Usually I leave the topic of athletes and finance to the experts. But given the flurry of articles that have been written about this subject lately, I felt compelled to write about it.

A look at the numbers
Recently, a few members of the sports industry have disputed the accuracy of the statistics contained in the well-known SI article How (and Why) Pro Athletes Go Broke by Pablo Torre:
  • By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.
  • Within five years of retirement, an estimated 60% of former NBA players are broke.
Jack Bechta, a well-respected NFL agent, commented on some potential problems with the SI statistics for NFL players in one of his insightful NationalFootballPost.com The Agent's Journal columns called A rookie’s most important business decision.

Seventy-five percent of NFL players are broke within 3-5 years of playing their last games. 

The seventy-five-percent statistic isn’t necessarily accurate. The NFL may argue that this number has never been verified and is grossly exaggerated, and there have even been surveys of retired players that put the number at closer to 40 percent.

Here’s the problem: First, when these phone surveys are conducted, they can only reach the most stable players who had the same phone numbers for years. Second, those who are broke are embarrassed by their situations and are usually difficult to locate. They also don’t always come clean or even participate in the surveys.
Bechta raises several good points here and I think it’s perfectly reasonable to call into question a survey’s sampling methods and the validity of its results. Many surveys are plagued by various shortcomings, poor response rates, and sampling errors. 
 
Without being privy to the methods that SI employed to conduct their survey research and arrive at these numbers, it’s hard to pinpoint the exact figures and really know just how pervasive these financial problems have become in professional sports.
 
Regardless of whether it’s 40% or closer to 75%, there are countless numbers of former athletes in financial ruin and there is undoubtedly a systemic problem that needs to be addressed. While it is essential to know exactly how deep-rooted and prevalent these issues actually are, debating about how bad the problem really is represents a red herring that can sometimes distract us from taking a hard look at the real issues.
 
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A faulty mentality
At the root of many of these financial issues is a self-imposed “lifestyle” that sucks many athletes up like a vacuum. The lifestyle I’m referring to is maintaining the appearance of being rich (notice how I didn’t say wealthy) and keeping up with the Joneses. This mentality lends itself to reckless spending—buying an extravagant house with all the bells and whistles, the latest sports cars, expensive jewelry, and all the other luxuries. Then there are the lavish vacations, expensive dinners, nights at the casinos, and fancy parties, not to mention the additional expenses racked up by bringing the entourage along for the ride. On top of wild spending habits, there are also the ill-advised investments, as well as mismanagement of funds and fraud perpetrated by business advisors. You get the point.
 
If you’re like current NBA player Eddy Curry, the bad habits and uncontrollable spending will catch up with you before your career ends. With millions of dollars on the way and several years left on his contract, it may not be too late for Curry to redeem himself and work his way back to financial security.  
 
Many of the players who are living the lifestyle never experience this type of rude awakening during their playing careers and they continue to feed the lifestyle with their lucrative contracts and signing bonuses. Everything seems all fine and dandy, but the lifestyle is unsustainable over the long-term, and it eventually catches up with them in their post-athletic careers.
 
Take Antoine Walker for example, even if it is an extreme case. He recently filed for bankruptcy protection only a few years out of retirement after making $110 million in the course of a 13-year career. 
 
Then there are others who unexpectedly have their careers cut short due to injury or being waived, and suddenly fall off a precipice into financial ruin. They no longer have an income stream flowing in or savings they can tap into, and the bills continue to pile up as a painful reminder of the lifestyle they used to lead.
 
The lack of financial discipline and the disaster that often results are symptoms of a lack of education and a mentality marred by self-entitlement, invincibility, instant gratification, and shortsightedness. I would prefer to defer to my friend E. Patrick Miller (sports psychologist for the Los Angeles Lakers) for a more in-depth breakdown of these psychological components.
 
There are also the socioeconomic factors. It is no secret that many professional athletes come from poor backgrounds and are not equipped to handle their newly acquired millionaire status.
 
These problematic psychological and socioeconomic factors can all be combated by a proper and timely education as long as an athlete is willing to learn and adopt the right mentality and habits, and has the necessary support framework in place.
 
