11/05/24
January 31, 2008
NBA players' financial security no slam dunk: A statistic was cited during the meeting that startled some of the hoopsters. It was said that 60% of retired N.B.A. players go broke 5 years after their cheques stop arriving.
posted by tommytrump to business and law at 02:04 PM - 41 comments
Well nobody said athletic ability and brains went together. As a matter of fact, sometimes when somebody is so gifted athleticly they develop little skills in other areas. I always wonder why someone like Mike Tyson can have $300 million one day and be bankrupt in a couple of years. Also the NBA consistently proves that no matter how much money the players make, their behavior off the court is not consistent with what you would expect of the affluent. Forgive me if I don't feel sympathetic to people who average over $5 mil a year and can't make ends meet. I would just need one year like that and never need to work again.
posted by Atheist at 03:35 PM on January 31, 2008
The 60% figure is said to be a ballpark number, but even if it was overshot, and the real number is 40%, that is still unbelievable. Has anyone seen the show on MTV that glorifies big spending called Cribs? Ridiculous. And like Atheist, I don't feel a bit bad for any of the "broke" players. 14 cars, including Bentleys and Rolls Royce Phantoms, 10.000 sq. foot mansions, olympic size swimming pools, and billboard size HD TVs. Gosh, who saw the bankruptcy coming?
posted by BoKnows at 03:59 PM on January 31, 2008
The NBA... it's schaaaaaaadenfreude-tastic!!! But seriously- I'm actually glad this is happening, because it's a valuable life lesson for these people to learn. Better they be self-actualized (eventually) and broke than rich and as petty as always. There is simply no excuse, none, that anyone making into the 8-digits, even pre-tax, can't have a solid nest-egg and investment income to live extremely comfortably off of. Even the most conservative investment portfolio would generate $1m a year for life off of a $20m (7+ years in the league, likely) saved sum. I don't understand how no one- no truly close friends, or parents, or agents- didn't tell these people to invest. MTV Cribs is, like My Super Sweet Sixteen, an example of the decadence of a declining civilization. I'd pay "straight cash money" to watch a series called the "MTV Cribs: Where Are They Now?", in which we see how some no-talent one-hit wonder of shitty rap/club music is now living in squalor with certainly no Benz in the driveway.
posted by hincandenza at 04:04 PM on January 31, 2008
I don't wish poverty on anybody, especially someone with no life skills or marketable experience aside from being able to slam-dunk on tippytoe. I don't care how large they lived once upon a time. Being poor fucking sucks. Yes, many of these players have been spoiled from the moment they first dribbled their porridge in their high chairs. That's how you go through millions in no time. But given that, if you spend it all, you have to make more somewhere, or else your story gets a hell of a lot more tragic. It's good that someone's paying attention to that bit. I don't feel as bad for these people as I do for a lot of people who've never had success in their lives, but I'm not dancing on their blingless graves neither.
posted by chicobangs at 04:19 PM on January 31, 2008
two words: bud get
posted by garfield at 04:32 PM on January 31, 2008
You have those words in the wrong order.
posted by 86 at 04:35 PM on January 31, 2008
It might feel nice to see the NBA players taken down a peg after their careers, but unfortunately, most of us would probably find ourselves in the same situation. Take a look at the number of lottery winners who blow through their cash, or on a smaller scale, the number of kids who spend way more than they earn after they get their first real job out of college. Take a look at the sub-prime lending mess we are in. The loans themselves were not the problem, the problem was that people used the easy availability of the loans to buy more house than they needed. Talk to the survivors of the Great Depression, and it's easy to see the differences between their attitudes on saving and spending and the attitudes of today. I'm sure there's more than a few people here who carry a wee bit more credit debt than they'd like, and will likely spend years paying it off. How many here have the recommended six months salary saved up in case of job loss or emergency? I'm only up at two months myself, but trying to get there.
posted by bolo165 at 04:43 PM on January 31, 2008
Say - vings? How many of these guys got suckered because an education is for people who can't dunk? Caveat Emptor. Good rule to live by. That said, I'm constantly one paycheque away from Hobotown.
