"Why the f--- did I even buy this?"
July 26, 2012 7:35 PM   Subscribe

In 2009, Sports Illustrated investigated the strange and perilous financial lives of professional athletes.

Since then, former Met Lenny Dykstra has been sentenced to three years in prison for auto sales fraud and pled guilty to bankruptcy fraud, while Metafilter discusses the collapse of retired pitcher Curt Schilling's video game studio.
posted by Snarl Furillo (37 comments total) 19 users marked this as a favorite
I was just reading this, off your link in the other thread. I knew it was bad, but this completely gasted by flabber:

• 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.

posted by rtha at 7:41 PM on July 26, 2012

I met a former pro basketball player some years ago. He hadn't been quite good enough to play in the NBA, but he'd been good enough to play in Europe, so he'd had a career there for five years or so, making 200K a year until a knee injury ended his career. He'd bought a house for his parents and a downtown Toronto condo for himself, and paid his way through law school and then a masters of law. He'd gotten a job at a big law firm upon graduation from law school, but didn't stay long after he'd finished articling because he didn't care for the environment there. They were telling him what kind of tie to wear. His friends all told him he was crazy to quit, but as he put it, "I made 200K a year doing something I loved. I'm not going to work at a job I hate for 80K." When I knew him he was finishing up his master's. He had a part-time job for $10 an hour that he enjoyed and at which he had quite a bit of free time in which he could do his schoolwork. So basketball had been good to him, given him a good secure financial foundation on which to build, but he wasn't going to be able to just retire. I'm sure he'll have done well in life, because he had a very mature attitude about it all. He had things he wanted to do and no entitlement issues. He didn't think he was too good to work for $10 an hour.

I'd expect his story might be fairly typical for your average pro athlete who played it smart and invested his money. Their careers would not be all that long, 5 years on average, and they would not make the kind of money Michael Johnson or Wayne Gretzky made. They'll own a house and have some savings banked so that they can go back to school or start a business or something like that. They can live on a fairly modest income if they own their own homes free and clear, but they won't be able to just live off their sports earnings for the rest of their lives.

The ones who blow it all, who can't get it through their heads that out a million a year the government will take half, will retire from sports and have just a high school education (or maybe not even that in terms of what their academic skill levels are), and a damaged body, and they are in for a very rude awakening because they've been living in bubble of admiration and privilege since they were young and first began showing exceptional talent.
posted by orange swan at 8:08 PM on July 26, 2012 [4 favorites]

And yet in every sports labor dispute ever the sports talk radio lines light up to talk about the greedy players and give the owners a pass.
posted by furiousxgeorge at 8:12 PM on July 26, 2012 [8 favorites]

It seems like a lot of folks have that MC Hammer problem, where they want to support people who helped them on the way up, and, next thing you know, your neighbor's barber's on the payroll and you're investing in your uncle's startup that puts googly eyes on MySpace photos.
posted by box at 8:41 PM on July 26, 2012 [10 favorites]

Um, on half million a year the government won't come close to taking half.
posted by maxwelton at 8:43 PM on July 26, 2012 [1 favorite]

box, let's talk about this googly-eyes thing. I think you're on to something.
posted by mr_crash_davis at 8:46 PM on July 26, 2012 [9 favorites]

Is there a Kickstarter campaign? What are the $1000 rewards?
posted by Bunny Ultramod at 8:48 PM on July 26, 2012

The $1000 reward. (nsfw)
posted by nebulawindphone at 8:53 PM on July 26, 2012

Boy will that teach me to look at the URL before I click.
posted by gingerest at 8:56 PM on July 26, 2012 [7 favorites]

Mod note: nsfw-ed that, come on!
posted by jessamyn (staff) at 9:04 PM on July 26, 2012 [3 favorites]

I went to a mostly black high school. A number of students in my class displayed truly exceptional athletic prowess. The community rallied around them like you wouldn't believe; teachers literally had meetings about how to get them to graduate, the principal mentioned them constantly when addressing the school over the PA system, and their coaches were essentially working full time to develop the abilities of that handful of students.

Two eventually became professional athletes (NBA and NFL).

You have to understand that when a student comes from that environment and succeeds in sports, it's not his success. The achievement belongs to him, and his coaches, and his teachers, and his family, and the hundreds of his peers who tried and didn't make it. Probably millions of man-hours of effort goes into turning a couple hundred teenage athletes into one star. So when they get to the pros, they feel that they owe those people some of the profits from their success. In some sense, training each potential pro athlete is a risky but potentially profitable investment on the part of the community.

