Advice for NFL Retirees

An NFL rookie made a minimum of $285,000 a year as of 2007, and while eight-figure deals make headlines, most players wind up with a lot less. In short, a stint in the pros doesn't mean you're set for life.

Aaron Parthemer, 36, is a certified financial planner with Citi Smith Barney who has been working with athletes since 2000, and his current roster includes 27 players from 17 NFL teams. He offers a look at the less-than-glamorous future for the majority of the league's players and advice for retiring from a career that usually lasts only about 3½ seasons. Excerpts:

What does an average client look like when he retires from the NFL?
It's fair to say that the average NFL player coming into retirement is really not in great financial shape. A lot of times that has to do with multiple factors, but I'd say the most important is the enhanced spending in relation to incomes. It's easy to get into a lavish lifestyle when you're in the NFL. Even though it seems very glamorous, the average player isn't making a $60 million contract. It's just not enough assets to sustain them for their entire life. The average NFL career is around three years, and assuming you're at the minimum income levels, your gross income is barely $1 million, let alone what your net would be after taxes and expenses.

When these guys come to you, what's their level of financial understanding?
It varies. I can tell you there are some players that come in and have a grasp of the limited opportunity that exists and the need for a lower-key lifestyle to have savings. But there are several players I've come across over the years that really are on quite the opposite spectrum. In some cases they're on the path to complete financial destruction. Whether it's lack of planning or not knowing how to spend, when those players come in it's a big challenge to get them turned around.

What do you tell them?
I like to point out to players that they need to understand they're spending a 10th or less of their life earning money to last them for two thirds of their life. It's exactly the opposite for the average person. The rules I use to afford a mortgage or a car shouldn't be applied to an NFL player because they're in a completely different scenario. There aren't many players who couldn't get a loan under Fannie Mae guidelines. The problem is those guidelines are written for 30-year mortgages, not people who'll have a career of three to 10 years. One of our rules is to not let them make any major investment decisions during the first six months of their contract. Then once we've seen their spending habits—how much they spend on jewelry, cars, or whatever gets them excited—it allows us to determine what the appropriate strategy is to get that player on track to create a future for themselves.

What's the biggest cause of financial problems for NFL players?
It's when they trust friends or occasionally family who don't have the financial expertise to manage that size of money. That's where it blows up. About half of it comes from that type of situation, but no question the rest comes from very poor spending habits and a lack of discipline in understanding just how limited this opportunity really is. I'm working with a very famous player right now who is retired. At the time he played he had the largest contract in the NFL and had many off-field opportunities. For all intents and purposes, the money's gone. Now, it's planning to max out on what the NFL provides and get his life on track. The money he made in his career was in excess of $50 million.

If I'm a middle-tier player in my mid-20s, how do you set me up for the rest of my life?
We start with the basics. It's as simple as having a checking account and a money market account, or creating a budget. [Another] area we really look at is the credit side. The [NFL Players Association] offers a free credit monitoring service, but over half of the players aren't taking advantage of it. You may have all the money in the world, but if you come to me with a 400 credit score, you're going to start paying 18 percent on your cars and 10 to 12 percent on your houses. We had a player this year sign a $57 million contract, and when we pulled up his score it was down in the 500s. It's a very important thing for these players because when they got out of the NFL and wanted to create businesses a couple years ago, before the credit crunch, you could get a loan. Now they need a solid credit score. The last of the basics is getting an understanding of the benefits provided by the NFL. I'm a big fan of the NFL benefits, and I know I'm in the minority there. I've never run across a company in the private sector where an individual gets that style of coverage. [Parthemer notes that the NFL matches players' 401(k) contributions with $2 for every $1 contributed, plus an annuity, severance, and other benefits for career players.)