posted by WeedyMcSmokey at 05:12 PM on January 31, 2008
Common sense and honest advocates are sometimes in short supply in NBA circles, but they do exist. I have had a very hard time getting my 21 year old to keep with the little budget I’ve set up for him while attending college. Sure, you can’t spend it if you don’t have it. But now days, the damn banks will send college kids a credit card with a 2000 dollar limit, knowing full well that if the kid that’s in college doesn’t pay, the parents will have to step in if they want to preserve their child’s credit. Everywhere you turn; there are vultures out there that prey on people of all financial backgrounds, from check cashing and rent to own to 100,000.00 for filing tax returns for rich athletes. My kid fell prey, but now knows the scheme. He’s had to learn the hard way that it all catches up with you. He has learned the value of accepting the guidance of honest advocates, in this case, his parents. My point is that when you are talking about young adults and their early attempt at handling finances, they are very vulnerable. I’ll acknowledge that the player have ownership in their financial woes, but the NBA and other professional sports leagues have shown that they don’t really care about their athletes by not doing more than they have in an effort to counsel their players when it comes to their finances. I hope the NBA is proud of these statistics.
posted by amigo59 at 05:26 PM on January 31, 2008
amigo59, the NBA is dealing with adult males that aren't listening, what do you want them to do, become parents to these men? You give most men the type of money these guys are getting and I'll bet none of them will ask the NBA what they should do with the money they gave them.
posted by Familyman at 05:45 PM on January 31, 2008
You are missing my point familyman. I've said the players have ownership in the dilema. "Common sense and honest advocates are sometimes in short supply in NBA circles, but they do exist" Look at the ages of these guys. Even educated young people make mistakes. Why don't they make more of an effort in making available these honest advocates. They seem to be making a statement here. But it comes a little late don't you think. If I'm an employer, I feel certain resposibility for my employees. Sure, you can't make them do right, but you can provide more outlets that can help guide them. I'm just saying that they have not done enough, and I think that it's no secret that they simply don't care as much as they should.
posted by amigo59 at 05:55 PM on January 31, 2008
If MLB cared more for thier players, the steriod problem would not be what it is today. Just let me get mine, the hell with he who helps get me there. I guess careing doesn't sell tickets.
posted by amigo59 at 06:11 PM on January 31, 2008
"MTV Cribs is, like My Super Sweet Sixteen, an example of the decadence of a declining civilization." Anyone ever read "The Great Gatsby?" How 'bout Tolstoy? The entire Rococo period was made up of old school folks spendin' money just to spend money. Lavish lifestyles are nothing new; Fast money is just that: fast.
posted by everett at 06:24 PM on January 31, 2008
I agree with you amigo59. All professional sports, especially the NBA since they take 19 year olds, have an obligation to help these guys take control of their finances. Maybe a type of Social Security that's just taken out of their salaries and saved for them. They pay them exorbitantly knowing full well that this type of thing will happen.
posted by Shotput at 07:11 PM on January 31, 2008
I'm not convinced that this is something the NBA needs to do or feel responsible for. After all, the NBA Players Association is the group who alerted the players to the statistics, and by doing that, is trying to help "steer" the players down the right road. Maybe the individual franchises can provide financial seminars to it's players, but it is not the NBA's job to "babysit" these guys. From my perspective, I was working at 16, paying for my car and insurance. Any "fun" money I had came after my bills were paid, not before. Yes, there are pitfalls in today's "borrowing" lifestyle, but with a seven figure income or more, there should be no borrowing. The players just need to stop "one-upping" each other.
posted by BoKnows at 07:43 PM on January 31, 2008
Eight figures is a lot -- but it's still a finite number. Very few people have anything like an intuitive grasp of what it will purchase, much less know how to spend it wisely. We're coming out of a period of "easy money", and there are many people of much humbler means who are learning the same lesson the same hard way, that there ain't no such thing as easy money. Being suddenly rich doesn't make you suddenly smart about money, and all an eight-figure salary does is allow you to make the same mistakes on a much larger scale.
