Thinkofone's Blog

One person's thoughts may change the world

The NFL money train… AKA the NFL Draft

I coach football at the high school level, so I see and hear many things that the average person may not have privy to. That being said, I’m going to offer my opinion to what is about to occur during the draft and free agency. Lets first talk briefly about the free agent market.

Free agent. Hmmm, now, what does that mean? It depends upon what time of year it is. There is free agency, where there is a certain period where a veteran’s contract is up and his current team has, for what ever reason, decided not to sign him. The other type of free agent means you didn’t get drafted, but, either you or your agent has shopped you around and that a team will take a look at you. There are contracts to sign here as well and in some NFL circles is where the real bargains are..for the owners and coaches.  A tough spot to be in, but hey, if you’re chasing an NFL dream, it’s the way to go. In fact, it’s a way for a player to measure what teams have a need for, and for them to try to fulfill it.
The next type of player is, the one who gets drafted. In my opinion, drafts one through four are relatively safe, for the first year at least. These are the players teams have been studying, interviewing, poking, prodding and examining. Wonderlic testing, judgement examinations, physical examinations, combines, pro days, interviews, all the things that go into making a multimillion dollar investment. They play inside of community funded stadiums. The new Cowboys stadium that the Dallas cowboys play in cost 1.3 billion, of which the owner Jerry Jones “partially” owns, was funded by a tax increase, Jerry’s money, and even money from the NFL.
Owners as well as the NFL, have a very interesting agreement on how they spread the wealth. They divide the very lucrative TV rights evenly amongst all NFL teams, this giving ownership a lot of money, and, allowing them to charge additional fees, parking, food, alcohol, jerseys, jackets, toys, etc which totals up to a very nice profit. And, that’s just for football. Nothing wrong with that, that is the main reason why they are in business, MONEY. The NFL is a glamorous business to be in, and sexy. Ask Antonio Cromartie, with all ‘dem kids. Sorry Antonio.
But, here is a very, very interesting statistic as well.

“In May of 2009 according to Sports Illustrated 78% of former NFL players are broke or financially stresses after retirement”
The dirty little detail that no one want to talk about just before the draft. They are too busy selling you on all the speculation and hype a team, coaches, players and… agents are going through leading up to it. This keeps the NFL hype wagon up during the off-season. The player’s salary is a money grab before they even sign their first contract. It is usually 3% of the player’s salary, but, if the agent is a lawyer, then that billable rate can go by the hour, and all those additional fees start to add up. Plus, many of the top athletes are front loaded. That means the agent is usually funding the player many items, cars, places to stay, the football training camp before the combine, food, traveling expenses, clothing, etc. So as soon as many of these high-end players finish playing their last down in the season or in a bowl game, they are out of school, and headed for “training camp”. And the money grab begins. Hmmm, sounds vaguely familiar to… sharecropping?

Now I don’t really fault the agents, as they would say, “Don’t hate the player, hate the game”. It’s the nature of the beast. College players are expected to contribute at the pro level immediately, even quarterbacks. I saw an interview of Trent Richardson, the number one running back in the draft. He spoke of how much he loved the game, how he keeps in contact with his high school coach, his two young daughters he fathered in high school, and his mother whom he told to call the dealership and get whatever car she wants.

Don’t get me wrong, I think Trent is a fabulous running back, but, huh? Where is the money coming from to get that new car for his mother? He hasn’t even been drafted yet. No contract, no job, but, he has an agent. And that agent is fronting him the money. So even though the agent’s fees is going to be at the most 3% of Trent’s salary, Trent is going to be hit with a big fee for all the fore mentioned things I talked about. That’s on top of the cost of his family, funding the mother of his two girls, etc, etc, etc… You see where I’m going with this, and you see why I mentioned the Sports Illustrated article on bankrupt football players. Trent is an ACL injury away to financial ruin.

Here is the break down:

Trent’s contract prediction is 4 years 20 million, 12 million dollar signing bonus. You have to take into account that NFL salaries are not guaranteed. The only real dollars you see is your signing bonus, and each year you play until your contract is up, you’re injured and released, or you’re just released.

Kid(s) –  50,000 per year per kid
Vehicles – 50,000×2 average cost plus what you buy your mother
Agent fees 3% off of 12000000.00 =  360,000.00
Agent upfront funding – 200,000
House – 1.2 million dollar average – 240,000.00 deposit
Women – bottomless pit, OK bad joke… 500,000.00
miscellaneous – 400,000 per year ( travel, partying, lifestyle, etc…)
Lawyer services – 10,000.00 starting fee

Now, the 12 million is not really 12 million, after taxes it is  actually 8,040,000.00. Now you have to remember, all the above numbers are estimates and it comes to about 1,900,000.00 which is almost 2 million dollars. He’s already down to 6140000.00.

After that, the financial planning services begins. The financial planner will also take off their fees off the top, put at least 2 million in a trust fund and investments, so now Trent is down to 4,000,000.00 or less, depending on how much is invested and he has not even played a down. He could get a shoe deal, maybe even a commercial or two. Be essentially, it’s like winning the lotto, a lot of money that’s taxed, and a lot of people pulling at your heals as to which way to go. And there is always the lawyer and financial planner around the “help you maintain your windfall”.

The NFL and the NFLPA have a difference of opinion of the average length of a football player’s career. The NFL says 6 years, while the NFLPA says it’s more like 3.5 years. Either way, more than likely, he’s going to be a young man, at the age of 30, either out of football, on his second or third team, and probably playing for a lot less money. In the end, the “smart” people make a lot of money on this money tree. The NFL, the owners, the NFLPA, the agents, the lawyers, the financial planners, car dealers, woman, oh and I almost forgot, you. Next year, there will be another highly touted player, a one of a kind, a superstar, the talk of the town, another RGIII, or Luck ,but, there is only one of you.

Trent, I meant no harm is using you in this example, only enlightenment for others, and perhaps even you.  Have a great time at the draft, work hard in the NFL, and live like a pauper, do not initially buy a house, purchase a used SUV,  there are a lot of greedy people wanting a piece of you, the rest of your life is in front of you,… there is life after the NFL. A good person to talk to is Barry Sanders. I see him sometimes at the smoothie shop. He seems content and very happy, and he played a full 10 years and left on his own terms, just like Jim Brown.



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This entry was posted on April 26, 2012 by in Sports and tagged , , .
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