Don’t let money rule your world

Aug
7

When I was a young basketball player, the thought of getting paid millions of dollars to play the sport I loved would quicken my heart rate and keep me up nights, wishing upon a star.  As is true with most young athletes, signing that contract with the NBA, NFL or the MLB is a dream even more exciting than winning the lottery.  You “work” for 10 years, retire in your 30s, and you’re financially set for the rest of your life.  What I discovered about the truth of the matter was incredibly shocking.  Similar to lottery winners, with no financial prowess or discipline, most pro athletes go completely broke in less than 10 years after retirement.  In fact, 60% of retired basketball players go broke in 5, and 78% of football players in 2!  Athletes are forced to sell their homes, sell their championship rings, and file for bankruptcy.

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How does this happen?  How does achieving every little leaguer’s dream turn into every regular Joe’s nightmare?  As you will see the answer is simple:  just like lottery winners, if you don’t know how to legitimately make a million dollars, you will have no idea how to keep a million dollars.  The following is a breakdown of where the money went and who has gone broke.

Bad Investments

While many athletes had the right idea, they made many mistakes when it came to investing their millions.  Rather than follow the more conservative path, allocating small percentages to things like private equity and real estate, making clever small business grants and watching it grow. Instead of dedicating most of their attention to quality stocks and mutual funds, most athletes do the complete opposite.  With little to no interest in the stock market, they invest most of their money in “sexier” ventures like restaurants, car dealerships and clothing lines, all of which go belly up.  Here are some examples of investments gone horribly wrong.

Players: NFL retirees Drew Bledsoe and Rick Mirer
Venture: Pay By Touch, a technology which would replace credit cards with fingerprints.
Result: Company was sketchy to begin with, riddled with legal issues, and eventually closed down.

Player: NFL’s Muhsin Muhammad
Venture: Baylo Entertainment company
Result: Muhammad had to sell his mansion on eBay when his company was being sued for late credit card payments.

Player: MLB’s Mike Pelfrey
Venture: Texan financier Robert Allen Stanbford’s $8 billion fraud.
Result: 99% of his fortune is now frozen.

Player: NFL’s Raghib (Rocket) Ismail
Ventures:  Religious movie; Rock N Roll Café; COZ Records; cosmetics; framed calligraphy-name shops.
Result: All were flops, millions of dollars up in smoke.

Player: NFL’s Michael Vic
Ventures: Car-rental dealership; real estate; wine shop
Result: Never took off, placing Vic $6 million in the hole, forcing him to file for Chapter 11 bankruptcy and to put his mansion on the market.  Of course going to prison for illegal dog fighting pretty much took care of any endorsement deals he had.

Player: Torii Hunter
Venture:  A new inflatable raft invention that you can place under your furniture, where in the case of a flood, everything floats.
Results: Project sank. $70,000 gone.  Hunter was nearly swindled into another $500,000, but he sought financial advice and was steered away from rubber dingys.  Hopefully he’ll be wiser with his $90 million dollar contract.

Frivolous Spending

Athletes in the big leagues spend like they’re in the gargantuan leagues.  This is especially true for rookies who feel the pressure to maintain the same lifestyle as a veteran.  Mansions, cars, jewellery and clothes are bought at an absurd level during a pro athlete’s peak earning period.  When a 22-year old is suddenly getting pay checks in the ballpark of $500,000 every two weeks, the idea of remaining somewhat conservative while planning for the future seems ludicrous.  They find themselves purchasing $10 million dollar homes, 10 cars of at least $125,000 apiece, fancy restaurants and all-night parties, not to mention the drugs, the alcohol, and the gambling that is often associated with some of these rich celebrities.  They fail to realize that once the income stops, the monthly payments don’t.

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Misplaced Trust

As soon as these new professional athletes sign their names on the dotted line, they are surrounded by vultures in the disguise of investors, financial advisors, and even friends and family who would tell them how to “protect” and spend their fortunes.  They’ll be approached by all types of services who want to “help” them out, but who will charge them up the yin yang for the privilege.  Some examples are the bill-paying services who’ll manage the athletes’ monthly expenses, but who will charge their own monthly expense of $5000.  Or financial managers who’ll charge them $100,000 to prepare their taxes.  While the players are busy on the court or in the field, they have no clue what is happening in their own bank accounts, and most couldn’t be bothered to find out, so they hire people to take care of that stuff for them.  Unfortunately these people are very often crooked.  Between 1999 and 2002, $42 million dollars was lost when approximately 78 NFL players trusted crooked advisors.

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Luigi DiFonzo: Former-felon-turned-adviser defrauded many players including Eric Dickerson, a Hall of Fame running back.  Luigi committed suicide in 2000.

William Black: An agent whose pyramid scheme took $15 million from over a dozen football players.