posted by lil_brown_bat at 08:32 PM on January 31, 2008
I guess it's just hard for me to see how it's the NBA who is doing something wrong here. An employer pays his employees millions of dollars over a short career and then when they are no longer employed the employer is now obligated to make sure that they don't lose all the money they were paid? Name another company that does that and I might see where the NBA is not doing enough and I'll know where to send my resume.
posted by Familyman at 08:32 PM on January 31, 2008
I'm sure the NBA and other leagues have people at the ready to speak to and help young players with financial planning. If not, there at are whole lot of other sharks out their that will get them listening. Unfortunately those are the ones that they listen to, family (who don't know how to invest), friends (who want to spend it) and themselves (who think it will never run out). It can't be mandated but shouldn't someone who takes 20% of your income and invests it conseratively be a smart thing to do for these players? They didn't (for the most part) have $ to begin with so what would they miss but financial security? Maybe a 48 hour seminar without breaks will make them say OK!! Wish I had 20% of what I made invested (which would have hurt) much less 20% of millions that player would never miss if he/she never saw it and couldn't spend it.
posted by gfinsf at 05:24 AM on February 01, 2008
"MTV Cribs is, like My Super Sweet Sixteen, an example of the decadence of a declining civilization." Anyone ever read "The Great Gatsby?" How 'bout Tolstoy? The entire Rococo period was made up of old school folks spendin' money just to spend money. Lavish lifestyles are nothing new; Fast money is just that: fast. Agreed. Civilisation has been declining for thousands of years (according to some), yet somehow we keep rolling along. There will always be nostalgia for that "bygone era", unfortunately, it never existed like we all want to remember it. Not surprised about this statistic. If you play for a couple years, get used to spending as if you are always going to make a million a year, then have to find work as a high school basketball coach making 30,000, or whatever, you are going to run into problems. It is the responsability and right of every individual to do whatever the hell they want to with their own money. If people don't want to take financial advice, then they shouldn't have to; and if they set themselves up for failure down the road, then they have only themselves to blame.
posted by Chargdres at 09:10 AM on February 01, 2008
Sure, you can’t spend it if you don’t have it. But now days, the damn banks will send college kids a credit card with a 2000 dollar limit, knowing full well that if the kid that’s in college doesn’t pay, the parents will have to step in if they want to preserve their child’s credit. That reminds me of college where the administration pushed to reduce credit cards for students generally help us be more financially aware of CC woes. At the same time, business students always had this project to see who could sell the most CCs to students (they always targeted the new freshman. Go figure). I see the NBA kind of like that. The organization higher-ups might very well be trying to send the right message and offer services (the article does mention there are free financial services for the players) while the culture itself and certain actions by all parties says something completely different.
posted by jmd82 at 09:40 AM on February 01, 2008
I have to wonder what the reason behind posting this article even was. Is anyone really shocked that professional athletes so often go broke? Not to single out the NBA because we are all familiar with problems in all of the professional athletic platforms, most recently the NHL's crying about not getting paid enough millions to play a sport, but the NBA's players seem to have a knack for getting into fights with fans, complaining about their lack of funds, and of course the off the court issues...Mr. Bryant anyone? It's pretty well highlighted that when these people reach the "elite" level of athletics, you're unofficially expected to live that "elite" lifestyle in order to protect the image of other players. Image will always be a factor for anyone in the public eye, no matter what it is that makes you famous. With that said, I can't defend those guys because they make more money then I'll end up accumulating over my entire career. I am willing to bet, however, that I'll end up more financially sound, in the respect of my retirement status, by the time I'm 35 (I'm 25), than the majority of pro athletes will when they are finished with their tour as a professional athelete. Being paid millions for years and coming out with nothing to show for it isn't anyone elses fault but the person who pissed it all away themself. No emphathy for NBA, NHL, MLB, or NFL players from this guy.
posted by Bleedinbluno2 at 11:05 AM on February 01, 2008
I'm crying crocidile tears that these guys still believe the world owe's them a friggin living.
posted by thatch at 11:43 AM on February 01, 2008
I'm betting that Jim Brown would have some helpful advice for these young athletes.
