You might think such losses merely confirm the snobbish stereotype that footballers are stupid. Maybe not. For one thing, high rates of financial distress are not confined to English football. Lots of American sports stars have also lost millions. And for another, there are many types of bad judgment, and none of us is immune to all of them. Sir Isaac Newton lost thousands when the South Sea bubble burst, and if he wasn't clever enough to avoid losing money, then nobody is...
There are three particular problems professional sportsmen have to which other investors are also vulnerable.
One is overconfidence. Sportsmen are selected for this, because they have to believe - often in the face of strong evidence to the contrary - that they can win the game. As Arsene Wenger once said: "If you do not believe you can do it then you have no chance at all".
But overconfidence is an easy way to lose money, because it causes us to believe - wrongly - that we can spot good investment opportunities. Ruby Henry of Rutgers University has shown how this afflicts American professional basketball players. She measured overconfidence among them by calculating the frequency with which they tried difficult three-point shots relative to the frequency with which they scored; overconfident players go for the tricky shot even if they have little chance of making it. She found that the most overconfident players were significantly more likely to start new business ventures than others, and to go bankrupt as these turned sour. "Too much confidence can lead to poor choices," she concludes.
This is not just true for sportsmen. Overconfidence can cause other investors to think they can spot winning stocks and so trade too much, or identify good fund managers and so waste money on high-cost, poorly-performing funds.
A second way in which sportsmen lose money is by copying their team-mates; investments in UCISs - not all of which are bad investments - are concentrated among a few teams. That shows the power of peer influence.
Conmen know this. A common scam is the affinity fraud, whereby a conman targets members of a particular community such as a church or country club. He then uses the word of mouth of one of his victims to sell the scam to others - because while we don't trust outsiders, we do trust friends and colleagues.
Again, peer pressure is not confined to footballers; it's what cost Sir Isaac so dearly. Herding and information cascades - in which we buy assets because others are buying - can cause assets to become over-priced and eventually crash; just remember tech stocks and mortgage derivatives.
A third problem is habit formation. Sports stars acquire big spending habits during the good years, and find it hard to get rid of them when their income drops in retirement.
But again, this is a danger we all face, especially with annuity rates being so low. The solution to it lies not just in financial planning, but in character planning - in not acquiring expensive habits in the first place. But this is more easily done in your 40s than in your 20s.
In these senses, sports stars who lose their millions aren't especially stupid. Their mistakes can also be ours.
But there's something else their misfortunes tell us - that people who are brilliant in one sphere can be very foolish in others.
