John Barnes: Lessons from a broke football star

If you asked football fans of my generation for a few of their favourite players, I'm sure that most of those lists would include the name John Barnes. He could toy with opponents and manipulate the ball with a level of skill that few players of his time possessed. The fact that he did so when black players were routinely racially abused from his terraces made him, for me, an even bigger hero. Sadly, John Barnes has been much less successful in other aspects of his life. He has, for example, shown a complete lack of financial acumen. Last week HM Revenue & Customs applied for his bankruptcy. Barnes had “a history of non-compliance”, the court was told, and owed £238,425. John Barnes is about the last person you would expect to be in this situation. When he signed for Liverpool in 1987, he became the highest-paid player in Britain — the first to be paid £10,000 a week. Even now he earns £200,000 a year as a club ambassador and up to £5,000 for an after-dinner speech. But having huge earning power doesn’t make you immune to going broke. it’s actually remarkably common for sports stars to run out of money. Mike Tyson and Boris Becker, who hit the heights around the same time as Barnes, are just two of the more notable examples.

Why it happens

The question is, why does it happen so often? In many cases, as with Barnes’s England team-mate Paul Merson, for example, it’s down to gambling — a constant temptation for high-earning players with time on their hands. But there are some common reasons why successful people generally are prone to losing their wealth.

Overspending

An obvious one is that they overspend. When Barnes was first declared bankrupt in 2009 he said: “When you're a young footballer you think this money's going to come in forever… When I first started playing football, I bought an Aston Martin and stupid flashy clothes, which were very expensive.” Overspending is a common pitfall for those, like Barnes, who suddenly find themselves wealthy. A 2011 study on the effects of winning a lottery showed that lottery winners in Florida were substantially more likely to go bankrupt than non-winners.

Overconfidence

Another problem for hugely talented people is overconfidence, and, in particular, the tendency to assume that just because you're extremely good at one thing, you will automatically thrive in a totally different area. John Barnes, for instance, was far less successful in his brief career as a coach and as a manager than he was as a player. Barnes has also been far from shrewd in his business dealings. One of many failures was Team 48 Motorsport, which he founded with two fellow former footballers, to promote young black racing drivers. Another venture, John Barnes Media Limited went into liquidation earlier this year after a winding-up petition from HMRC.

Lack of good advice

A common thread connecting tales of millionaire sportspeople going broke is either a lack of financial advice or, worse still, bad advice. John Barnes once told the Telegraph he had no need for a financial adviser because “I don’t have any money to invest”. When the former Chelsea and England striker Chris Sutton was declared bankrupt in 2014, he blamed his problems on bad advice. He said in a statement: “I was led to believe that I was making a profit on (my) investment. However I now realise that I was not.”

Have a financial plan

Again, these mistakes are not not unique to sporting celebrities. They are common to highly talented individuals — especially those who make large amounts of money early in their careers. Every successful person can learn from them. For some people, holding onto their wealth can be even more of a challenge than acquiring it in the first place. But, in truth, it really shouldn’t be. The secret, in short, is to have a financial plan. Work out what’s important to you and what you want to achieve. Of course, you will want to enjoy the rewards of your success, but you still need to live within your means. And, crucially, you need to invest while you can for periods in your life when you won’t have so much money coming in. The temptation, when you’re rich or famous, is not to heed the advice of others and to rely instead on your own gut instinct. After all, you may have had some luck, but you’ve got where you are largely through your own skill and effort. If anything, though, it’s even more important that life’s high-fliers have a trusted financial planner than the rest of us — someone who’ll keep them grounded and rational, and who won’t be afraid to challenge them if they think that’s what’s required.

Avoid unnecessary risks

One more thing. One of the dangers of extraordinary achievement is that it can make you inclined to take unnecessary risks. If you’ve enjoyed one success after another, you can fool yourself into thinking that it’s bound to continue. But it’s not. The financial markets in particular can be a real leveller. People often assume that they’re better placed than others to invest successfully, especially if they’re able to afford the “best” advice available. But making a killing on the markets is extremely hard, and you can easily lose large sums in the process. It’s an extreme example, perhaps, but the “investment” that triggered Chris Sutton’s bankruptcy turned out to be a spread betting foreign currency scam he should never have found himself involved in. There is no reason whatsoever for wealthy people to risk the money they have, and may well rely on in the future, to make even greater sums they will never actually need. I had so much pleasure watching John Barnes play football. I sincerely hope that he finally finds the sound financial adviser he really needed as a precocious young talent 40 years ago.