Why Do NBA Players Go Broke? (5 Reasons)

Despite earning millions, a lot of NBA players go broke after playing. One retired NBA player (LaRue Martin) even worked for UPS as a delivery driver.

So, how come NBA players go bankrupt?

A lot of NBA players go broke for multiple reasons, such as bad financial decisions, short playing time due to injuries, and lack of other sources of income. Most reasons can be attributed to a lack of financial management.

How exactly are they losing millions? Who were the players with the most earnings but became poor after playing? In this post, we find out.   

Why do NBA Players Go Broke (5 Reasons)

NBA players are some of best-paid athletes in the world. In fact, they’re the highest-paid athletes in terms of average salary at $7.5 million.

But why are so many of them going broke if that’s the case? Here are the most common reasons:

1. Overspending

The most common culprit among players who go broke is that they overspend. They mostly come from a poor family, so they tend to splurge when they get a lot of money instantly.

They will buy expensive mansions, sports cars, luxurious clothes, jewelry and eat out at lavish restaurants.

This expensive lifestyle has accumulated a lot over the years. There’s even a report that average NBA players spend $42,500 per month. Annually, that’s $510,000, which is a massive chunk of their salary even if they’re millionaires.

Compare that with the average American household spending of $5,111/month. You can earn millions, but you can also spend it all just as quickly.  

2. Injuries and bad contracts

Injuries are a regular occurrence in the NBA. But for some players, they get injured so bad that they can’t physically play anymore.

A prime example of this is former number one pick Greg Oden who played just 6 seasons in the league. Although he amassed a total of $24 million in career earnings, he now works for Ohio State as part of the basketball team coaching staff.

Aside from injuries, bad contracts can also be attributed to players going broke. Some may stay as a benchwarmer combined with a short career, leaving them with virtually nothing.  

3. They give too much

When NBA players get their first paychecks worth millions, they’ll usually give a lot back to their family and friends.

Such is the case with Allen Iverson who reportedly spent $10,000 each on clothes, restaurants and groceries monthly. His crew would always be with him, so you can imagine they’re treated well. Too well that sometimes his cash would go missing.

In an attempt to bless their family and friends, players would instead be bitten.  

4. Child supports, divorces, frauds

Unsurprisingly, many NBA players go through child support, divorces, and fraud throughout their careers.

Firstly, they go through divorces and would have to pay for costly settlements. But if they had children, they’re obligated to pay for child support, which could even balloon up to $2.4 million annually.

NBA players who aren’t smart enough to have finance guys around them aren’t exactly safe from fraud, either. They will spend it on a quick-rich investment scheme or a new business venture.

Ultimately, all these bad decisions are the main reasons they go broke.

5. No other source of income

Lastly, only a few NBA players are business minded. Most of them will rely on their only source of income, which is basketball related.

So, when they’re out of the league, naturally, they’ll blow through their savings quickly. Once that’s over, they’ll sell any property they have left.

They fail to establish a passive income source to supplement their active income. On the other hand, you’ll see the wealthiest NBA players have multiple businesses and investments.

How Many NBA Players Become Poor

We know that many NBA players become poor after retirement, but what is the exact figure?

According to a statistic, 60% of NBA players go broke within 5 years after leaving the league. This means that most NBA players who retire are going broke.

It doesn’t help that many don’t even have savings, businesses, and investments to fall back into. So, while some get some pensions, this isn’t enough to sustain them.

Thus, most of them will work different jobs closely related to basketball. They can work as a coach or as part of the staff.

NBA Players Who Went Broke

The NBA has been around for decades now, starting from 1946. As such, there have been many players who went bankrupt after playing in the league.

Here’s a list of NBA players who went broke despite earning millions:

As we can see, most of these players played decades ago. Thankfully, modern NBA players are getting smart with their money.

Michael Jordan and LeBron James are the best players in the league and the most influential financial figures.

They both are billionaires with multiple businesses, investments, and endorsements.

Retired NBA Players Who Became Richer

If many players went broke after playing, on the other end of the spectrum are the few players who became even richer.

Here’s the list of the richest retired NBA players and their net worth:

If you noticed, we didn’t include current NBA players on this list. Among the current NBA players, LeBron James leads the pack with a net worth of $1 billion.

Final Thoughts

NBA players are the best-paid athletes in the world. But many of them go broke after playing due to mismanagement of funds and uncontrollable factors.

While broke players are at the extreme, there are still many who remain millionaires after playing.   

Read these next:

• Are NBA Players Overpaid? (Shocking Truth)
• Why Do NBA Players Get Paid More Than WNBA? (The TRUTH)
• Why Do NBA Players Get Fined For Celebrating?