Even though you may have worked and trained for it your entire life, nothing can really prepare you for the moment you realize you’re going to be a pro.
“For me that moment clicked around my junior year of college,” says DeMeco Ryans, who was a linebacker for nine years for the Houston Texans and Philadelphia Eagles. “I had seen an article saying I may have the opportunity to leave college early and go to the pros, and I had no idea people were thinking about me like that. So, from that moment on I was like ‘Oh, man, I can make it.’”
The only thing more exciting than that realization is another event few people are prepared for—signing your first pro contract. Unfortunately, along with the big numbers in that contract, there can come some big pitfalls. According to a Sports Illustrated article, “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. Numerous retired MLB players have been similarly ruined, and the current economic crisis is taking a toll on some active players as well.”1
While there are many high-profile examples of what not to do, no one watches game footage to see how to lose. If success is what you want, then success is what you should study. DeMeco Ryans is a fine example of what you should do.
Although Ryans was surprised when he realized he could go pro, not a lot of other people were. While playing at Alabama from 2002 to 2005, he was named the Southeastern Conference’s Defensive Player of the Year and defensive Most Valuable Player of the 2006 Cotton Bowl Classic. He also received the Lott Trophy for his combination of athletic excellence and off-the-field achievements and was recognized as a unanimous first-team All-American. That is why he was drafted as the first pick of the second round by the Texans, and because of where he landed in the draft, Ryans knew roughly how much money he was going to be offered.
“Knowing what I was going to [earn] was one thing, but then actually signing the deal and seeing the check come in […] it was definitely one of those life-changing moments,” he explained. “It was just overwhelming to know that I probably made at that one instant more money than my mom ever did working all her life.”
Like many pro athletes, Ryans wasn’t handed anything. His mother worked several jobs to provide for her family, and Ryans learned early on that he would have to work hard for whatever he wanted—just as she did. Ryans was no better informed about finances than anyone else his age; however, he was cautious and knew what he didn’t know.
“My mindset going in was, ‘Now what do I do?’ because I’ve got to make this last,” he remembered. “I knew the NFL wasn’t going to last forever, so I wanted to save as much money as I could. I wanted to be in a position where—if [that] was the only contract I ever got to sign—I would be able to sustain my life off it.”
Taking a long-term view of your life is unusual for anyone in their early 20s—even those who haven’t just received a lot of money. Athlete or not, at that age, pretty much everyone thinks they are invincible.
“You’ve got to treat this first contract like it’s your last because statistically that’s how it’s going to play out,” says John Mangum, Chicago Bears defensive back turned CAPTRUST Financial Advisor. The average career length of a pro football player is just 3.2 years. For basketball players it’s 4.5 years, and for baseball players it’s around five years. There are exceptions, but that’s not something you should plan on. Because DeMeco Ryans was already executing his financial plan when he did get his second contract, he was already well ahead of where he wanted to be.
At the professional level, there are no dumb jocks. You must be smart to be one of the best, no matter what sport you play. Ryans is no exception. He graduated cum laude from Alabama in seven semesters and was a finalist for the Vincent DePaul Draddy Trophy—often referred to as the “academic Heisman.” Being smart means knowing what you don’t know, and Ryans knew that in addition to having an agent, he needed to hire a financial advisor.
“Growing up, we were living paycheck to paycheck, so there wasn’t anything left to invest or anything like that,” Ryans said. “I needed someone who could help me invest this money and make the right decisions with it, because I was stepping into a whole other ballpark—something I don’t know much about.”
At the same time, Ryans was a smart consumer and wasn’t going to trust someone blindly.
“My first day, I told [my financial advisor] I [didn’t] want to see my numbers go up too far and I [didn’t] want to see them go down too far,” he recounted. “I didn’t just jump right in and have a fully diversified portfolio. It really took me time to understand it and know where my money was going and how everything worked.”
In addition to investment advice, Ryans also knew he was going to need spending advice. While he knew he couldn’t splurge on everything he wanted, he was concerned his advisor was going to try to run his life. However, the advisor made it clear that it was Ryans’s money and he could do whatever he wanted with it. Knowing that made it easier for the two to work together in creating a budget that would let Ryans enjoy his life then—and once he retired.
As a financial advisor, Mangum knows you can’t secure someone’s financial future by simply telling them to quit spending so much and save money. So, he helps his clients look at how they want to live when they retire, come up with the amount that will enable them do that, and see what they can afford now. That way, a budget isn’t a restriction, it’s a means to an end.
“If you can do this [at the beginning of your career], you get to be entirely in charge of your own life,” Mangum explained. “You’re not sitting there being afraid you’re going to get cut, or just trying to hang on if you can because you need the money.”
A professional athlete’s life is complex and demanding. In addition to finances, there are contracts, training, competition, and family life—all of which require attention. For DeMeco Ryans, knowing that he was going to be OK when his playing days ended was—well—priceless.
“It really just brought a calm over financial issues,” he said. “It’s put me in a position where I know my family will be taken care of. My kids don’t have to worry about their future. It’s put me in a position to help other people in my family as well.”
1. How (and Why) Athletes Go Broke. Pablo S. Torre. March 23, 2009. Sports Illustrated magazine.