You also have to keep in mind that there's not a lot of other options for these kids. No one who went to my high school to play football, and then the state college to play football, is going to get a law degree. It's just impossible. My high school wasn't even up to basic academic standards to get into college on anything but a sports scholarship (or with a lot of family help, which I was fortunate to have). The job market is brutal for young black men. So when they retire from a sports career, they're more or less guaranteed to have no real education or job experience. It's pretty damn hard to even get a basic retail job in that position.
posted by miyabo at 9:25 PM on July 26, 2012 [9 favorites]

It's interesting to look at the median salaries of pro basketball players. There are a lot of these guys earning about two million a year. That sounds a lot unless you're Californian in which case:
  • After the feds and state takes their cut you're looking at about 1.3 million a year.
  • 1.3 million will buy you a nice house in a in a nice neighborhood. You could easily spend four times that on a very nice house in a very nice neighborhood.
Your pro career is likely to last only 4.7 years, so it doesn't take a lot of profligate spending and bad decisions for the lower end players to end up in financial distress. Add a divorce and suddenly you've lost the house and the fees you paid to the lawyer and etc. and ugliness has ensued.
posted by Tell Me No Lies at 9:35 PM on July 26, 2012

Former NBA forward Shawn Kemp (who has at least seven children by six women) and, more recently, Travis Henry (nine by nine) have seen their fortunes sapped by monthly child-support payments in the tens of thousands of dollars.

As a sole parent, owed over $20,000 by the father of my kids which represents years of unpaid child support, I just don't know what to say... words fail me.

I guess their Fathers Day must be a fun routine of 8am-9am = firstborn, 9am-10am = secondborn, etc etc.

Seriously, have these guys never heard of a condom???
posted by malibustacey9999 at 9:37 PM on July 26, 2012 [1 favorite]

Of course. It's that thing the chicks keep telling us to wear.
posted by Bathtub Bobsled at 9:41 PM on July 26, 2012 [1 favorite]

You think this is bad, you should see how terrible retired investment bankers are at baseball.
posted by No-sword at 10:01 PM on July 26, 2012 [25 favorites]

miyabo has a big part of it. There are plenty of people who feel entitled to a cut of a pro-athlete's success. The other thing is that the people who've given an athlete advice on their sports development, often know very little about managing a few years of salary to stretch into a lifetime investment. The people the athlete has trusted for advice no longer know the answers. Athletes end up broke for the same reasons lottery winners end up broke - not knowing how to invest and budget. Toss in a bad marriage or an early, career-ending injury and that football money is long gone.

I spent a few years around pro athletes. Only a (smart or lucky) few of them are going to have long careers, listen to good financial advice and be set up for the long haul.
posted by 26.2 at 10:03 PM on July 26, 2012 [1 favorite]

As it was Schilling's debacle that started this discussion tonight and there is much speculation about the causes of the plight so many sports stars find themselves in, I think ignorance of anything to do with financial management is the biggest culprit. As SI points out, so many are simply unprepared. Others, like Schilling, are educated but do not understand business or management.

I have been interested in the career of Josh Beckett--personally, I think his pitching days have been numbered since he had surgery a couple of years ago and doesn't seem to have regained his dominance--but what interests me is his investment in Herradura Ranch because, while it is certainly a big real estate investment and as such wouldn't be favored by SI's guidelines, it is something he seems to know a lot about. I do wonder if it is actually profitable, or even break-even. No way to know but Josh does not seem to be trying to prove anything to anyone and I don't get the feeling he ever thought of baseball as his ultimate career.

Or, what about everybody's favorite good guy, newly retired knuckle-baller Tim Wakefield. How many of his more muted millions might he have hung on to. He seems a modest and level-headed man. He even took himself off the World Series roster when he felt his injury might prevent him from helping his team as much as another pitcher might. He's a thoughtful and unselfish man which is a bit rare at that level of sport and it's hard to imagine him being as wild with his money as he sometimes was with a baseball.

