RETIRED NATIONAL FOOTBALL LEAGUE PLAYERS’ PERCEPTIONS OF FINANCIAL DECISIONS MADE: A PHENOMENOLOGICAL STUDY by John Edward Karaffa A Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Business Administration UNIVERSITY OF PHOENIX March 2010 UMI Number: 3417794 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. UMI 3417794 Copyright 2010 by ProQuest LLC. All rights reserved. This edition of the work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, MI 48106-1346 © 2010 by John Edward Karaffa ALL RIGHTS RESERVED ABSTRACT The purpose of this qualitative phenomenological research study was to examine the lived experiences and perceptions of 25 former National Football League (“NFL”) players regarding the financial decisions they made when active as players for information that could lead to an appropriate model for making good financial decisions. Determined in the qualitative phenomenological study were the influential factors identified by the participants in the study that focused on financial decisions made by former NFL players. The study revealed five themes: (1) wealth enablers, (2) wealth killers, (3) challenges, (4) attitudes, and (5) wealth weak spots. The results of the study might help current and future NFL players become better-equipped to face the unique financial challenges that come from life as professional athletes. NFL, union, and team leaders should improve the way retired ballplayers are handled with regards to disability and injuries and NFL pension benefits, and NFL leaders should continue to enhance the educational programs offered to NFL players with regards to their careers after football and education about money. Professional advisors should fully understand the phenomenon of their clients being NFL players, actively guide and teach their clients about money, and do the right thing with regards the financial advice dispensed. NFL players should take to heart these nine financial tips: (1) realize that the career is short (NFL = Not For Long), (2) take it slow, play it low…be conservative and humble, (3) consult trustworthy professionals, (4) set a budget, beat it, and save, save, save, (5) educate yourself about your finances, (6) learn to say “No” to friends and family requests for money, (7) prepare yourself for your 2nd career, (8) you can’t go wrong with your 401(k), safe investments, and a modest home, and (9) wait to select a mate. v DEDICATION This study is dedicated first and foremost to my loving wife, Teresa, who has provided steadfast, loving support throughout my doctoral and life journeys. I also dedicate my dissertation to my fine young boys, Kevin and Nathan, who have also provided vital encouragement, support, and inspiration to “live the dream” personally, athletically, academically, and professionally. This study is also dedicated to the retired men of the National Football League who gifted their stories to this study in hopes that current and future professional athletes, the sporting establishment, and leadership in the industry will learn from the successes and failures of these great legends of the game. vi ACKNOWLEDGMENTS I would to acknowledge and thank my committee members for their support and guidance throughout the dissertation process: my mentor, Dr. John DeNigris for his continual encouragement and focus; Dr. Elizabeth H. Thompson for her tutelage and challenge to extend beyond my “quantitative” comfort zone by tackling a human interest study of such magnitude; and Dr. Ralph J. Melaragno for his exceptional research rigor and candid feedback throughout the process. I would also like to acknowledge Andre Collins, the Director of Retired Players for the National Football League Players Association, and his teammate, Alanna Elie, for their support of this study and assistance in soliciting retired National Football League player volunteers for participation in the study. The cooperation of the NFLPA was an instrumental factor in this study’s success, and their quest to help players make better financial decisions was commendable. In addition, I especially appreciate the six retired NFL players who assisted with the pilot study: former Virginia Tech stars Nathaniel Adibi, Noland Burchette, and Jim Davis; financial advisor Lance Johnstone; University of Minnesota Associate Athletic Director and former Minnesota Vikings Director of Player Development, Dr. Leo Lewis; and All Stars Helping Kids founder, businessman, and Pro Football Hall-of-Fame inductee, Ronnie Lott. vii TABLE OF CONTENTS LIST OF TABLES ………………………………………………..…………… xiii CHAPTER 1: INTRODUCTION ………………………………………….