posted by Spitztengle at 01:16 PM on February 01, 2008
If all occupations were paid wages relative to how necessary they are to mankind, NBA players would make in the neighborhood of $2,000 per month. And I'm being generous. I work educating (and taking care of) everyones children, but that's not nearly as important or beneficial to society as being able to toss a ball through a peach basket. In the meantime, check out this week's Sporting News and look over Shaq's list of monthly expenses: Monthly NBA Salary: $1,666,667 Mortgage: $156,116 Property Tax: $75,261 Electric: $10,065 Telephone: $3,345 Cable: $1,495 Food/Household Supplies: $12,775 Gas: $24,300 Entertainment: $330 Vacations: $110,505 Misc: $114,946 Again, that's monthly. I realize it's Shaquille O'Neal, not some benchwarmer, but come on! When there's a fraction of that money to be made in that league, I don't care how long it lasts for them, it's a freakin' farce.
posted by dyams at 01:37 PM on February 01, 2008
I work educating (and taking care of) everyones children, but that's not nearly as important or beneficial to society as being able to toss a ball through a peach basket It isn't, because people just like you say it isn't. It's not like NBA players are taking in each other's washing here -- who do you think buys the jerseys? Changing priorities starts at home, with our everyday decisions about what we buy and what we support. It isn't all "those other people" -- it starts at home.
posted by lil_brown_bat at 01:53 PM on February 01, 2008
It doesn't start anywhere. It's supply and demand. People want their kids to get taught and they want to see basketball played well. There's a much larger pool to draw from for the former than the latter. Thus higher salaries. You'll note no one pays more than $0.00/hour for hand-wringing.
posted by yerfatma at 02:00 PM on February 01, 2008
$24,300 for gas?!?!??? Wonder if that includes jet fuel too.
posted by jmd82 at 02:22 PM on February 01, 2008
People want their kids to get taught and they want to see basketball played well. I understand that. If the NBA goes on strike, though, how is your life impacted? Not at all, really. If school teachers go on strike (which they aren't allowed to do), how would your life be impacted? A lot, if you have kids. If there's no garbage pickup, your life is impacted? A lot when you have smelly garbage piling up all over. If you live in a city and rapid transit goes on strike, you're impacted. Whether or not there's only a relative small amount of people who can dribble (a basketball) between their legs, shoot from behind the three-point arc, whatever, so what? These guys, whether they are in the league two years or twenty, they're making a sizeable amount of money (even at the low end of the spectrum). Their job as a basketball player (in this case) is going to be for a short time. If they can't look into the future and figure out how the future may look to them, what can anyone do? Welcome to a thing called "Real Life." I'll feel for guys such as former NFL players who played for nothing decades ago and now have broken-down bodies and nothing to show for their years in the game. But if LeBron blows out his knee next week, maybe he'll have to try and sell his 50,000 square foot home in Cleveland with the bowling alley and disco to keep from going broke. They're all "Living the Dream," and whether they're stars or sixth, seventh, or eighth man off the bench, it should dawn on them it may not last forever.
posted by dyams at 02:36 PM on February 01, 2008
Whether or not there's only a relative small amount of people who can dribble (a basketball) between their legs, shoot from behind the three-point arc, whatever, so what? Water versus diamonds. I'm sorry to not type any more than that, but there's nothing more to it. If you want to be pissed at twenty-something kids, some of whom aren't well-educated and/ or don't have someone looking out for their best interests, for blowing wads of cash, go nuts.
posted by yerfatma at 02:54 PM on February 01, 2008
Thus far, I haven't seen the word "agent" mentioned in any of the above posts. Isn't that one of the roles of a sports agent...........to be a financial advisor? I am on the fence on the concept of either being financially stable, with an extremely modest life style, or living all out for a few years and having the time of my life. That being said, I say, give me 5 million bucks (2 mil would do), I am only 40, I will never work again.
posted by danjel at 03:35 PM on February 01, 2008
Thus far, I haven't seen the word "agent" mentioned in any of the above posts. Isn't that one of the roles of a sports agent...........to be a financial advisor? I think that only extends to advising on the merits of different prospective deals, not on financial strategy (so the advice is, "This deal is better than that deal," not "This is what you should be doing with your money."). Now, it's possible you could find an agent who's capable of giving both kinds of advice, but given that there's already a conflict of interest for an agent acting just in his/her basic capacity, I don't think it would be wise to use an agent as a financial adviser.
