You have mismatch of quotes. Try this code.
$playerfileLocation = "../wp-content/gallery/playerphotos/" . $playerid . ".jpg";
if(file_exists($playerfileLocation))
echo "The file File exists";
else
echo "The file File does not exist";
Update:
Actually I would suggest using below code as whenever PHP see double-quotes, it tries to parse anything in between it, which is not required in this case. This is a small optimization in performance.
$playerfileLocation = '../wp-content/gallery/playerphotos/' . $playerid . '.jpg';
if(file_exists($playerfileLocation))
echo "The file File exists";
else
echo "The file File does not exist";
Also, to just check if file exists and if not display default image use the following code:
$playerfileLocation = '../wp-content/gallery/playerphotos/' . $playerid . '.jpg';
$defaultfileLocation = '../wp-content/gallery/playerphotos/default.jpg';
if (!file_exists($playerfileLocation)) {
$playerfileLocation = $defaultfileLocation;
}