How do you earn 40 million and few years later have nothing?
 

http://www.complex.com/sports/2014/0...broke-homeless

Fuck, I do not imagine how is it possible? :1orglaugh
Bad investments - yes, but if you earn that you put at least some money in sure things, for example you develop/buy a building and live off the rent for the rest of your life.
How is it possible to become broke, give me his brain for a day to test drive and see how it works :1orglaugh

Between state, federal, local taxes and agent commissions he probably netted only about half of that. But still.


BTW, 60% of all NBA players are broke within 5 years of retirement. Those figures are worse for the NFL.


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Yeah, 20 or 40 does not matter at all for this topic :)

It's easy. You take a poor kid with shitty parents (or a single parent) who grew up with nothing and you suddenly give him a check for 8 figures... wrongly expecting them to behave as a rational, well parented, well educated and well taught adult.

With the high percentage of broke players you would think the players associations would push for contracts with long term payments.


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stupid assholes, dont know how to manage cash

I wouldn't call them "stupid assholes" Most of these guys have been placed on pedestals and treated as special from an early age because of their special skills. No one has prepared them for ordinary life the minute their skills fade, and income stops.

Also sky high child support/alimony payments don't get adjusted when they stop earning they get stopped when savings are depleted. There's a whole class of women who's goal in life is getting knocked-up by a pro athlete and what young guy doesn't want sex?

I think Robert Kiyosaki said it best.... something like "what can a broke, inner city, single mother of 4 teach her children about money management".

They try to set our Footy players up with businesses and financial skills. Seems to work, some still fuck up though.

They lose all the money because they have no wealth management skills. When you build up a business taht slowly starts making lots of money, you learn to manage your assets, what you can and cant buy. When you are some kid in college that can't do anything but play sports and you suddenly get an 8 figure income - you buy cars and houses and piss it all away on crap you don't need and expensive bottles of champagne that taste exactly like a $4 bottle of sowietskoje

Sounds like he is trying to get out of paying child support

These guys dont know how to budget and invest. Then again, thats most of America.

So you are saying these people do not understand that when they hit age of 36/39 years old their income would stop?
Well, that would be the definition of stupid if they do not understand that. Or do not "prepare" for that as you put it.

Yes, but in this case he was getting paid for years, meaning you should get used to it and start behaving smarter with cash as time goes by. First year you maybe waste, second year less wasting, third less and so on. I mean how many years does it take to learn to manage their money?

Also these guys are usually exposed to an unheard amount of leeches, and usually they also fall for it. Not only "pro-wifes", but there are countless other examples, lawyers milking them, phony brokers etc.. unfortunately they are in most cases an easy prey.

One that was and still is smart with his money is Oscar de la Hoya, but he had the luck to team up with a professional that's managing his business financialwise that he can trust.

My older half brother (same father, different mother) was born in the early 1960s and because my daddy was married, and this was completely taboo for the time, he was adapted by his grandparents (on his mother's side). They were rich, built the NJ turnpike, owned a construction company, a number of the gas station & resturants on the Turnpike, and also an ice cream company. They died when he was eighteen and he became a multi-millionaire over night.

For the next twenty-five years he traveled the country. He did what he wanted to do when he wanted to do it. Eventually.... all of the money ran out.

He went from being a multi millionaire many times over to being a fifty year old man who has never worked a day in his life

So don't players get recommendations for good lawyers? I would think at least the league should advice them in that matter.
Or if you say that Oscar has great lawyer - that means other sports people know that as well and they should hire the same guy. I mean he could be busy or exclusive with Oscar, but I mean - recommendations works..

From the OP's link ...

Shawn Kemp
Estimated Career Earnings: $92,000,000
How He Lost It All: Before you complain about the price of condoms, read the story of Shawn Kemp. It could potentially save you $100,000,000. The Sonics forward fathered (at least) seven children by six women and lost most of his career earnings to child support. Now that $12 box of Trojan Fire and Ice jimmys doesn't seem like such a burden, does it?


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I think people have a hard time understanding this because they are evaluating the situation from their own rational perspective and not able to see things from the players irrational perspective.

When you think you're the best, you're a star, you can do no wrong, you're a winner, you win, win, win.. etc etc etc... its very easy to give into the temptation of short term pleasures and rewards vs planning for long term, rationalizing that you'll figure something out later... get a new contract, get into rapping, get a movie deal, or whatever.