posted by lil_brown_bat at 03:51 PM on February 01, 2008
If you want to be pissed at twenty-something kids What makes them that much different than any other kid who goes to work in their twenties? Are basketball players the only twenty-somethings who aren't that well educated? There's a lot of kids who actually graduate from college and start waiting on tables. We're supposed to scratch our heads and act dumbfounded when humans get wads of cash, even if just for a few years, then piss it away? I just think it's funny they want to live like kings, then aren't bright enough to figure it probably won't last forever. You have to be well-educated to figure out you may need some money when you get older? And they're some of the only humans who could currently afford to put money away (everyone else spends their mini-paychecks as soon as they get them just to afford basic necessities). I've never played college basketball and I can pretty much realize even the ones lucky enough to make a NBA roster won't be around that long. This fact escaped them, though (and apparently everyone who knows them and fails to give them the least bit of advice).
posted by dyams at 07:26 PM on February 01, 2008
Hey, Shaq is only spending 30% of his income. I wish I could get my expenses that low. These young NBA'ers have millions thrown at them at a time in their lives when they think they are invincible. There are plenty of "regular" people in their 20's and 30's that have no concept of saving for later years, why would wet-behind-the-ears ballplayers be any different? That being said, I think the NBA has implemented a mentoring program that has retired players helping out rookies so we'll see if that helps.
posted by curlyelk at 08:02 PM on February 01, 2008
There are plenty of "regular" people in their 20's and 30's that have no concept of saving for later years That's my point. Many "regulars" don't have any concept of saving because they don't have money to save. By the time you make car payments, insurance, $3.20 a gallon gas, food, rent, etc. there isn't any to put away. As you said, Shaq pays ridiculous amounts for everything imaginable and still only goes through 30 percent (I'll go with your figures) of his income! The regular joes of the world are lucky if they can scrape up $20 to put away. I don't know, it's not like this is a brand-new phenomenon. You'd think somewhere along the line the fact they need to plan for when they're tossed out of the game would be taught to them. It's ridiculous. Maybe my next post will be a story, "80 Percent of Educators Go Broke While They're Still Employed."
posted by dyams at 08:09 PM on February 01, 2008
I agree with you that teachers are underpaid, but that has nothing to do with the salaries of pro athletes. The NBA is a business they can pay their employees as much money as they see fit. As lbb alluded to, the only way these exorbitant salaries are going to come down is if we stop buying tickets and merchandise. If I was financially stable ten years ago I would have gladly bought season tickets to watch my home NBA team (Pacers). Now not so much. I probably wouldn't even shell out $25 for a lower level seat, much less buy a $150 jersey. The antics of many of these players irritates me to no end. My jaded opinion probably has something to do with the numerous titty bar shootings, brawls, and overall poor play of the Pacers. I might be more inclined to watch a more respectable team.
posted by curlyelk at 01:19 PM on February 02, 2008
I could care less if their contracts are large. My problem is with any human dumb enough to squander that much money, whether they be at the high-end of the salary scale or further down. You can live one hell of a lavish lifestyle (or at least very comfortable) and still not touch a huge chunk of those salaries. But they go broke. I guess many of them are like the clowns that audition on American Idol who think they are actually great singers when, in reality, they are, at best, average. Some of these players need a reality check on their game to help them realize if they're fortunate enough to make some damn good money for a few years, they'd better hold onto it because they'll be out of the game before they know it.
posted by dyams at 06:22 PM on February 02, 2008
Finally I agree with the Democrats - soak the rich - at least when it comes to NBA players. I don't mind the government taking and wasting their money since they do not have a clue on how to manage it anyway. Their war on poverty includes taking care of people who could not figure out how to live on $20 million. One may conclude that if these people could not play professional basketball then at least 60% of them would be working at Whataburger. That would be bad news for Whataburger since they would likely have trouble even counting change. I admit that I never owned 14 cars and would not know what to do with them unless I owned a used car lot, but I did own a 14-year-old car once - I maintained it and it always got me to where I wanted to go. I can almost sympathize with Sprewell thumbing up his nose at $21 million as not being enough money because he has a family to feed - provided he adopted the state of Alabama. Taking differential equations in college may be challenging but investing and living off of millions of dollars for the duration of life is quite simple. What is difficult is living off $20 a hour and investing for a decent retirement.
