Obviously most atheletes (not your elite ones) are on small length contracts, for probably sizable amounts by our standard, but still the shortness of the contract might make them a liability if they choose to try to get a loan.
Would a bank manager look at an application, look at an athelete on only a one year contract, and reject it because if that athelete gets a career ending injury they would not be able to make payments back on the loan?
What about a fit athelete vs an injury prone one?
Banks loan money to professional athletes or prospective professional athletes all the time. Of course, on a case by case basis, some loans would be more freely given than others, but generally speaking I don’t think an athlete would encounter much difficulty. Professional athletes, even crappy ones, make colossal amounts of money- a Major League Baseball player makes a minimum salary of $300,000. The important thing is that the player can show that he’s going to make money in the future.
College kids do this all the time when they’re about to enter the draft- they go to a financial institution and borrow on their future earning potential. What they have to do is show with some certainty that they are going to be earning X amount of money- for football players, for example, the salary of a rookie is determined largely by how early he is selected in the draft, so if I was a graduating college quarterback I could show the bank that the experts have predicted I would be drafted with pick #75. Then I could show the bank that the #75 pick usually earns (making this up now) a three-year contract for $8 million. The bank would then use that as a basis for what I’d be likely to make, and lend accordingly.
In the case of a player who’s already under contract, the difference would be that instead of using the draft to demonstrate his future earning potential, the player would have to use something else, most likely some kind of complicated statistical analysis. Same idea, though; the more the athlete can convince the bank he’s going to make, the more the bank will lend.
Regarding the injury, almost all professional athletes are insured to some extent against that possibility. Some players are insured for a large, large, sum; if the next Michael Jordan blows his knee out in his first game and never plays again, that’s like a billion dollars of income he’s lost out on. The bank could look at the amount of coverage on the insurance policies to see how safe of a loan they were making. Also, the more injury-prone an athlete is, the harder it’s going to be to get insurance, so it’s not really the bank’s problem. It can be very difficult for a frequently injured player to get anybody to pay him a great deal of money without insurance, though. A healthy athlete would have less trouble.
Oh yeah- since you’re talking specifically about the non-elite athletes, I’d imagine the amount of the loan and the ease with which it was obtained would increase sharply as the player’s skill level decreased, for the reason I mentioned above- less future earnings potential. They might not give a backup tight end the $12 million loan that they’d give the superstar, but the same process would apply when they decided what they would give him. Just like you’d expect, the harder it was for the player to demonstrate his future earnings potential, the harder it would be to get the loan. A 45-year old kicker with arthritis would have a devil of a time taking out a big loan, whereas a 19-year old with a bright future won’t.