The “Real Deal” is broken.
Former heavyweight champion Evander Holyfield plays the real-life game Deal Or No Deal. It has been reported that her $10 million estate in suburban Atlanta is under foreclosure, the mother of one of her children demanding unpaid child support even though she appears to have paid off the debt. A Utah consulting firm has gone to court claiming the boxer failed to pay back more than half a million dollars for landscaping. Just another top-class athlete who has had to reduce his lifestyle to the level you have become accustomed to. Why do athletes who seem to have it all often completely incapable of controlling everything related to finances?
We all played our violins to death when we heard about Latrell Sprewell’s financial troubles. On Halloween 2004, Sprewell, who is in the final season of a five-year, $62 million contract with the New York Knicks, said he was insulted by a contract extension offer from the Minnesota Timberwolve that was reportedly worth between $27 million and $30 million. for three seasons. Sprewell stated, “I have to feed my family.” The quote became the national moniker for the public’s perception of athletes as greedy, untouchable individuals. Apparently, Sprewell still couldn’t feed his family. His yacht was recently repossessed and his million-dollar home is about to be repossessed.
While there are certainly stereotypes of financially irresponsible NBA athletes, no professional sport is immune.
Let’s take a look at some of the financial sad stories of famous athletes over the years:
1. No one my age can forget Jack “The Ripper” Clark, the star player for the Boston Red Sox who filed for bankruptcy in 1992 in the middle of his second year of a three-year, $8.7 million contract with Boston; he recorded $6.7 million in debt. Jack is a wise financial planning and asset acquisition expert. His bankruptcy petition lists assets such as 18 cars, including a 1990 Ferrari for $717,000 and three 1992 Mercedes Benz cars for between $103,000 and $143,000. He owes money on 17 cars and is responsible for about $400,000 in Federal and state taxes. He also lost about $1 million in drag-racing ventures. Sounds like Jack would be more at home in the NBA. You can read about it here Bentley from Mike Tyson
2. Johnny Unitas, Hall of Fame quarterback for the Baltimore Colts, filed for bankruptcy in 1991 on the grounds that many business ventures failed in his petition. These failed sections include bowling alleys, land deals, and restaurants. He filed for Chapter 11 bankruptcy in 1991.
3. Mike Tyson The name speaks for itself. Mike’s bankruptcy was highly publicized. Despite earning hundreds of millions during his boxing career, Mike remains modest. His bankruptcy petition simply states: “I can’t pay my bills”. According to federal court records, his liabilities totaled about $27 million. You can read the story here.
4. Dorothy Hamill, the women’s figure skating gold medalist at the 1976 Winter Olympics, filed for bankruptcy after a series of financial setbacks. Hamill said he had suffered financial setbacks as a result of poor financial investment advice and management.
These are just a few of the many stories of athletes’ misery. This is not a phenomenon confined to professional sports – just ask MC Hammer. Prior to declaring bankruptcy, it was announced that his daily living expenses far exceeded his income by $33 million. If I was going to turn to celebrities, I should definitely mention Kim Basinger and Michael Jackson.
When the Toronto Star ran an article stating that a staggering 60 percent of NBA athletes “bankrupt” five years after retiring, didn’t we all pull out the minuscule fiddle we’ve ordered for such events? The NBA and NBA players’ unions have both denied the claims. The next article talks about all the people who take advantage of and “cheat” these athletes. While I have no doubt that this is true, I can also understand how such a generalization would make the NBA uncomfortable. This gives you the impression that 60 percent of NBA players are not only financially incompetent but idiots in general. This is not true. While good business sense is often lacking, I see many of their faults as a fallacy of trust, credibility and lack of life experience than anything else. Smart, busy people who can afford it, hire people with targeted skills to help them. This allows them to focus on their craft. Sometimes mistakes are made and poor judgment is used in hiring and associating with us. That’s not unique to the NBA or professional sports. This happens to everyone. That is life. It happens all the time. It just doesn’t make the front page when we screw up. If there’s any question at all about how bad we are as the general public, just look at the private bankruptcy filing statistics.
To get an inside perspective, I contacted Jordan Woy, a highly respected sports agent and principal at sports marketing/management firm Schlegel Sports. Jordan has represented many famous athletes
Here’s what Jordan said:
I think there are several reasons why so many athletes are “bankrupt”. First, whether they are lottery winners, athletes or entertainers, if they are not equipped with the knowledge of how to make and save money, they are in trouble. When they don’t acquire it through disciplined business practice and they don’t have those skills, they usually do it quickly. Most lottery winners or athletes make a lot of money in a short period of time. They start spending it on things that are only going down in value (cars, jewelry, parties, groups, etc.) and start to evaporate the money they have. They can do this until they stop making big money. This is when the problems started. It’s hard to believe that MC Hammer, Mike Tyson, Evander Holyfield and now Ed McMahon are broke. These are the people who make hundreds of millions over time and disappear. The extravagant spending and entourage might be a downfall for the first three for sure.
Most athletes play for four to ten years if they are lucky. Once they pay taxes (can be 40 to 50%) and agency fees and buy their first house, car, clothes, jewelery (plus, cars, clothes and jewelery for friends and family), they have very little. When they first “get rich” all their old friends and family are looking for help. Most athletes feel obligated to help everyone at first, then they become wise. They also want to follow their teammates. If someone buys a Bentley, they have to buy it; if someone buys a watch for $75,000, they should buy it to maintain its appearance. Then, of course, when their careers are over and they’re still living in a million dollar house, driving 3 expensive cars (and insurance), traveling on private planes, and taking a Limo when they’re out of town, reality sets in. money runs out fast.
However, if athletes educate themselves, learn money management skills, and make smart and safe investments along the way, they are usually in excellent shape. Having represented athletes for more than 20 years, we call this our “life plan”. We take clients on off-season work holidays to places like Las Vegas, Cancun and on cruises to the Bahamas to learn business networking. We have people from industries like real estate, oil and gas, financial planning, credit repair, asset protection/plantation planning, etc. come to educate the players and their wives so they can learn about the business and also determine if they are interested in any this industry for life after sport. One of the financial planners who came in always said most people died when they came down from Mount Everest, not up. The goal is for these athletes to reach their Mount Everest AND descend safely.
So what do you think? Are athletes’ financial mistakes different from yours or mine? They are of course mistakes made with higher losses. When we hear these stories, can’t we understand that someone can have that kind of money and spend it all? Can we learn a lesson about how to live our lives from their publicized financial mistakes? Do we even care at all?
With all due respect to Latrell Sprewell we have our own family to feed….