Kirk Wright: The hedge fund manager managed to defraud folks from all walks of life to the tune of $150 million.  $4 million came from safety Blaine Bishop, while $2.7 million came from safety Steve Atwater.  After being convicted of 47 counts of fraud and money laundering, Kirk Wright would also commit suicide.

Divorce

Between 60-80% of professional athlete marriages end in divorce.

No athlete in history understands the financial cost of divorce like Michael Jordan.  When all was said and done the former NBA superstar handed over $168 million to his ex-wife Juanita, placing him ahead of Neil Diamond and Steven Spielberg for the most expensive celebrity divorce.  Thankfully, Jordan didn’t waste all his money on things like inflatable furniture rafts and shady investment deals, so while the settlement is indeed a huge blow to the bank account, the six-time NBA champion’s endorsements and business deals will keep him out of the poor house.  Not all players are so fortunate.  Most professional athlete divorces occur after retirement, when the pay checks are no longer coming in.  And in accordance with American divorce law, the wife is entitled to half of the husband’s assets, including everything he earned during his sports career.

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Children

Diapers for one baby are expensive.  Professional athletes have a bad reputation for making many babies, with many different mothers.  Monthly child support payments definitely add up.

Boxer Evander Holyfield:  It is estimated that Holyfield made over $200 million during his fighting career.  Now he’s being sued for missing the $3000 per month payments for only one of his 11 children.  His $10 million dollar home is up for auction due to foreclosure.

NBA’s Kenny Anderson:  7 children from 5 different mothers (3 girlfriends and 2 wives).  One of these women divorced Kenny, and won nearly half his assets, close to $10,000 in child support, and the license plate on her car reads “HISCASH.”

NBA’s Sean Kemp:  7 children, 6 women.

NFL’s Travis Henry: 9 women, 9 children.  At roughly $3000 a pop, his monthly child support payments are equivalent to what some people earn in a year.

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Entourage

One problem with becoming incredibly wealthy, is that you usually do it alone.  If you suddenly won the lottery, it would be perfectly normal for you to want to take all your friends on an all-inclusive trip around the world.  The only problem is that they didn’t win the lottery.  They still have jobs to go to and bills to pay.  What ends up happening with many celebrities is they’ll “hire” their friends to perform the various jobs (accountants, lawyers, marketing managers) required to keep their s**t together while they’re playing ball.  While this may seem like the right thing to do, these friends aren’t necessarily qualified to handle million dollar accounts or high profile real estate deals.  Mistakes are made, millions of dollars are lost.  Many athletes turn to former NBA legend Magic Johnson for business advice, and he will literally hang up on them if they’ve hired a friend or a family member to handle their affairs.

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And of course, lets not forget the “friends” and “family” who come out of the woodwork as soon as these athletes sign that pro contract. All of them are probably looking for a quick business loan because they know a guy who can make them all a little richer. Suddenly your cousin’s girlfriend’s doctor’s yoga instructor went to elementary school with you, and they need your help. Sounds absurd, but any celebrity will contest that they often can’t tell they’re real friends apart from the people just looking for handouts once they became famous.  Also, when someone you’ve known for your entire life starts asking for a few thousand dollars, and you’ve just received your pay check for $500,000, it becomes difficult to say no.  Most athletes have known several people their entire lives.



49 Responses to “The 6 Main Reasons Why Most Pro Athletes Go Broke”

  1. Waltsense Says:

    It should be a LAW. No professional ahtlete should get married under 30. You can have kids up to your eyeballs in your 30s-50s.

  2. TheScore.com Blog - The Score Says:

    […] to lottery winners,” writes Cosmoloan, “with no financial prowess or discipline, most pro athletes go completely broke in less than 10 […]

  3. JOHNW Says:

    HEY, I HAVE A GREAT IDEA….NOBODY DESERVES MORE THAN 100K PER YEAR FOR PLAING ANY GAME. LET THEM GET ANYTHING OVER THAT FROM ENDORSEMENTS…IF THEY’RE SMART ENOUGH. IT’S A SIMPLE…LESS PAY FOR THE AVERAGE DUMB-ASS……FEWER PROBLEMS FOR THE AVERAGE DUMB-ASS. EVERYBODY ACTS LIKE THERE’S NO WAY TO BRING THESE SALARIES BACK UNDER CONTROL. WRONG….YOU JUST HAVE TO HAVE THE BALLS(NO PUN INTENDED)TO START OVER. HEY, TEAM OWNERS, WAKE UP! IF YOU ALL STARTED OVER NEXT SEASON, WITH ALL NEW, UNKNOWN PLAYERS….TICKET BUYERS WOULD STILL SHOW UP. AS A MATTER OF FACT, IT WOULD PROBABLY GIVE YOUR SPORT A NEW KICK-START…A NEW BUZZ….A NEW EXCITEMENT.

  4. Jay Says:

    Johnw..
    WTF are you talking about? If person A wants to pay person B 100 million dollars to play a game, why should you care? Why so you have any gripe against anyone making as much money as they can?

