How does a professional athlete sign a contract and earn a certain amount of money but have a lower net worth than the amount they earned?

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I was looking over the net worth of a specific baseball player and it says his net worth is between $6 million-$15 million. But in the same article it says he earned $51 million playing four seasons in the majors. If he earned $51 million how is his net worth $15 million max?

In: 5

Costs deducted from earnings. Taxes, purchases, cost of living, his management team gets a percentage.

The same way any person could earn $50,000 per year (that’s $200,000 over 3 years) but not have $200,000 in their bank account. They spent most of the money instead of saving it.

Gross income = earned wages before deductions ($51,000,000 contract)

Deductions can be: federal taxes, state taxes, SS and Medicare, health insurance, 401k, mandatory withholding (child support and alimony)

Net income = actual take home pay

Same theory applies to net worth…

Gross Worth = total lifetime earned wages before deductions and debts

Net Worth = total lifetime earned wages minus deductions AND minus outstanding debts (mortgage, car loans, credit card debt, etc)

I wouldn’t believe any public reports of net worth, unless they’re disclosed as part of legal proceedings.

Net worth is value of current assets minus debts. First off, taxes and agent commissions are going to cut those earnings almost is half. So maybe they took home $30m. And maybe he blew $20m on fancy cars, partying and strippers. Maybe be lost a large chunk of money in a divorce. Maybe he bought a $40m mansion and still owes $30m on the mortgage. Many athletes spend an insane amount of money when they’re earning big bucks, only to have that end when they’re still young and they don’t have money to support their lifestyle for very long… there are countless athletes who are broke within a decade of retirement even when earning absurd sums of money during their careers.

Your net worth isn’t your income, it’s your combined savings & assets minus debts. It sounds like your guy spent a lot of money, which is hardly unique to professional athletes. Also net worth is actually difficult to nail down without privileged access to a person’s taxes and financial records, so these numbers are often little better than conjecture.

I don’t know what the maximum agent cut is in MLB, but in the NBA it’s 4%, in the NFL, it’s 3%. Endorsement contracts will earn the agent more, but that’s kind of free money from the athlete’s perspective. I promise you whoever landed Tom Brady’s Hertz deal go a very sweet payout.

At 6 to 15 million dollars, he’s got enough money to live a perfectly high standard of living, never work another day in his life, and still see to the financial stability of his family. I wouldn’t weep bitter tears over his plight.

professional athletes are not generally well known for smart money management

they have to pay their agent, their manager, their publicist, etc. They are in the top tax bracket, so state and federal taxes take a big chunk. They have to pay for expensive houses and sports cars and buying a house for their mom and a car for their dad. And vacations and child support and their drug dealer and their three girlfriends and their entourage that follows them to parties

plus their contracts are not paid in a lump sum, they are generally paid out over time and contingent of various things

Which player are you talking about?

The short answer is that the net worths that come up are utterly unreliable. The only thing that can (sometimes) be found in public records is their home. Sometimes a boat. Bank accounts and investment information isn’t really out there, unless they own enough of a company need to report it.

If they are buying into businesses, it should be through some sort of LLC, which may not be easily traced to its owner

Net is after expenses, your contract may be for $50 Million dollars.

Your agent is entitled to 5%, that’s $45 Million for you.

You pay 15% tax, that’s $38.25 Million for you

You bought your Mom a mansion for $5.25 Million, you have $33 Million (the house for your mom is in her name and thus not part of your net worth).

You bought a collection of sports cars for your friends for $3 Million, leaving you $30 million

Your wife left you and took half. You have $15 Million in cash, your own mansion, jewellery, clothes, cars and a boat.

[Another relevant article](https://www.abi.org/feed-item/how-athletes-go-bankrupt-at-an-alarming-rate)

This one looks at their financial situation on retirement, but the same principles can apply to active athletes.

Unreliable sources. Have been around NFL players since day I was born. Some of their net worth will say 35 million well if you know them like I do it’s more like 200k. Also some are way to low my uncle who played and coached his net worth doesn’t show up it used to say one million..no he’s sitting on at least 12 m’s