But often, we misconstrued having the newest Mercedes as being wealthy, but that’s only the surface.
Being Sexy vs. Rich
It isn’t always about you. What about when all of the sudden, your long lost cousin is your new best friend. What does she really want?
You have the potential to earn a substantial amount of money. However, you and millions of movie stars, attorneys, physicians and corporate gurus are at risk when it comes to managing wealth. You are not immune to financial burdens and life management pitfalls. In fact, professional athletes often experience more financial instability due to the limited lifespan of earning potential.
Athletes are frequently in the national news for failing financially. Mike Tyson, who earned over $300 million during his boxing career, filed for bankruptcy in 2003 for being $27 million in debt and owing $17 million worth of taxes to the United States and British governments.
Example: Joe Louis, Mike Tyson, Muhammad Ali - does that sound familiar? They all had financial problems. In fact, Mike Tyson lost almost $400 million dollars. Louis spent his final years running from the IRS. (Maybe it was Mike Tyson squandered $100 million dollars.) So if you're an athlete, get yourself educated. People like Bill Cosby and Oprah Winfrey don't go broke because they make sure they understand where their money is going. If you're an athlete, spend far less than you earn. Your life should be profitable and you should run your financial life like a business just like everybody else.
How about Lenny Dykstra, former baseball star? He had failed car washes, a magazine company, real estate investing, and a stock trading website. Yet, he owed more than $30 million dollars to creditors including $18 million on a house he purchased from Wayne Gretsky.
Latrell Sprewell. He turned down a $21 million dollar contract because he said it wasn't enough money to feed his family. He made over $96 million in his career, but lost his million and a half dollar yacht after the U.S. Marshall seized it for defaulting on the note payment. His $5.5 million dollar house went into foreclosure in 2008.
And of course, Mike Tyson squandered $350 to $400 million dollars. He spent $4.5 million dollars on cars alone. He had a $2 million dollar bathtub; a $140,000 for Bengal tigers. Tyson received much publicity that gave him a game changing outlook on life when one of his tigers was kidnapped by drunken bachelors in the lampoon film “The Hangover”, but don’t believe this will erase his debt.
What about Eddy Curry? He's currently earning $10.5 million dollars a year. He pays $6,000 a month to his personal chef, $17,000 per month in rent, $30,000 per month in household expenses. He gives his parents and his father-in-law $16,000 a month and has seen 12 of his cars driven off by relatives. In the year 2009, Eddy Curry asked his boss, the New York Knicks for an $8 million dollar advance to help with his financial problems, but the team only gave him $2 million dollars. He also sued a former agent for mishandling his money. His mansion is in foreclosure and he's borrowed almost $4 million dollars against the house already.
Or how about these statistics? The average salary in the NBA is over $5.5 million dollars yet an estimated 60% of players are broke within five years after retiring. Seventy-eight percent of NFL players are bankrupt or under financial stress because of joblessness or divorce within two years after retiring. Many baseball players struggle financially after retiring. In 2009, ten current and former baseball players, including Johnny Damon of the Yankees, Jacoby Ellsbury of the Red Sox, Mike Pelfrey of the Mets, Scott Eyre of the Phillies discovered that at least some of their money was tied up in the $8 billion dollar fraud allegedly perpetrated by Texas financier Robert Allen Stanford. In fact, Pelfrey said that 99% of his fortune is frozen. Eyre admitted last month that he was broke.
How (and Why) Athletes Go Broke. PABLO S TORRE. Sports Illustrated.: 2009 NCAA TOURNAMENT PREVIEW New York: March 23, 2009. Vol. 110, Iss. 12, p. 90
According to the SI article “Why pro athletes go broke”, ten of baseball’s big leaguers discovered that portions of their earnings were tied up in the $8 billion fraud allegedly perpetrated by Texas financier Robert Allen Stanford. One of the players told the New York Post that 99% of his fortune was frozen and another admitted his was bankrupt.
Consider the following statistics:
Following two years of retirement, 78% of former NFL players are bankrupt or under financial stress because of joblessness or divorce.
Within five years of retirement, an estimated 60% of former NBA players are bankrupt.
Depending on where you are in your professional career, your short term personal goals for athletic performance are set by you and your coaches -- but what about your short and long term goals for financial management?
What do you want to do when you retire from the game?
How do you plan to financially support your retirement lifestyle?
Who should be managing your investments now and in the future?
When do you want to retire from the game?
How do you choose a team of trusted advisors who will represent your best interest?
In this book, you will gain insight into how to manage your wealth. (Since the book does not just focus on management of wealth, expand this comment to include all) We have included findings from a variety of professional athletes who have discovered ways to successfully manage their money and life experiences. We have researched and presented ways to help you manage other aspects of your personal life. Chapters in this book cover:
Please enjoy the book and make it your Goal to be successful!
Contact:
Catherine Hicks
(423)-645-9403
Asset Protection
Roccy DeFrancesco, J.D., CWPP, CAPP
This chapter is trimmed down version of the volumes of material I have on this subject matter (in other words reading this chapter is just the beginning of your education on proper asset protection).
What is asset protection? The term used by most in the mainstream means protecting someone’s wealth from negligence lawsuits (which is what this chapter will focus on). However, I want to remind readers that there are many other creditors who are more likely to take your money than someone who files a negligence lawsuit against you.
Your number one creditor every year is the IRS. Therefore, it is important to mitigate income, capital gains, and estate taxes whenever possible.
The stock market can be a creditor. If you had money in the stock market during 2000-2002 (-46%) and 2007-2008 (-59%), then you know the stock market is a creditor. It is imperative (especially for athletes who notorious receive terrible long term financial planning advice) to make sure your money is properly allocated where you have some portion of your money in wealth building tools that will not go backwards when the stock market drops significantly.
The number one creditor of many seniors is long-term care (LTC) expenses. While most affluent athletes who have their money properly protected from market crashes should have
