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 The “Real Deal” is broke.
It is being reported that former Heavyweight champion Evander Holyfield is playing the real life game of Deal Or No Deal.
He is in deep financial do do. It has been reported that his $10
million estate in suburban Atlanta is under foreclosure, the mother of
one of his children is suing for unpaid child support, and a Utah
consulting company has gone to court claiming the boxer failed to pay
back more than a half million dollars for landscaping. Just one more
high profile athlete having to scale back that lifestyle to the level
to which you have I have been accustomed, not the athlete. Why is it
that athletes who seem to have everything are often completely unable
to control anything relate to finances?
We all played our violins to death when heard of Latrell Sprewell’s financial troubles. On
Halloween 2004, Sprewell, who was in the final season of a $62-million,
five-year deal he signed with the New York Knicks, said he was insulted
by Minnesota Timberwolves s offer of a contract extension that was
reportedly worth between $27 million and $30 million for three seasons.
“I’ve got my family to feed,” That
quote become a national moniker for the public perception of athletes
as greedy out of touch individuals. Apparently Sprewell still cant feed
his family because his yacht was recently repossessed and his multi million dollar mansion is about to be foreclosed on.
While there is certainly the stereotype of the financially irresponsible NBA athlete , no professional sport is immune.
Lets take a look at some high profile athlete financial sob stories over the years:
1. Who my age can forget Jack”The Ripper” Clark
, star player for the Boston Red Sox who back in 1992, in the second
year of a three-year, $8.7 million contract with Boston filed for
bankruptcy and listed $6.7 million in debts. Jack was a master of
financial planning and prudent asset acquisition. His bankruptcy
petition listed him as having bought 18 automobiles, including a 1990
Ferrari that cost $717,000 and three 1992 Mercedes Benz cars costing
between $103,000 and $143,000. He owed money on 17 of the automobiles,
was liable for about $400,000 in Federal and state taxes. He had also
lost about $1 million in the past year in a drag-racing venture. Sounds
like Jack would have been more at home in the NBA.
2. Johnny Unitas
Hall of Fame quarterback for the Baltimore Colts filed for bankruptcy
in 1991 citing numerous failed business ventures in his petition These
failed bits included bowling alleys, land deals and restaurants. He
filed for Chapter 11 bankruptcy in 1991.
3. Mike Tyson
This speaks for itself. Mike’s bankruptcy was highly publicized.
Despite earning hundreds of millions during his boxing career, Mike
kept it simple. His bankruptcy petition simply stating: ” I am unable
to pay my bills” which totaled about $27 million, according to federal
court records.
4. Dorothy Hamill The
women’s figure-skating gold medalist in the 1976 Winter Games, filed
for bankruptcy after a series of financial setbacks. Hamill said she
has experienced financial setbacks as a result of poor financial
investment advice and management.
These are just a few of many athlete tales of woe. It is not a phenomenon limited to professional sports. Just ask M.C Hammer. Prior to his declaring bankruptcy,
it was made public that his day to day living expenses far exceeded his
33 million dollar income. If I am going to veer off to celebrities, I
certainly have to mention Kim Basinger and Michael Jackson.
When the Toronto Star ran an article alleging
that a shocking 60 percent of NBA athletes “go broke” five years after
retiring did we not all pull out that very tiny violin we have reserved
for such occasions? The NBA players union and the NBA have both
disputed that assertion. The article goes on to talk about all the
people taking advantage of and “scamming” these athletes. While I have
no doubt there is truth to this, I can understand how such a
generalization would make the NBA uncomfortable. It leaves you with the
impression that 60 percent of NBA players are not only financially
inept but idiots in general. This is simply not true. While good
business sense is often lacking, I view many of their mistakes as being
more mistakes of trust, credibility and lack of life experience than
anything else. Smart busy people who can afford to, hire people with
targeted expertise to help them. This allows them to focus on their
expertise. Sometime mistakes are made and bad judgment is used in who
we hire and hang out with. That is not unique to the NBA or
professional sports. This happens to everyone. That is life. It happens
all the time. It just does not make front page when we screw up. If
there is any question at all as to how badly we as the general public
screw up, just look at the personal bankruptcy filing statistics.
In order to get a perspective from the inside, I contacted Jordan
Woy, a highly respected sports agent and a principal in the sports
marketing/management firm of Schlegel Sports. Jordan has represented numerous high profile athletes
Here is what Jordan had to say:
“I think there are several reasons why so many athletes “go broke”.
First, whether it is a lottery winner, an athlete or a star
entertainer, if they are not equipped with the knowledge on how to make
and save money they are in trouble. When they didn’t earn it through
disciplined business practices and they don’t have those skills they
usually go through it quickly. Most lottery winners or athletes make a
great deal of money in a short period of time. They start spending it
on things that only go down in value (cars, jewelry, partying,
entourage,etc) and start to evaporate the money they do have. They can
carry this off until they stop earning big money. This is when the
trouble starts. It is hard to believe that MC Hammer, Mike Tyson,
Evander Holyfield and now Ed McMahon are broke. These are people who
earned hundreds of millions over time and it disappeared. Lavish
spending and entourages were probably the downfall for the first three
for sure.
Most athletes play for four to ten years if they are lucky. After
they pay taxes (can be 40 to 50%), agent fees and buy their first
homes, cars, outfits, jewelry and then buy friends and family things
they are left with very little. When they first “strike it rich” all of
their longtime friends and family expect help. Most athletes feel
obligated to help everyone out at first then they wise up. They also
want to keep up with their teammates. If someone buys a Bentley they
have to buy one, if someone buys a $75,000 watch they have to buy one
to keep up the appearance. Then of course when the career ends and they
are still living in a multi million dollar house, driving 3 expensive
cars (and insurance), traveling in private planes and taking Limo’s
when they go out on the town reality sets in. The money dries up very
quickly.
However, if athletes educate themselves and learn money management
skills and make smart, safe investments along the way they are usually
in very good shape. After representing athletes for over 20 years we
call this our “life plan”. We take out clients on working vacations in
the off season to places like Las Vegas, Cancun and on a cruise to the
Bahamas to learn business networking. We have people from industries
such as real estate, oil and gas, financial planning, credit repair,
asset protection/estate planning, etc come to educate the players and
their wives so they can learn about these business and also determine
if they are interested in any of these industries for life after
sports. One of the financial planners
who comes always says most people die coming down from Mt. Everest not
going up. The goal is for these athletes to get to their Mt. Everest
AND to get down safely. ”
So what do you think? Are the financial mistakes athletes make any
different than yours and mine, just on a different scale? When we hear
these stories are we just unable to comprehend that someone could have
that much money and spend it all? Can we learn lessons in how to live
our lives from their highly publicized financial gaffes? Do we even
care at all?
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