normal person could cause stress. Simply making the career transition could cause it. ... As far as data goes, though, this was the best data we could find."

To come up with the numbers, Carlson and his partners cross-referenced public bankruptcy records with the 928 players drafted during an eight-year period starting in 1996. After establishing the bankruptcy rates at the two-year and 12-year marks, the paper predicts via regression analysis that about 40 percent of players will have declared bankruptcy within 25 years of retirement, a period that wouldn't begin before the year 2021.

While these findings fall significantly below the 78 percent figure cited in 2009, it's important to note they remain contextual outliers. The 1.9 and 15.7 percent figures roughly align with the general population, the paper suggests, but that fact is more significant than it might seem.

In short, NFL players are filing for bankruptcy at the same rate as the general population even though they earn more during the average career than college graduates earn in a lifetime. (Using data logged through Sportrac.com, the paper notes a median career earning of $3.2 million for NFL players. Per the U.S. census, the average college graduate will earn $2.1 million over a career.)

"We viewed it as a surprising finding from an economic perspective," Carlson said. "It might be subtle, but regular people are making a tiny fraction of what NFL players make, and they're all filing for bankruptcy at about the same rate. You wouldn't necessarily expect that to happen."

The NFL Players Association said it was aware of this research but not yet prepared to comment. Indeed, the information is mixed. It suggests a less cataclysmic scene than previously depicted, but one that is still more pronounced than it should be given the dollars involved. And so it goes.