Ever wonder how pro athletes go broke?

[Riffraff]

From Comcast.net Some old contract info, but how they go broke is what matters.

 

The 10 Ways Sports Pros Blow Their Cash

Rich professional athletes squandering their millions has become a sad cliché.

 

A Sports Illustrated article this year showed how shockingly common financial ruin is:

 

* By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

 

* Within five years of retirement, an estimated 60% of former NBA players are broke.

 

* Numerous retired MLB players have been similarly ruined.

 

If that's not bad enough, the recession has made things even worse. Too much money in real estate; investments in Ponzi schemes; and poor financial advising have been exposed with the down economy.

 

A sign of the times? More former stars are selling their championship rings for money than ever. "It's amazing that I heard the recession was over," says Timothy Robins, owner of Championshiprings.net, who buys bling from current and former pros and has seen a 36% increase in sales during the past year. "I'm getting more calls from players than ever. They're having a really hard time."

 

While just about everyone has lost money over the past year, athletes tend to make particularly bad financial decisions, and it's not just reckless spending.

 

Put Cash in a Ponzi Scheme

Pros seems especially susceptible to Ponzi schemes. Some recent examples:

 

* Federal prosecutors charged a woman who once advised Michael Vick and several other football players with stealing $3 million from eight victims in a Ponzi scheme, according to the AP. Vick is suing Wong to get $2 million back.

 

* MLB stars Greg Maddux, Bernie Williams, Johnny Damon (pictured here), J.D. Drew, Andruw Jones, Carlos Pena and other current and former players invested with Allen Stanford, according to the Washington Times.

 

* Seven former and current NFL players are among the 3,000 investors who were allegedly duped into investing $100 million in a Canadian-based Ponzi-type scheme — a pyramid allegedly run by two men who had prior dustups with the law, according to the Vancouver Sun.

 

Make Bad Investments

Maybe it's because tangible business ventures are more fun than stocks and bonds. With little business background, however, athletes have made some terrible investments. Some examples from SI:

 

* In May 2007 former quarterbacks Drew Bledsoe (pictured here) and Rick Mirer and five other NFL retirees invested at least $100,000 apiece in a now-defunct start-up called Pay By Touch—which touted "biometric authentication" technology that would help replace credit cards with fingerprints—even as the company was wracked by lawsuits and internal dissent.

 

* Rocket Ismail also squandered a fortune funding an inspirational movie; the music label COZ Records; a cosmetics procedure whereby oxygen was absorbed into the skin; a plan to create nationwide phone-card dispensers; a Rock N' Roll Café, a theme restaurant in New England; and recently, three shops dubbed It's in the Name, where tourists could buy framed calligraphy of names or proverbs of their choice.

 

* Michael Vick put $6 million in bank loans towards a car-rental franchise in Indiana, real estate in Canada and a wine shop in Georgia.(AP Photo/Jim Bryant)

 

Get Divorced

Costly divorce has long caused financial pain, but it's especially accute in pro sports.

 

Polls, studies, and anecdotal evidence suggest that the divorce rate for pro athletes are high, according to the NYT.

 

In football, the Times article mentions the reasons why NFL and other pro sports marriages fail: "rampant infidelity, women who target athletes, trophy wives, lifestyles not conducive to marriage and players being surrounded by entourages, which can discourage intimacy."

 

And it can be costly: Golf great Greg Norman's divorce last year cost him $103 million, according to the AP.(AP Photo/Darron Cummings)

 

Try To Run a Business

Everyone wants to be Magic Johnson, who runs the successful Magic Johnson Enterprises, which invests in urban development. When most pro athletes try and run their own business, however, the results are poor.

 

As SI notes, recent examples include Saints alltime leading rusher Deuce McAllister, who filed for bankruptcy protection for the Jackson, Miss., car dealership he owns and Panthers receiver Muhsin Muhammad, who put his Charlotte mansion on eBay a month after news broke that his entertainment company was being sued by Wachovia Bank for overdue credit-card payments.

 

The most spectacular recent example is former MLB All-Star Lenny Dykstra (pictured here), who has been forced to sleep in his car after his magazine, The Player's Club, failed miserably. "Nails" filed for bankruptcy protection in July, reportedly owing between $10 and $50 million. (AP Photo/Ed Betz)

 

Do Drugs

Lots of money usually means a good party. But for some athletes, that's about all they do. Drugs, especially, can mean bad news. Some examples:

 

* Texas Rangers baseball star Josh Hamilton (pictured here) began his career by burning through a $4 million signing bonus doing coke, crack and downing a bottle of Crown Royal a day, according to Maxim.