What pains me a lot more than Schilling's story are the many stories of young players who are bilked by petty thieves and by mega-thieves like Sanford. Those young players, like Jacoby Ellsbury, a member of the Navajo Nation and my favorite Native American MLB player, were trying to prudently invest and yet were so vulnerable.
posted by Anitanola at 10:21 PM on July 26, 2012 [3 favorites]

How about an article about the financial lives of professional sports agents? These athletes make dumb mistakes but they are represented by people who are supposed to look after their finances who fail spectacularly and probably criminally and feel no consequences at all probably because they wear ties.
posted by srboisvert at 1:36 AM on July 27, 2012 [1 favorite]

How about an article about the financial lives of professional sports agents?

I saw a doc on this subject some years ago. It started with the following quote ;

"An athlete without an agent is still an athlete. An agent without an athlete is a homeless person."

Once the contract has been negotiated, an agent has no function. An intelligent person would hire a good contract lawyer to do the negotiation and pay him a fee for his services. Most athletes choose to keep an agent who takes at least 10 percent of their earnings to do ... what ? Often it is things like getting their washing machine fixed. Agents keep the problems of the normal world away from their athletes which keeps the athlete in a state of arrested development. Meanwhile, every time an athlete walks into a shop or dealership or whatever, the salesman's eyes turn to dollar signs and they pull every trick in the book because athletes are famously (a) wealthy, and (b) stupid with their money.

I question the contention that professional sports is a good career choice and wonder if all those good-hearted people who are trying the help the local tyro up the greasy pole should really be doing something more useful with their time.
posted by devious truculent and unreliable at 3:22 AM on July 27, 2012 [5 favorites]

Unless things have changed (which they may well have, as my knowledge is twenty years our of date), my understanding is that the story is particularly sad with regard to professional football players. There you have much larger teams and a big portion of them are second string and worse low-status players, linemen and such, who have careers measured in a few years, make relatively very little money, and...suffer chronic health problems for the rest of their lives.

When players strike, it's (often? sometimes?) all about bettering the lot of these players, not the stars who get the enormous contracts and endorsements and all that. And yet the fans, as mentioned above, vilify the players as being greedy star celebrities with enormous endorsement income.

I dunno. Maybe because I'm not really a team sports fan, it's easy for me to make this judgment. But I've long felt that this whole business, from high school through college to pro, is exploitative. Both often at the individual and business level, but also just generally with regard to our whole society and the socioeconomic group from which we draw these athletes. Everyone who's never watched Hoop Dreams and is interested in all this (at the high school level) should watch it ASAP. It's an excellent documentary and it will be one that you'll find yourself thinking about occasionally for many years.
posted by Ivan Fyodorovich at 3:32 AM on July 27, 2012 [2 favorites]

Fuck Curt Schilling, and fuck Lenny Dykstra. Based on the number of people they took down with them, and the sheer assholeness with which they did it, they don't belong in an article about the athletes financial lives. Shawn Kemp and Travis Henry may owe tens of thousands a month, but at least they didn't cost Rhode Island $110 million.
posted by inigo2 at 5:04 AM on July 27, 2012 [2 favorites]

And yet in every sports labor dispute ever the sports talk radio lines light up to talk about the greedy players and give the owners a pass.
And yet the fans, as mentioned above, vilify the players as being greedy star celebrities with enormous endorsement income.

YMMV, but I was listening to a lot of sports talk radio (in Detroit) during the last couple of lockouts (NFL and NBA), and the opinion of the callers was almost unanimously in favor of the players (slightly less so for the NBA, but I suspect that's because the physical toll of the NFL has been on people's minds more). Decades of owners crying poverty when building shitty new stadiums and then relocating teams anyway has taught even the casual fan the difference between rich and wealthy*, and who the worse of the two are.

Yes, there are individual players who are tagged for being greedy, but always within the context of "The team can't afford to give him that much and still stay under the salary cap/keep other good players."

* -- "Shaq is rich. The white dude who signs his checks is wealthy." -- Chris Rock
posted by Etrigan at 5:47 AM on July 27, 2012 [2 favorites]

Having read so much recently about the effect of repeated hits to the head on the executive functions of the brain, I wonder if that could be contributing to some of the problems these athletes are facing?

This recent story about a high school football player who committed suicide soon after suffering a concussion talks about pro football players receiving thousands of small injuries to the brain over their careers, but even small injuries add up.

