Why Do So Many Baseball Players Go Bankrupt?
Many baseball players’ professional careers begin in Fort Lauderdale–and end in bankruptcy. To fans, this is unbelievable. We wonder how players could have squandered their salaries. Yet it happens all the time. Jose Canseco made $45 million in his career and later declared bankruptcy. Curt Schilling made $112 million and went broke. And it happens quickly. A report on mlb.com estimates that 70 percent of foreign-born Latino players face serious money problems within four years of retiring.
In some cases, players simply waste their money on expensive cars and homes. However, this is by no means the norm. Many are bilked out of their earnings by untrustworthy financial advisers at reputable firms. Others spend their savings on family and friends. “If there’s one consistency [with these players],” one researcher noted, “it was, ‘I couldn’t say no to family.’ So you’ve got some really difficult human situations. Compassion situations.”
Yet even after they lose their money, players continue to make financial missteps. Often they give up their assets–even though they don’t have to.
A Sensible Solution For Baseball Players (And Anyone) Deep In Debt
Lenny Dykstra filed for Chapter 11 bankruptcy in 2008. Reportedly he owed his creditors more than $10 million. Clearly his financial decision-making was poor. (He has been accused, furthermore, of writing bad checks and committing credit card fraud.) Nevertheless, declaring bankruptcy was a sensible step.
With a Chapter 11 filing, individuals create reasonable payment plans to pay back their creditors. The installments are based on what the bankrupted individual makes, not what is owed. The duration of these plans is usually no more than five years. Afterward, any remaining debt is cleared from the individual’s record. Moreover, with Chapter 11, individuals are allowed to keep their assets rather than forced to sell them off.
For retired baseball players, Chapter 11 bankruptcy can be especially useful. Some of them recognize it, but do so too late. “It sucks,” Curt Schilling told reporters. To pay his debts, he’d sold his piano, a Hummer golf cart, used crutches, and a bloody sock he’d worn in a playoff series against the Yankees. “I sold all that stuff to pay the banks back. Instead of filing for bankruptcy and keeping it all, I sold it all. It sucks.”