 

* NBA player Chris "Birdman" Andersen burned through his $289,000 2001 signing bonus partying; in 2006, was kicked out of the league for two years for unspecified drug use, according to ESPN, losing his $3.5 million a year salary.

 

* Pro football star Ricky Williams lost millions in salary when failed drug tests because of Josh Gordon use, leaving the NFL in 2004 (paying $8.6 million for breach of contract) and then being suspended in for a year in 2006.(AP Photo/Kathy Willens)

 

Have Too Many Children

Like everyone, athletes should be allowed to have as many children as they like. But not all are exactly responsible with parenting, having multiple kids with multiple women. That, put crudely, costs a lot.

 

Take the example of former NFL player Travis Henry. The NYT reported recently that Henry, 30, a former N.F.L. running back who played for three teams from 2001 to 2007, has nine children — each by a different mother, some born as closely as a few months apart. Henry says he's broke, and cannot afford the estimated $170,000 in child support he owes per year.

 

Or boxing champion Evander Holyfield. As the AJC notes, Holyfield has grossed more than $248 million in the ring, but also come close to losing his Atlanta home because of child support payments believed to total $500,000 annually -- on top of two divorces and several failed business ventures.(AP Photo/Lawrence Jackson)

 

Using the Wrong Advisors

Players often know they need financial help. They just chose the wrong people to advise them.

 

Whether buddies from back home or predatory scammers, the NFL Players Association says at least 78 players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds, according to SI. Some of the magazine's examples:

 

* Luigi DiFonzo -- a former felon who claimed he was an Italian count and defrauded players such as Hall of Fame running back Eric Dickerson before committing suicide in August 2000.

 

* William (Tank) Black, a disgraced agent who built a pyramid scheme that took a total of about $15 million from at least a dozen players, including Patriots running back Fred Taylor

 

* Kirk Wright, a hedge fund manager, was convicted on 47 counts of fraud and money laundering in a scheme involving more than $150 million. His client list included at least eight NFL players. Wright committed suicide in prison.(AP Photo/Matt York)

 

Invest Too Much in Real Estate

More than anything else, players appear to put too much money into real estate.

 

"The number one thing to do is real estate," says Robins of Championshiprings.net of where players invest. "Now, that's gone down the tube."

 

Similarly, SI quotes Ed Butowsky, a former senior vice president at Morgan Stanley as saying "Chronic overallocation into real estate and bad private equity is the Number 1 problem [for athletes] in terms of a financial meltdown...and I've never seen more people come to me about raising money for those kinds of deals than athletes."

 

Some examples of stars facing foreclosure following the housing market collapse from CNBC include NBA players Latrell Sprewell and Vin Baker, and MLB star Jose Canseco. (AP Photo/Kevork Djansezian)

 

Fight Dogs

Going to prison for 18 months because of fighting and killing dogs wasn't the only thing that hurt Michael Vick. The star NFL quarterback also went broke.

 

Besides millions of dollars in lost salary, Vick sunk his fortune into legal fees, fines and supporting family and friends, according to the Smoking Gun. A judge recently approved a plan for the QB to repay creditors $20 million after he filed for bankruptcy. (AP Photo/Matt Slocum)

 

Act Dumb

This might be the most obvious way sports stars lose their money: sometimes, they just act stupidly.

 

And moronic decisions have serious financial consequences. Recent memorable examples include:

 

* Michael Vick (see dog fighting entry) * New York Giant Plaxico Burress was sent to prison for two years for having an illegal gun and accidentally shooting himself at a New York City nightclub last November -- right after signing a five-year, $35 million contract. * NFL first-round pick Adam "Pacman" Jones (pictured here) has twice been suspended by the NFL for off-field incidents -- including for the entire 2007 season -- and was released in February by the Dallas Cowboys, notes the AP. Besides many other run-ins with the law, Jones was most famously involved in a melee and shooting at a strip club, but essentially got off. He's now looking for work; Jones had signed a four-year contract with the Cowboys worth $13.3 million. * Olympic champion Michael Phelps was caught smoking a bong, losing his Kellogg's endorsement deal, as well as financial support from USA Swimming, according to the New York Daily News.(AP Photo/Seth Wenig)

[buddahj]

hookers, drugs & booze...all other mistakes come from these.

[cdrudge]

 

hookers, drugs & booze...all other mistakes come from these.

For character mistakes that is. Having an agent or financial advisor run off with your money or put it into something bogus doesn't necessarily come from any of those. And in some cases, it could be very legitimate business ventures that just don't pan out.

[tosberg34]

A lot of these guys come from nothing, so when they get everything it's like a free for all. Maybe business should be a college requirement for footbal players. It might help.

[DMD]

The NFL has rookie symposiums where they discuss all the pitfalls and potential problems.

