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JordansBulls
03-27-2009, 11:19 AM
Source: Sportsillustrated (http://vault.sportsillustrated.cnn.com/vault/article/magazine/MAG1153364/1/index.htm)




• 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.






"Chronic overallocation into real estate and bad private equity is the Number 1 problem [for athletes] in terms of a financial meltdown," Butowsky says. "And I've never seen more people come to me about raising money for those kinds of deals than athletes."

For the risk-averse investor, an adviser such as Butowsky would suggest allocating 5% to private equity, 7%--12% to real estate, 50%--65% to a mix of public securities (stocks, mutual funds and the like) and the rest to alternatives such as gold and hedge funds. Yet with athletes, who are often uninterested in either conservative spending or the stock market, those percentages are frequently flipped. Securities are invisible, after all, and if you don't study them, they're unintelligible. Not to mention boring. Inventions, nightclubs, car dealerships and T-shirt companies have an advantage: the thrill of tangibility.






About five years ago, Hunter says, he invested almost $70,000 in an invention: an inflatable raft that would sit under furniture. The pitch was that when high-rainfall areas were flooded, consumers could pump up the device, allowing a sofa to float and remain dry. "The guy I invested with came back and wanted me to put in more, about $500,000," Hunter says. "Then I met [Butowsky], who just said, Hell no! I wound up never seeing that guy—or any of my money—again."





Then there are the unnamed athletes and team personnel who pawned 400 title rings to the online reseller championship-rings.net over the past three months, a spike of about 33% from the same period last year. (A 2008 Giants Super Bowl ring was among them.) "It's mostly younger players who've been selling," says Tim Robins, the site's owner. "It's the economy. Selling these items is always embarrassing, a last resort."






On a much smaller scale, Torii Hunter and Astros pitcher LaTroy Hawkins recall the story of a former major leaguer from the Dominican Republic whose adviser took care of all his financial matters. One day the player's mail came to the clubhouse and Hunter playfully asked to see it. "It turns out he was paying this guy $5,000 a month on insurance for two cars in the Dominican Republic," Hunter says. "I got three cars, and I only pay $250 a month. He'd been with and trusted this guy [for almost 18 years]!"





As soon as an athlete goes pro, people in search of handouts tend to stretch the definitions of family and friends. When Hunter went to his hometown of Pine Bluff, Ark., for his grandmother's funeral last August, he found Old St. James Baptist Church packed, the line of cars outside stretching for blocks. "But my grandma didn't know anybody," Hunter says. "She just lived at home." When he stepped outside the church, people "came running, all dressed up, chasing after me," Hunter says. "They were throwing CDs, projects, letters.... They were yelling, My sister's brother went to school with you!"






Perhaps the upper limit on spending was set by the famously profligate Shaquille O'Neal, who—according to a document obtained by the Palm Beach Post during O'Neal's canceled divorce filing in January 2008—spends a total of $875,015 each month, including $26,500 for child care, $24,300 for gas and $17,220 for clothing.





Financial advisers have come to call it "the problem of the $20,000 Rolex." If a 22-year-old spends $20,000 on a watch or on a big night out at a nightclub, that money is either depreciating or gone. "But if they invested in a five percent, Triple A insured, tax-free municipal bond for a period of 30 years," money manager Seymour says, "that $20,000 would be worth $86,000 at that tax-free rate of return.

DrDEADalready
03-27-2009, 11:29 AM
"They were throwing CDs, projects, letters.... They were yelling, My sister's brother went to school with you!"

Correct me if i'm wrong. But My sister's brother?? wouldn't that make it your brother as well :confused:

FOBolous
03-27-2009, 11:57 AM
that's because quite a few of them never went to college or doesn't stay in college long enough to get a degree. all they know is the sport they play. as the result, they don't have anything to fall back on. once they graduate at the age of..let's say...38...than what?

plus a lot of them get really rich really fast so they don't know the value of a dollar. they don't know how to manage their money or invest their money...they don't about saving their money. they just go around throwing money away buying up useless things so yeea...there your answer

superkegger
03-27-2009, 01:03 PM
I recomend reading the whole article. It is a really good article. Just kinda makes you shake your head though.

bleedprple&gold
03-27-2009, 02:16 PM
how the hell does Shaq spend 24 grand a month on gas??

LAKERS 24/7
03-27-2009, 02:35 PM
Correct me if i'm wrong. But My sister's brother?? wouldn't that make it your brother as well :confused:

haha nice catch. it would either be your brother or it would be you

gregd111
03-27-2009, 02:51 PM
how the hell does Shaq spend 24 grand a month on gas??

Yea that can't be true, what does he pay for the teams charter fuel?

TrueRob
03-27-2009, 03:17 PM
Now I see how they go broke. The main problem is the lack of income after retirement. Even if they do have a source of income, it's usually not enough to maintain their wealthy lifestyles.

JordansBulls
03-27-2009, 03:51 PM
Now I see how they go broke. The main problem is the lack of income after retirement. Even if they do have a source of income, it's usually not enough to maintain their wealthy lifestyles.

After owning a house and a few vehicles, what exactly else do you need?

TrueRob
03-27-2009, 04:02 PM
After owning a house and a few vehicles, what exactly else do you need?

Money for maintaining the house, money for maintaining the cars. Eventually, new cars, clothing, expensive vacations etc. Then they have to pay a bunch of bills for their children if they have them. Without any new income I can see how they could go broke.

RaiderLakersA's
03-27-2009, 05:26 PM
"A fool and his money...."

Can't nail them for not being financial wizards. There are Ivy League doctorates who can't balance a check book. Brilliant minds presided over the current bank and financial market collapse. Finance is just a hustle by a different name.

I do fault athletes, however, for not having the simple common sense to live like the money won't last. How hard can that be? Especially after the checks stop rolling in.

What is the NBA veteran minimum -- $1.2M yr? I could maintain my current level of living for 20 years with that income. A 2 - 3 year contract would set me up for life. And we're not even talking about money from endorsements or signing and player incentive bonuses. But I have a middle class mentality, and I was raised in abject poverty. There's no way in hell that I would blow that kind of income in my lifetime. It just wouldn't happen.

I know the article was meant to enlighten, but all I can do is shake my head...

ShakeN'Bake
03-27-2009, 05:30 PM
Athletes tend to have entourages that they pay everything for. Cut the entourages and you'd save yourself a lot more money

pete_one
03-27-2009, 07:13 PM
gimme the vet's minimum and i can make it last the rest of my life