posted by longgreenline at 01:21 AM on February 03, 2008
What is difficult is living off $20 a hour and investing for a decent retirement. That's where it's at for me. When people (any people) come into a great deal of money, even for a limited time, they are then in a perfect position to ensure they're provided for into the future. My father's second-wife's daughter wone $777,777 dollars in the lottery and that one-time chunk of money has made them comfortable for the rest of their lives. They still work, but they're good with that. (Many) Former NBA players are hampered by a lack of common sense about the world around them and their future in it.
posted by dyams at 07:51 AM on February 03, 2008
There are plenty of "regular" people in their 20's and 30's that have no concept of saving for later years That's my point. Many "regulars" don't have any concept of saving because they don't have money to save. By the time you make car payments, insurance, $3.20 a gallon gas, food, rent, etc. there isn't any to put away. That's crap. People make choices at every income level. Most Americans want to live in the nicest home they can afford. As soon as they can afford to move out of the old neighborhood, they do. All but the poorest people in this country can save something, but most people don't save up to buy a lesser car, they just use credit to buy one that they can't afford. That is even more true of people in theirs 20s. People do not want to live below their means enough to truly save up for that car, or gadget, or tv. This is not a phenomenon that is exclusive to NBA players. I have seen (and done) this same thing in law school. All of a sudden you get a job in law school that is paying you $30-$40 an hour for part-time work, or huge amounts of money for your summer job. Do you save and scrimp and take out less student loans? Probably not. Despite the school's advisers telling you that is what you ought to do, people (especially young people) like to live for the moment, and worry about the future later. Sure, when you are in your 40s still paying off your student loans, you will agree it is unwise. But, so what? Life is for the living. We can scrimp and save for our huge retirement, and not even make it there. Also, using Shaq as an example is a really bad one. No one thinks that Shaq is ever going to go broke. But, the NBA minimum players, who are also expected to help out their poor parents and extended family as well. I think all of these harsh judgments are really just denying human nature.
posted by bperk at 10:19 AM on February 03, 2008
using Shaq as an example is a really bad one I realize it's Shaquille O'Neal, not some benchwarmer whether they're stars or sixth, seventh, or eighth man off the bench whether they be at the high-end of the salary scale or further down bperk, as noted above I mentioned several times I was speaking about the average player, not necessarily Shaq, but Shaq just happened to have his monthly expenses listed in a publication. But if you want to say a family with an income of $45,000 per year has the same ability to put some money away as someone who makes $1 million per year, even if they only have this income for two, three, or four years, then I can't quite agree. You're correct that everyone makes their choices about what to do with their money, but a guy that makes that large amount of cash for a few (or several) years can go out and buy a home without a mortgage, vehicles without payments, create a college fund automatically for their kids, and still not have spent half a million. But in your post you're also talking about people who went to law school, and that's not even conceivable for most Americans, as the majority won't even go to college. A law school graduate (with their degree) has already planned for their future by gaining an education that will most likely mean they'll remain financially comfortable up through retirement. I have a friend who was an All-Pro NFL linebacker. He came up with nothing (but a large family), played a career of average length, but knew from the start he had to plan for the future (and believe me, he was no genious). He played well, made decent (though not huge) money, bought two large homes, lived extremely well, put money away, invested in a business for his future, and now lives a great life without a financial care in the world. He helped his family, although they weren't the type of people that expected him to buy them mansions and BMWs, etc. But his salary for that short span of his life allowed him this.
posted by dyams at 07:40 AM on February 04, 2008
Wasn't it the great economist Patrick Ewing who said something like "We make a lot, but we spend a lot too" when trying to explain why they were on strike? Unfortunately, most of these athletes have been told they can do what they want as they are growing up in the sports world. They are not going to be very open to anyone giving them advice that they can't do something. You can lead a horse to water but you can't make it drink.