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Is reversing this ugly trend possible?
There are many people who feel that trying to educate players is a hopeless task. I have heard it from both personal friends and colleagues in the sports industry. 
 
Burt Gross’ (another columnist from the NFP) harsh opinion of NFL players in Can the players endure a lockout? is representative of this sentiment:

Post-football career transition programs and financial workshops for players are useless. They don’t address the fact that the majority of players simply can’t comprehend what’s being said by a financial expert any more than the average player can comprehend the theory of relativity.  So what’s the point?  If you don’t believe me, watch an episode of “Basketball Wives” and see where and what a modern day athlete spends his money on. You're not going to change it, but at least you can control the amount and pace these morons [spend] so they have a steady income stream for life. Conducting seminars and financial classes is simply a PR move; it doesn’t do anything but make the NFLPA look good and wash its hands of any accountability.

Gross obviously doesn’t have much faith in athletes. He insults their intelligence as a whole and views financial workshops and post-football career transition programs as “useless” because the average player can’t comprehend what they are being taught. Further, he dismisses the NFLPA’s seminars and classes as simply a PR move that doesn’t do anything.   
 
One of my close friends, who is an NFLPA-certified advisor at a top agency and will go unnamed, has expressed similar opinions to me and firmly believes that persuading many of his clients to do the right thing is virtually impossible. He once told me about one of his clients who ran through over $400,000 in a week on a spending spree. There are numerous other anecdotes he has shared with me, and on many occasions, he has grown frustrated by the erratic behavior of some of his clients and their repeated and open disregard for his advice.
 
While some advisors are enablers and perpetuate the vicious cycle of athletes going broke, it would be unfair to even suggest advisors should shoulder all the blame. The players are equally at fault in many cases because they simply refuse to listen to the advice they are given. 
 
In response to NFL players making bad financial decisions, Jack Bechta said the following in another one of his articles entitled Fixing the dark issues of football:

It’s simple! More and more education needs to come from everybody: agents, the financial community, the NFL, NFLPA, and individual teams. The fact is that we have to stop a player from being his own worst enemies. For me, it’s a constant conversation with all my clients that lasts throughout their careers and beyond. The education process should never end. I also encourage older retired players to keep preaching to the younger ones about their own mistakes.

Bechta is absolutely right. The only way to combat a player from being his own worst enemy is to educate him from all angles.
 
To me, it comes down to a system that lacks the proper institutional support mechanisms and educational tools to guide professional athletes in the right direction and keep them from squandering their newfound riches.
 
To break the status quo and reverse the ugly trends we have grown so accustomed to reading about in the media, the players need mandatory ongoing education. Outside of the agent and financial planner, the main vehicle by which this can be accomplished is through the player development programs set up by the pro leagues, player associations, and individual teams.
 
The NFL and NFLPA have done a fantastic job in implementing a multifaceted player development program. While the NFL Rookie Symposium garners most of the attention (be sure to check out former NFL star Cris Carter's inspiring speech from this year's symposium), the NFL player development program also includes an introductory meeting at the NFL Combine, a rookie orientation program that takes place about 3 times a year within each club, and a rookie conduct management program that focuses on impulse control, stress management, and decision making. The program also goes on the road and visits about 25 to 35 colleges a year, where the NFL representatives talk to collegiate players about responsibilities that come along with the privilege of working for the NFL.
 
Rookie symposiums and orientations are an excellent start, but education needs to be delivered over a sustained period of time to be effective. The art of being a pro athlete is a discipline in itself that requires intense preparation, training, and execution at a level on par with actually playing the game. 
 
Efforts need to be made to educate elite athletes at the amateur ranks, when they arrive at the professional level and throughout their careers, and after they make the transition to their post-athletic careers.
 
Educating athletes to make the best choices is a collective effort that requires the participation of all the main stakeholders, especially the athletes themselves. You can have the most incredible educational system set up, but without the targeted group’s buy-in, the whole thing is obviously doomed. 
 
The best chance of reversing this ugly trend is to first educate athletes why change is needed, then empower them with the knowledge needed to effect the desired change, and finally guide them and give them the proper resources to reinforce the newly-learned behaviors so they can be sustained for the long haul.