 

Of course a 21 year old "playa" who has several million in his wallet is not going to listen. Heck, if I had several million bucks when I was 22, I cannot imagine the trouble I would have gotten into. I know what I managed to do on almost nothing. Imagine your wildest dreams and desires being fully funded.

[tosberg34]

The NFL has rookie symposiums where they discuss all the pitfalls and potential problems.

 

Of course a 21 year old "playa" who has several million in his wallet is not going to listen. Heck, if I had several million bucks when I was 22, I cannot imagine the trouble I would have gotten into. I know what on almost nothing. Imagine your wildest dreams and desires being fully funded.[/quote].

 

Ahhh...I can see myself now. Darn! Back to reality. Why couldn't I be rich instead of beautiful?

Edited September 19, 2009 by tosberg34

[RussMan]

The shelf life of a professional football player is very short. As such they should have their investments allocated as if they were a year or so away from retirement... convervatively.

[Duchess Jack]

Imagine your wildest dreams and desires being fully funded.

 

 

Dungeons and Dragons - ALL DAY ALL THE TIME!!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Jackass]

It's a mindset where they came from nothing and now have all this money where it's almost not real to them and they think they might as well spend it. There's a lot of pressure from peers to spend and to give gifts, etc. Financial responsibility is not cool.

[pig devilz]

a body racked with pain and injuries sure doesn't help either > drugs.

 

plus, as somebuddy else said, they come from nothing, then have everything.

Many don't have peers/family that they can fall back on for advice or experience.

How many times have you heard that, Oprah/Ali/Cosby/a coach _____ fill in the blank, "is my mentor"

 

When you have this kind of money everybody wants to be your friend and adviser.

A solid foundation doesn't just show up when wealth shows up. It's more likely that greed will.

Sadly, even within their own family's.

 

Many pro athletes make the wrong decisions because they are surrounded by the wrong people.

And, they, the athletes, just don't have the time, determination or smarts to invest in what they are investing in.

[BeeR]

The NFL has rookie symposiums where they discuss all the pitfalls and potential problems.

 

Of course a 21 year old "playa" who has several million in his wallet is not going to listen.

Darwin in action.

 

Actually I can sympathize with those who try to invest responsibly and it doesn't work out, but the thugs-n-drugs slime are a joy to see crash and burn...sadly, even then they sometimes still get off lighter than they should.

[Riffraff]

Life Lessons From an Ex-NFL Player Turned Boss

 

One of the success stories - Eddie Kennison

 

Eddie Kennison was a newly minted wide receiver in the National Football League when he went to a seminar for rookies and was handed a card that read, “When the fat lady sings.”

 

On the back were a handful of statistics: 76 percent of professional athletes are broke one year after retiring from sports; 78 percent of professional football players are broke and divorced one year after retiring from sports. But the one that Kennison remembers more than any other: 100 percent of NFL players experience job termination.

 

Very cool that it hit home.

[Savage Beatings]

Dungeons and Dragons - ALL DAY ALL THE TIME!!

 

 

I cast Level 7 Bankruptcy. Duchess takes 50 Hit Points and suffers Death from Massive Damage.

[stevegrab]

Yep unless they can parlay their playing career into a career in broadcasting or coaching, they should save a lot and plan on finding a real job or business opportunity at some time. I know the NFLPA does more to counsel these guys, but too many (especially those with huge contracts/salaries who had little or nothing growing up) go into a spending frenzy.

[DMD]

Life Lessons From an Ex-NFL Player Turned Boss

 

One of the success stories - Eddie Kennison

 

 

Very cool that it hit home.

 

 

That is as awesome as it is rare.

[CowboysDiehard]

Even more impressive is the fact that RiffRaff dug up a his five year old thread to post this in!

Edited May 19, 2014 by CowboysDiehard

[WashingtonD]

I'm surprised the NFLPA hasn't devised some sort of Defined Contribution like program (leveraging Trusts or something like that) to cover the gap between 30-55 when players receive their pension benefits.

 

You wouldn't receive the tax break associated with a normal DC but you are trying to solve for people going broke, not people protecting income for retirement.

[darin3]

I'm surprised the NFLPA hasn't devised some sort of Defined Contribution like program (leveraging Trusts or something like that) to cover the gap between 30-55 when players receive their pension benefits.

 

You wouldn't receive the tax break associated with a normal DC but you are trying to solve for people going broke, not people protecting income for retirement.

 

 

Imagine the jack that a NFLPA pension fund would have? Even the most passive of investments would yield excellent returns for these guys to fall back on after their playing days are through. Some guys get it, most don't (sadly).

[electricrelish]

Dungeons and Dragons - ALL DAY ALL THE TIME!!

 

Hehehe!!!! That was truly funny!