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Alan Greenspan, the well-known economist and former chair of the U.S. Federal Reserve, once said: “The number one problem in today’s generation and economy is the lack of financial literacy” (Cook, 2016). In the volatile world of complex financial products, financial literacy is a fundamental life skill to inform individuals’ financial decisions, efficiently allocate financial resources, and achieve greater financial well-being (Lusardi & Mitchell, 2014; OECD, 2017; Warmath & Zimmerman, 2019). Despite the fast proliferation of complicated financial products and services in the retail market, many of them have proven difficult to comprehend for financially unsophisticated consumers (Lusardi & Mitchell, 2014; Reyers, 2019).
Many professional athletes might be classified as financially unsophisticated consumers since some of them have been swindled into high-risk investments and many remain susceptible to suffering financial losses due to generally low levels of financial literacy (Balliauw & Van Den Spiegel, 2018; Van Heerden, 2018). Their lack of financial literacy may sometimes be overlooked because, as Richardson and McKenna (2020) show, many professional athletes are well paid, well liked, and revered as heroes. Nonetheless, Ferrel (2021) states many professional athletes are going broke at an alarming rate and suggests now more than ever there is a need for more research on this phenomenon.
While tens of thousands of individuals are pursuing a career within the multibillion dollar global sporting industry (Richardson & McKenna, 2020), the sports careers of many are short-lived, and the majority of professional athletes retire in their 30s, long before the conventional retirement age (Küttel et al., 2018). In addition, professional athletes’ sports careers could be suddenly ended by injury, loss of form, and nonselection (Knights et al., 2016). The COVID-19 pandemic has compounded this uncertain climate, causing an unpresented market shock to the sporting industry with significant financial implications and greater austerity within many sports leagues and clubs (Bowes et al., 2020; Parnell et al., 2021). This has increased the prospect of mass player redundancies and fewer player contract renewals in the foreseeable future (Parnell et al., 2021).
This situation is problematic since many professional athletes have no plans beyond their playing careers and shifting to a new occupation can be challenging (McGraw et al., 2019; Woods, 2015). It also means that even the most successful and well-paid...