NFL players only get paid their actual salary during the season. Some of them get offseason workout bonuses, but for the most part, NFL players have to rely on what they make in the season to survive the offseason. The minimum salary in the NFL is approximately $320,000 and you would think that would sustain a young man and his family, if he has one to support, throughout the offseason.
However, we know that many young football players enjoy to live a certain lifestyle that a $320,000 annual salary just won't cover. With the current NFL lockout and the 2011 season in jeopardy, many of those players who are somehow living paycheck to paycheck are concerned about when their next payday will be. Some have already run out of money.
ARG Sports Funding is a Virginia based company that specializes in lending money to professional athletes. Jason Yorker, the owner of ARG, has been pretty busy this offseason because the lockout has put NFL players' lifestyles in danger. His company doesn't work like a bank does when it comes to loans, though. He's much more relaxed than banks, offering up players, "a couple extra hundred thousand dollars here and there."
That couple extra hundred thousand dollars comes at a price, though. He often charges these young athletes an interest rate of 30 percent. The average interest rate for a home loan this year is between 4-6 percent. So, a $250,000 loan with a 30 percent increase is just insane.
To defend his through-the-roof interest rates, Yorker says he doesn't look into credit ratings. He just judges whether or not a player is "good for it." You know, kind of like a loan shark.
To explain the 30 percent interest rate he charges, Yorker said that, unlike other lenders, he doesn’t care much about his clients’s credit scores or whether they have any assets to back up the loan. If he thinks a player’s good for it, he can get them the cash in just a couple of weeks. Since the beginning of the lockout March 12, Yorker said, business has been booming.
The players who have signed contracts with ARG are in a pretty bad situation and they're to blame for it as well as Yorker, who's obviously taking advantage of the situation they're in.
I'm not sure what their college curriculum was, but it's obvious that they didn't take, or didn't pay any attention in, any finance classes. $320,000 should be more than enough to get through a year of living. It's by far and away a higher salary than the millions of duel income homes that don't need a high interest loan to survive. The NFL likely has a small class on personal finance for rookies before they enter the league, but how much of that information goes in one ear and out the other? So, when a young player or a rookie decided to buy four cars and a mansion on credit just to find themselves broke in a year, they turn to a legal loan shark, like Jason Yorker, who offers them money with a high price.
This is the kind of thing that former NFL cornerback and analyst Deion Sanders has tried to warn incoming rookies of.
"One of the things I do is try to go back and grab these young guys and say, ‘Understand, there’s going to be a famine,’" said Sanders. "They say, ‘What do you mean by a famine?’"
Now, added Sanders, "Some of those guys are crying broke."
Yorker says that he's signed contracts with 25 NFL players this offseason, including 15 recently drafted rookies. That's 25 people that owe Yorker a lot more money than he's given to them.
Let's just figure it this way. Let's say a player took a loan from ARG for $250,000 at a 30 percent interest rate with an agreement that it would be payed off in five years. If that player made regular monthly payments, those payments would be $8,088.35 a month. In the end, they would have borrowed $250,000 but they would have payed back $485,280 -- almost double of what they borrowed.
What happens if they get hurt? What happens if they just don't have what it takes to make it in the NFL? Do they get their knees broken when they can't pay or will they just lose their house?
I'm glad to see at least somebody is making money off the lockout.