The average consumer-level same day loan comes with a 15 to 25 percent fee per $100 loaned. This amounts to $50 or $60 in most cases, which is hardly earth-shattering. However, the 2011 NFL lockout has given rise to high-dollar variation of such loans, which the media has dubbed “lockout loans,” reports Yahoo! Sports. Players without paydays because of the labor dispute who discover themselves in financial distress are being solicited by lending agents with offers.
Dangerous 36 percent Annual Percentage Rate on lockout loans
There have been lockout loans of $60,000 made with a 36 percent APR which ads up very fast. The $300 and $400 customer same day loans do not make almost that much interest on 36 percent APR. Yahoo! Sports reports that there have been players from 16 NFL teams that got these loans.
Some players have been better off with the NFL Players Association lockout while others have had a very difficult time keeping up with finances. Hardly any players listened when the NFLPA advised players to save three game checks. This was given as advice to players in preparation of the 2011 lockout. The NFLPA told players to do other things to make money such as refinance homes, fly coach and do things such as autograph signings, MSNBC states.
Money issues for NFL players
Sports psychologists suggest that star athletes are surrounded by enablers from a relatively young age. Players get to be professionals without ever having learned much about finances. They are unable to look after their finances because of this. Throwing millions of dollars at someone who may have grown up poor may also open the door to myriad temptations. After retirement, most NFL players end up bankrupt. Sports Illustrated estimates this to be about 80 percent of players. MSNBC indicates that as much as 380 of the NFL’s 1,700 players live from paycheck to paycheck, even though the average NFL annual salary in 2010 was $1.87 million. About $320,000 was paid on average to a rookie. Nevertheless, after taxes and agent payments, players could end up poor.
The support for lockout loans is there
The lockout loans are a legitimate product. This is the opinion of NFL athlete advisor Sherard Rogers who spoke with Yahoo! Sports. While franchises will endure, players who live to spend can run into trouble.
“Every NFL team was valued at over $1 billion, so they can weather the storm of a lockout. But could players if there weren’t resources to cover this short-term labor dispute?” asked Rogers. “The key is to figure out how to solve the short-term liquidity issue and put the pieces in place to ensure they don’t have this liquidity issue again.”
Citations
MSNBC
msnbc.msn.com/id/41855264/ns/business-personal_finance/41855226
Philly Sports Column
philly.sportscolumn.com/showthread.php?t=11751
The Real Athlete Blog
accessathletes.com/blog/blogDisplay.cfm?/Education-is-Key-for-Pro-Athletes-596
The Post Game
thepostgame.com/features/201104/tpg-exclusive-cash-strapped-nfl-players-seeking-high-risk-lockout-loans
Both sides are feeling the ‘deal heat’
youtu.be/CQD7MvhD3sI
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