  5. kix dunn Says:

    yeah…but all that pussy!!!

  6. HogieWan Says:

    @JOHNW -

    When pro sports started getting popular, the players weren’t making very much but they knew how much they could be making. So, they started betting against their team and blowing games or taking money from bookies for shaving points.

    Besides, people will and do pay a lot of money to go see a game or to advertise during one on tv. Should the owner keep all that money? Or should the guys that people are actually coming to see get a big cut of it?

  7. john Says:

    and y do u think thay pay so much to go see it cuz the players have to be paid thay just dont print the cash. less for the player means less for tickets and better overhead for events yes?

  8. jon Says:

    niggas!

  9. john smith Says:

    If they can’t handle that kind of money, they deserve it! Sports INDUSTRY has grown too big, every one wants piece of the action. I am not american/canadian, when I “very rarely” watch some sports from usa. I get bombardment of adds in every inch of the screen. When somebody interviews race car driver, first comment from his/her mouth is “I wan’t to thank good people of BLAA BLAA”. I turn off TV and go outside play sports with kids. You should too, if you have a kid. Or do something else.

  10. DJ Says:

    “jewelry” not “jewellery”

  11. Cosmoloan » The 6 Main Reasons Why Most Pro Athletes Go Broke « QuantumTom Says:

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  12. Joog Says:

    “their” not “they’re”

  13. JoeD Says:

    @JohnW -

    Is obviously not aware of something called collusion. Owners can’t get together and just decide to start over with new, unknown players. It’s against the law to collectively conspire together like that. Owners privately tried to do just that in the 80’s, were sued, and lost.

  14. SavageDarky Says:

    How else are these broke-down white ‘ho’s gonna get paid? They do the freaky-deep dark-nasty for a payday. Knock out a couple of ugly babies to keep the checks rollin’ in and then eat each other out all day. It’s an industry!

  15. SavageDarky Says:

    And it’s not Jewelry OR Jewellery it’s Jury. Git it straight suckuh!

  16. Gail Says:

    Zero Sympathy for any of these idiots.

  17. gilclyde Says:

    This whole entry is a ripoff of a March 2009 Sports Illustrated article, and your only reference to that is an unnamed link in the body of the text, 2/3 of the way down the page. Weak.

    http://sportsillustrated.cnn.com/vault/article/magazine/MAG1153364/1/index.htm

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  20. DN Says:

    You’re wrong about Muhsin Muhammad. That credit card suit was for like $25,000. His 8600 square foot crib was already on the market as he and his fam bought a new, larger home in Charlotte after he was signed in Free Agency.
    Everybody is cutting back. Moose is a relatively modest and frugal athlete by the standards of today’s Pro Athletes.

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  22. Kurt A. David Says:

    As a former professional athlete, now Transition Consultant for Professional & Olympic Athletes I see the reality of these statistics on a regular basis. It’s become pandemic and until the leagues become more proactive in their approach to the transition of pro athletes from sports this reality will probably continue. Right now, once an athlete’s cut-loose from a team they’re pretty much on their own except for some select cases.

  23. Ericka Herd Says:

    Hello,

    This was a great article. I am working on my dissertation in order to receive my PHD. I would like to cite this article THE SIX MAIN REASONS WHY PRO ATHLETES GO BROKE. Can you notify me and tell me when this was published and who the author was? I would appreciate your help. Thanks.

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  25. Lindy Says:

    “can’t tell they’re real friends apart”

    ‘Their’ is spelled wrong.

  26. Bill Says:

    I would have mandated that my wife signs a pre-nup…No way she is walking away with 168 million…Wtf…I would give her 100 bucks a year and child support if needed..if she doesn’t sign she doesn’t love me.

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  29. Imblackniggas Says:

    Yall be talking osme stupid shit man. if i wanna play a basketball game and win some cash then get on ur knees and suck it bitches!!!!

  30. yall fag it's Says:

    punk ass niggas dont even no what the fuck their doing play the fuckin game right and stop your bitchen get a fuckin LIFE

  31. omgniggas Says:

    yall fuck yourself what they said you mutha fuckas dont even have a fuckin life so get one they dont $$cost$$ much oh wait you have no fuckin money fuck your mutha fuckin mom

  32. milton snead Says:

    after reading these bad story about pro players mismanagering their money, I really feel so sad for these people and I know some them mean well when they are trying to help other. But I just want to say one thing to this and I pray its a lesson learned:….you can have all the money in the world but without God it does not mean anything and most likely you won’t enjoy it!

  33. Beresdeh Says:

    they broke couse their lifestyle, always thinking their money will come anytime. … lol.

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  35. Ari Massoudi Says:

    To complete this excellent article explaining the problem and the reasons why most Pro Athletes go broke, hereafter an article proposing a solution :

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  36. mr.awesomeguy6 Says:

    this info sucks suck it losers

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    I reckon that sport players should have a person who advises them how to spend their money and what investments would be wise.

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