This is why lottery winners are always broke and why everyone always says "if it was me, i'd just..."

It is the current rational self, making predictions about a future, newly enriched and wholly irrational self. It doesn't really work well.

Well, like I said - lottery winners are one time big money. Athletes earn for 15 years.. Every month. So I assume even the most retarded would start getting better with money management at his 5th or 10 th year at least. I mean at least once in the lifetime they would get an idea "Damn, when I will be 37 my paychecks will stop. What would I do?".

Not that I am assuming they are rational thinkers, I just give their brain a little credit - that they get that magical idea I posted in above paragraph.

Actually very few athletes last 15 years. NFL/NBA starters usually last 5-7 years.

Or you can be an NFL star like Tom Brady making 20 million a year and your wife makes twice what you do, lol.

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If they have managed to get out of a complete shithole through sporting ability then they won't have ever expected to be the first member of their family to make it past 35.

I follow basketball so I know that 15 applies to majority. 12 years to absolute majority. However you should keep in mind that athletes who drop out of NBA can earn big money in Europe and now even in China.
Even in NBA it is 10 years for majority. I mean you can be starter for 5-7 years and then bench player for few more.

Again it does not matter, my point is that even if you have zero management skills you naturally improve in that department after few years. It is not one time money influx like in lotteries etc.

Give me a couple mil and I can stretch it for life. Oh wait, I'm married with a kid on the way. Not possible.

I was reading about many stars from football and basketball went broke. When they were on the top they didn't care to save or learn how to save, or drugs$parties&hookers, or divorces , or gambling. Many things.
But some are very good. Look at Jordan, he made last year more than when he was a king of the court. Or Foreman -he is doing good too.

Jordan has a brand, he gets royalties from Nike for Air Jordan etc. So we can count his as still "active" athlete :)
Anyway I agree - some are managing just fine, we mostly hear only about "bad" cases.

it's not always stupidity or poor upbringing though. You could just be horrible at investing. If you make some very large and poor investments that become malignant that can eat up money fast. In the op's 'buying a building' example even. If you spent say 10 million on an apartment building because you've always been told that is guaranteed money. But then you find out later the building was enough to pass code but only held together JUST enough to last 2 or 3 years and it needs major renovations. that could easily be another 5 million. If anyone gets injured or is affected by any of those code violations that could lead to law suits and even if you win that becomes a very expensive bill for a team of lawyers you would need. That doesn't leave you a lot to live with given you probably spent a bit of money on yourself during that time, even a nice house and some vehicles would have you treading water just like that.

personally i would work with much smaller investments and try to grow with that instead until i felt more confident in bigger projects, but mostly because i really don't know how to invest that kind of money either hehe

major renovation for half a building cost after 2-3 years? Is that 1 in 100000 thing or US thing?
I work/deal in real estate development, mostly commercial and if you develop a building you enjoy steady 8-10%( on average) income from renting space.
meaning if you invest 10 mil you get 1 mill each year. Without needing any major renovations for the first 10-15 years.
This is 99.9% safe investment.
So lets say I am an athlete and I get 20 mil. I invest only 10% of that into a development and I enjoy 200K every year. After small renovations and taxes I still have 100K to live like a king.

You can never underestimate the power of ignorance. They cannot grasp the concept of financial stability, saving, budgeting, low risk investing and cannot think beyond tomorrow.

It was just an example. It might be stocks or just estate went down in price a lot.

Bingo :2 cents:

He should write a book "How i wasted 40 million dollars" , he might earn another 40 mill to waste.

That is why I specified this thing as a sure thing out of all investment opportunities. If you get big money you invest some portion of that into "sure thing" and speculate with riskier investments with the rest.

quite a bit of finger-pointing in here at peeps who've earned a lot more than those pointing fingers.

It's odd to me that peeps think that just because someone can throw or catch a ball accurately then they also have the tools, resources and wherewithal to be equally proficient financially.

That's a logic leap.

Adding to a lot of what's already been posted, these guys also have a lot of hangers on and ass kissers. They put their old friends and school buddies on the payroll, then overpay them out of "loyalty". It doesn't take a big crew to start draining the money quickly.

See also: famous rappers

Not equally proficient, that would be a logic leap of course. I am not that stupid to expect that much.
I expect just bare minimum, even the dummest person should be able to achieve such a minimum:

Not a logic leap to think that a person who earns money for years at least after 5 or 10 years starts to grasp at least the bare minimum of management skills...