One of my professors is researching the effects of concussions and other similar brain injuries on athletes and has many stories about profound personality changes, cognitive decline, and loss of judgment. It seems to me that the sort of injuries to the frontal lobes common in athletes could easily lead to them thinking that bad investments are good ones, and being vulnerable to con-men.
posted by deadtrouble at 5:56 AM on July 27, 2012 [3 favorites]

In Stephen Fatsis's book "A Few Seconds of Panic" he is an Ivy-educated writer taking a stab at being a kicker on the Broncos. [Note: it's a lot of fun and a good read.] He discusses this issue, and says that while some of the players were very smart, savvy guys, most of them were focussed too closely on just making it through camp, and then making it through each week. The double load of learning the team's plays while knowing that they were on the edge of losing their jobs if they got injured required too much of their attention...and this was pretty much the way it had always been for a lot of these men.
posted by wenestvedt at 5:58 AM on July 27, 2012 [1 favorite]

deadtrouble, I'e never heard that point raised before but it seems like a very good one. If we're worried about the players suffering such severe brain damage that they effectively get Alzheimer's in their forties, its effects on their ability to manage a sudden influx of wealth - a problem that's both complex and completely new to them - would be felt much sooner.
posted by Holy Zarquon's Singing Fish at 6:39 AM on July 27, 2012 [1 favorite]

It's a mistake to mention Curt Schilling in the same breath as someone like Rocket Ismail. Schilling knew what he was doing; he started and ran an ambitious company in a market he understands. Game companies often fail and Schilling understood the odds and risks and despite the recent press it's not particularly unusual, shameful, or stupid. Contrast Ismail, from the fine article, and his string of terrible private equity investments. That's a guy getting scammed.

Pro sports players have unions, right? Why don't they protect their players from crooked investment advisers? Are the unions on the take too?

Here's how Google educated its soon-to-be-rich employees before the IPO. I don't think that particular approach would work well for pro athletes, but something in the same spirit would.
posted by Nelson at 7:59 AM on July 27, 2012 [3 favorites]

The problem there is that players cease to be members of the players' union once they retire. So the union has no direct stake in protecting former players, and only a small percentage of its members are engaged in advocacy for retirees' benefits. Which makes a depressing kind of sense - while every current player is eventually going to be a former player, if they were that good at planning for their long-term financial security they wouldn't need this kind of help in the first place.
posted by Holy Zarquon's Singing Fish at 8:02 AM on July 27, 2012 [1 favorite]

furiousxgeorge: And yet in every sports labor dispute ever the sports talk radio lines light up to talk about the greedy players and give the owners a pass.
I don't see how incompetence at budgeting and financial planning equates to the players aren't being greedy. Or what player checkbook malfeasance equates to the owners deserving more scrutiny.

(Most of all, the players need financial management and education, which is difficult, considering they are near-teenagers in an ego-driven, testosterone-rich candy store with essentially limitless credit.)
posted by IAmBroom at 8:58 AM on July 27, 2012 [1 favorite]

This is just an exaggerated microcosm of what is wrong with America in general. We need financial education at a high school level and probably as low as grade school. Kids entering college should have at least a vague grasp of the costs they are incurring when signing student loan documents. The working poor need to have a grasp of what that 14% car loan really means to their bottom line and their cash flow. Pro athletes need to be informed of the consequences of poor financial management -- and they need to be told, at the very least, to save most of their income in broad index-based funds and not to spend more than 2~3% of that nest egg in any given year after they "retire" from sports (in fact they should be adding to it for quite some time).

However, this is not rocket science. After instituting the above mentioned education, if the high school student still wants to rack up $150,000 in student debt, if the working poor wants drive a brand new F150 with a 14% loan, or if the pro athlete wants to give their money away to fraudulent money managers, relatives, and go bankrupt, that is their prerogative, and I won't feel sorry for them one bit..
posted by mbatch at 9:31 AM on July 27, 2012 [1 favorite]

mbatch: However, this is not rocket science.
Nope, it's life-skills. And you didn't develop yours by accident nor genetics. Some people haven't had that fortune, and while I can't say I think they should have their hands tied away from their own money, it's a bit heartless to say, "Fuck the poor if they don't know enough to spend more wisely."
posted by IAmBroom at 11:26 AM on July 27, 2012 [1 favorite]

We need financial education at a high school level and probably as low as grade school.

It's a good start and I think some people will definitely benefit from this, but I worry that the tempation from what we see around us is too great.
Too many shows and movies and music videos about how great everyone else has it. How rich they all are.
Everyone living in a NYC high-rise, eating out at the best restaurants night after night, wearing new clothes day after day.
Heck when I worked in a posh part of the city, it influenced me too, and I nearly went broke trying to live like the people I saw.

