If incoming draft picks can wait before signing their NFL contracts, they can do the same before making large financial expenditures once the player lockout is lifted.
That’s the message the NFL Players Association will send to its newest members Tuesday during a rookie symposium in Bradenton, Fla.
A 90-minute seminar on financial management will stress that players be especially prudent in their early spending — something that wasn’t the case with some members of previous rookie classes. Karl McDonnell, the chief operating officer of Strayer University, said rookies will be told to “take a year off from making any big financial decisions.”
“These players have a tendency to get approached by a lot of people, family and friends,” McDonnell told me and co-host Jim Miller on Sirius XM NFL Radio. “We’ve actually drafted a letter they can use that says, ‘I’m going to take the next year getting used to being in the NFL. I’m not going to make any major commitments,’ just to give them a little breathing room.”
“One of the things we want these young players to realize is the decisions they make in the next one-to-two years are really going to impact their lives forever. We want them to get off to a good start.”
Luther Ellis wishes he had heeded that advice. A 1995 first-round draft choice by the Detroit Lions, Ellis earned roughly $20 million during an 11-year NFL career and still was forced into filing for bankruptcy. Ellis blames his predicament on a series of bad financial decisions that began during his rookie year.
“The biggest thing that took us down the path of bankruptcy was being overextended to the point that I was counting on future earnings that didn’t happen and being involved in businesses that I shouldn’t have been involved with,” said Ellis, a married father of 11 who will be speaking at the symposium with McDonnell and Hall of Fame head coach Joe Gibbs.
“As good as the opportunities maybe seemed, if I would have put that money aside and just earned a modest interest rate of 6-to-7 percent, I’d be so much further ahead right now. And then I would have had the chance to sit back and look at what are the real opportunities, my personal passions, my wife’s personal passions and (decide) the things we want to be involved in. It would have changed our whole future.”
Ellis said some rookies are lured into signing with financial advisors despite not knowing exactly what they’re getting into. That becomes even more problematic because most players, like others of the same age outside the NFL, have limited knowledge of how to manage their money.
“When we have financial advisors speak to us on these subjects, it’s just like speaking a foreign language,” Ellis said. “This is something you don’t want to jump into blind right off the bat.”
Ellis, who declared bankruptcy in 2010, said he will tell players to “take ownership. As much time and effort as you put into making it to the NFL and living out the dream, put the same time into your finances.”
Approximately 125 of the 254 players drafted in April are expected to attend the Business of Football: Rookie Edition. The NFLPA decided to sponsor its own two-day event after the NFL cancelled its mandatory symposium originally scheduled for this week because of the lockout.
The 90-minute seminar that will feature McDonnell, Gibbs and Ellis is a truncated version of a larger program that the Washington Redskins implemented for its players in 2010. Rookies will be urged not to rely heavily on credit cards and loans. McDonnell said players must also budget and save for the long haul in NFL careers that may include lucrative paydays but usually don’t last for long.
“Really it comes down to discipline of not overextending yourself,” McDonnell said. “Anyone who comes into a large sum of money, there’s a temptation to do that.”
The same goes for freely giving away money to friends and family members, including those who may be applying pressure for a handout.
“When saying no to people like that, you’re really saying, ‘Yes,’ to your own financial future,” McDonnell said. “These players have spent a lifetime preparing for this opportunity. They have a responsibility to themselves and immediate family first and foremost to take care of them.
“Nobody wakes up intending to make bad financial decisions or filing bankruptcy. But sometimes through their own generosity, they find themselves in these predicaments. We want them to understand your primary responsibility is to yourself.”