Why NFL players go broke

Warren Sapp AP

(CBS News) When the NFL draft begins Thursday, all 32 first round picks might feel as though they're set for life. But it doesn't always turn out that way.

Just this month, CBS News learned that former NFL superstar Warren Sapp has filed for bankruptcy. But he's not the only big name who's gone broke.

Each spring, hundreds of young men from across the country spend anxious hours waiting to hear their names called at the NFL draft. For some, it's the beginning of a career that brings the fame and fortune they've always dreamed of. But for many, it's the beginning of a financial nightmare.

Muhsin Muhammad knows about longevity. The Michigan State University graduate spent 14 seasons as a wide receiver in the NFL, earning millions in salary and endorsements.

"This is an alpha male sport," Muhammad said. "And you think you're going to be on top forever."

In 2010, he left the locker room for the board room and now helps run an investment firm. Still, his business savvy couldn't protect him from a financial fumble. Three years ago, he was sued by Wachovia for nearly $25,000 in unpaid credit card bills.

Muhammad told CBS News, "There was some debt run up by a family member and I was a guarantee on it. So it wasn't my responsibility but in the end I took responsibility for it and it's been settled.

Gerri Walsh, of the Financial Industry Regulatory Authority, an independent securities regulator, said, "They're perceived as having a great deal of money all of a sudden. And so people think that they can take advantage of that. Family members, financial advisers and others put a target on their backs for potential scams."

The NFL is keenly aware of the threats to their athletes' bank accounts. In 2009 Sports Illustrated reported that nearly eight in 10 former players find themselves bankrupt or in financial trouble. That's partly because the average career lasts just six or seven years. And while the league takes in roughly $9 billion annually, the minimum salary is $390,000.

Walsh said, "The NFL approached FINRA about two years ago to find out about tools and resources that we had to help NFL players better protect themselves when it came to their investments."

Walsh runs that program. She starts her outreach months before the league starts calling names. At the pre-draft East-West Shrine Game & Senior Bowl, Walsh says she meets players who are already in financial trouble.

"What they do is they try to better position themselves in the draft by taking on, taking out loans to engage in programs that might further their choices of getting a higher number in the draft," she said.

Muhammad said, "Based on those numbers, you would often see players going out and getting loans and lines of credit, building up debt before they even get that first check."

Once they're in the league, it doesn't necessarily get better.

When superstar Sapp filed for bankruptcy earlier this month, he reported owing $6.7 million, including back payments in child support and alimony.

Muhammad said, "I think it's an epidemic that players that, three to four years out of the game are either divorced or bankrupt. I think a lot of it has to do with lifestyle."

In Sapp's case, the lifestyle included more than $6,000 worth of shoes and a $1,200 lion skin rug.

But it's not just big spending that's a problem. Muhammad says an even bigger lifestyle flaw may be not preparing for life after the league.

"What about football ties into any other profession?" Muhammad said. "I don't think there are very many resumes that you can put, 'Hey, I was an NFL football player for 10 years,' and then someone's gonna say, 'Hey, OK.'"

To watch Rebecca Jarvis' full report and discussion about the story on "CBS This Morning," watch the video in the player above.

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