And also not a logic leap to assume that said person at least once would get this brilliant idea: "Damn, when I will be 37 my paychecks will stop. What would I do?".

Follow the accountant.

Wouldn't your accountant notify you when you were down to your last million?

lol

You have experience in real estate investing and have been successful apparently but i was talking about someone who has zero experience doing the same thing in my example. I'm not saying that would happen, i was using that as an example as what could happen to someone if they didn't know what they were doing.

ok, perhaps logic leap doesn't describe what's going on here, let's go with judgement call then.

It's quite a judgement call to make assumptions like these.

Everywhere is risk, however real estate would still be valuable and even if you do not do smart investment you would have solid/stable income stream for living expenses. That is why I advocate investing at least 10% into something that won't go away. And then you are welcome to blow the rest 90%. Just have SOMETHING left, that would make you living money :)
Or another simple idea in real estate - you build some condo building, take penthouse for yourself (that you would own after your money stops) and rent rest of the apartments. And you have it. It is very simple to create some stable income for the worst case scenario (if you blow or miss-invest the rest).
If I was accountant/lawyer of some athlete I would MAKE them do that for their own good. And later on they would thank me and would recommend my services to other athletes etc. I think that there are some shady lawyers who take advantage of those people... As this is not that difficult to manage correctly, without losing 100%.

Maybe he invested all his money in residential real estate in Detroit.


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The worst thing you can do investment wise is invest in something you know nothing about.

Note: A former NBA player owns more than 250 Wendy's and Chili's restaurants. He bought one, worked there during the off season cooking fries and mopping floors to learn the business.


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broke is a relative term, I highly doubt Eric is broke in the sense of $0, he is homeless probably because he sold his house and hasn't purchased another one.

didn't one of these sorts do something similar to that? I seem to recall one who tried to reinvigorate his home town and banrupted himself in so doing.

Derrick Coleman:
Estimated Career Earnings: $91,000,000
How He Lost It All: When you make close to $100 million in your career go ahead and buy some jewelry, fur coats, and Bentley GT's?you deserve it. But, for the love of Isiah, don't take it upon yourself to stimulate Detroit's struggling economy. Coleman, who ended his career with the Pistons, lost a fortune attempting to create jobs and revitalize business opportunities in Motown during 2009 and 2010. Before labeling the Michigan native a martyr, it's important to note that Coleman's assets included two chinchilla coats (because it's cold in Detroit), 40 Rolex watches (bosses got to be on time), and a 1970 Chevy Nova (uh, what?).

also, the #s are always offon these things, athletes never see anywhere close to that big #. That $40m? Figure the athelete ended up with <1/2 that after financial planners, accountants, managers, agents, etc. all take their cuts first.

Just like building a web site, my programmer and designer get their cut before I see a fucking dime. That site goes belly up and I'm out money after spending all my dough on fancy designers. Ok, not exactly identical situation, but you get the gist. a lot of entities get their cut before the dude who makes that money.

that guy!

to the topic:

Also, I think the other thing that's VERY difficult to consider here is the extreme other universe that level of wealth lives in. Getting paid $500k every 2 weeks being surrounded by yes men and all that hubbub is hard for peeps like us to comprehend.

Another thing, have you ever lost everything you've earned like one of these guys? If so, there's someone less than you who can't understand how you can have all you have and lose it like you did.

I can't knock the guy for trying.
Seems like he was trying to solve a multi-Billion dollar problem though.

Spending $1 mil on jewelry and clothes seems normal when you have $100 Mil though.
1% of income on luxury would give me a 1/2 pack of smokes per day.

:1orglaugh

Nobody is disagreeing with you here, I have plans on doing something very similar myself, but I wouldn't do it without experienced successful advisor's guiding me along the way. Someone less cautious would not bother, or get their cousin to do it for them. if high intelligence was all that was needed for investing mathematicians and engineers would be the richest most powerful people on the planet. That isn't exactly the case is it?

Anyone here know any doctors or lawyers with debt issues? Or financial advisor's? I've known a few. I wouldn't call any of them fools--although i probably wouldn't hit them up for financial advise either ;)

Nothing new! Happens all the time. Maybe the NBAPA should focus on teaching players wealth management instead of worrying about what some rich white guy says to his gold digger gf