…… 1 Background of the Problem ……………………………………………….....…. 2 Statement of the Problem ……………………………………………...………... 6 Purpose of the Study …………………………………………………….……… 6 Significance of the Study ………………………………….……………….…… 7 Significance of the Study …………………………………….…….…… 7 Significance of the Study to the Field of Leadership ……………...….… 9 Nature of the Study ……………………………………….……………….…… 10 Overview of the Research Method ……………………………….……. 10 Overview of the Design Appropriateness …………………...………..... 12 Research Questions ……………………………………………….……….…… 12 Theoretical Framework …………………………………………………....…… 13 Prospect Theory …………………………………………………...…… 14 Maslow’s Hierarchy of Needs ……………………………………….… 15 Rationality …………………………………………………...………… 16 Expected Utility ………………………………………………...……... 16 Youthful Decision-Making …………………………………………….. 17 Definition of Terms ……………………………………………………….…… 18 Assumptions …………………………………………………………………… 19 Scope and Limitations ………………………………………………..…...…… 19 Delimitations ………………………………………………………….......…… 21 viii Summary ………………………………………………………………….…… 22 CHAPTER 2: REVIEW OF THE LITERATURE ………………………….… 23 Title Searches, Articles, Research Documents, and Journals …………….…… 23 Historical Overview ………………………………...…………………….…… 24 Prospect Theory …………………………………………………..…… 24 Maslow’s Hierarchy of Needs ………………………………………… 25 Rationality …………………………………………………….….…… 25 Expected Utility ………………………………………………….…… 26 Youthful Decision-Making ……………………………………....…… 26 Current Findings ……………………………………………...………….…… 27 Prospect Theory ………………………………………………….…… 27 Maslow’s Hierarchy of Needs ……………………………..…….…… 28 Rationality ……………………………………………………….…… 29 Expected Utility ……………………………………………………… 30 Youthful Decision-Making ………………………………..…….…… 30 Gaps in the Literature …………………………………………………....…… 31 NFL Player Compensation and Benefits ………………………………...…… 32 Compensation ………………………………………………...….…… 33 Benefits …………………………………………………….…….…… 35 Cash Flow ……………………………………………………...…...… 37 Challenges that NFL Players Face …………………………………………… 39 Occupational Hazard …………………………………………….…… 39 Retirement Span ………………………………………………....…… 40 ix Earnings Disparity ……………………………………………....……. 41 Lifestyle Characteristics …………………………………..…….……. 41 Sudden Wealth ………………………………………….……………. 42 Backgrounds of NFL Players …………………………………...…..... 43 Financial Preparedness for NFL Players ……………………………………... 44 Financial Literacy ………………………………………………….… 45 Workplace Financial Education …………………………….….…..… 46 Workplace Financial Education Effectiveness ...……………….….… 46 Financial Education for NFL Players …………………….…….….… 48 Conclusion …………………………………………………..………….….… 49 Summary ………………………………………………………………..….… 51 CHAPTER 3: METHOD ……………………………………………….……. 53 Research Method and Design Appropriateness …………………………….... 54 Research Questions …………………………………………………….…..… 56 Population ………………………………………………………...…….….… 57 Sampling Frame ……………………………………………………..….….… 58 Informed Consent ……………………………………...……….……. 59 Confidentiality ………………………………………….……………. 60 Geographic Location ………………………………..………….……. 61 Pilot Study …………………………………………………..………….……. 61 Data Collection ………………………………………………………...…….. 62 Instrument ………………………………………….………………………… 63 Reliability and Validity ………………………………………….………..…. 64 x Reliability ……………………………………………………....……. 64 Validity ………………………………………………………...…….. 65 Data Analysis …………………………………………………….…….…….. 67 Summary ……………………………………………………………….…..… 70 CHAPTER 4: RESULTS, FINDINGS, AND ANALYSIS ……………..…… 72 Research Questions …………………………………………………………... 72 Pilot Study ………………………………………………………….……….... 73 Population …………....…………...………………………………….……….. 73 Sampling Procedures ..……………………………………………….……….. 74 Data Collection ……………………………………………………………...... 75 Reliability and Validity .………………...…………………………………...... 77 Demographics ……………………………………………………………….... 78 Data Analysis Procedures …………………………………………………….. 81 Data Analysis ...……………………………………………………………….. 82 Themes Identified ......………………………………………………………… 82 Theme 1: Wealth Enablers………………………………………….. ... 84 Theme 2: Wealth Killers..…………………………………………...... 90 Theme 3: Challenges….. ..……………………………………………. 92 Theme 4: Attitudes…………...…………………………………..….... 94 Theme 5: Wealth Weak Spots…….……………………………......…. 96 Answers to the Research Questions ………………..………………………… 97 Summary …………. ……………………………………………………….…100 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS ..…….…... 102 xi Findings ………......…………………………………………………….…… 103 Review of Research Question Answers ….…………………………….…… 104 Conceptual Model ..…………………………………………………….…… 105 Theme 1: Wealth Enablers………………………………………...… 107 Theme 2: Wealth Killers..………………………………………...….