And while you might try to be careful, if your friends aren't, then you're equally screwed. If they're all going to Vegas and staying in the center of the Strip during high season, then you either play along or stay at home.

If they're all eating out and ordering magnums of fine wine, you'll feel the pressure to pay your share as well lest they start calling you "cheap" behind your back.

And I'm just talking about "regular" people. Imagine how much more the pressure is on these professionals. "What? So-and-so drives a Honda and not a Range Rover?"

I'm realizing this now, and I'm almost 40 and lived my 20s and 30s in near-bankruptcy. Who knows what my attitude would be like if back then, I had more money and more friends than I could shake a stick at.
posted by bitteroldman at 11:36 AM on July 27, 2012

I wonder what the right historical analogies here are.

I can think of a few other situations where young, often uneducated people have come across a huge paycheck that will likely only last a few years. (High end sex workers? Gold rush miners?) But it doesn't seem like any of those situations have exactly led to widespread financial responsibility.

I'm not saying "this can't be avoided" or "there's nothing we can do." But I'm wondering if there are any historical situations like this in which the inherent hazards have been avoided.
posted by nebulawindphone at 11:39 AM on July 27, 2012

nebulawindphone: I can think of a few other situations where young, often uneducated people have come across a huge paycheck that will likely only last a few years. (High end sex workers? Gold rush miners?) But it doesn't seem like any of those situations have exactly led to widespread financial responsibility.
Heirs to fortunes... except that their parents have a clear heads-up that their children will need education on the matter. I was going to make a joking link to Paris Hilton, but then realized she's doing OK financially, and generating positive cash flow, AFAIK. So, it really, really matters to be brought up in a family that understands how to make money.
posted by IAmBroom at 12:23 PM on July 27, 2012

Right. It hadn't occurred to me that heirs and heiresses may technically be not-rich-yet before they inherit. In a way, they're just hanging onto the wealth and status that they had all along, even though the money wasn't in their name yet.
posted by nebulawindphone at 12:25 PM on July 27, 2012

Twelve years ago I was lucky enough to be hired at a dotcom startup before the IPO and many of us regular folk there made six and seven figures on our options. (Realized, when we exercised and sold.) I left before I vested more than about 30% of my options, but I exercised and sold most of those and ended up with more than mid-six-figures in income over two years. Well, about 200K of that I didn't sell until after the crash happened and I made only about 40K from that part1. But the rest of it I had in cash in the bank, not counting the tax bill.

Which is really not that much more than some highly paid people here make a year but it was an enormous sum of money for me. I never consulted anyone about it and, in fact, filed just 1040As both years, believe it or not. And I went through that money pretty quickly.

Part of what I'm trying to say is that I'm very smart and if it had mattered to me to manage that money, I would have. But I really don't care about money very much, it was sort of fun to have and I spent it. I don't regret doing that. Other people might shake their head at me for it. Especially considering that I was right then with my illness reaching the disabling stage and within a couple of years I was fully disabled and I've not worked since and I'm poor. But, still, it doesn't matter that much to me. It just doesn't. I know that in our culture this is supposed to be extremely important, but it's not important to me.

That said, obviously it's probably important to many of these former athletes, or inheritees, or whomever, and for those who think that they want to and ought to make their windfall be some foundation for lifelong financial security and comfort, well, it's a problem when they make bad decisions and that doesn't happen. But there are some people for whom a windfall is just a windfall and not some vast responsibility that one should manage carefully.

1. Well, that 200K+ block I didn't sell was intended to be my nest egg. But, like many people, once the crash began I kept dithering about selling and once it dropped enough, it was too painful to realize the losses so I just kept letting the damn stock be and so watched it fall and fall and fall.
posted by Ivan Fyodorovich at 12:41 PM on July 27, 2012

One big difference is that you're still employable. The dotcom boom may be over, but your industry still exists and you can still work. For a lot of pro athletes, their sport is the only thing they know how to do.
posted by nebulawindphone at 1:26 PM on July 27, 2012

IAmBroom, you obviously missed my point entirely.. Firstly, I never said "Fuck the poor", I said that, if they did receive the kind of financial education that I outlined in my first paragraph and then still decided to spend in an irresponsible manner, then that would be their prerogative and I would not feel sorry for them.

Also, I would argue that genetics can play a role, as innate intelligence will give some people a leg up, but that is irrelevant to the discussion.
posted by mbatch at 1:27 PM on July 27, 2012

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