You are barely out of your teens, and have been signed to a multiyear, multimillion-dollar contract by a pro team. You can expect another $20 million to $30 million in endorsement deals, and are positioned to become a brand unto yourself: another LeBron, Brady, Kobe, Jeter.
What’s even more incredible? If you were to find yourself in this scenario, you would most likely wind up dead broke, if not bankrupt and homeless, by the time you turned 40.
“Lots of players are having financial trouble, but they won’t talk about it,” says ex-NBA player Adonal Foyle, author of the new book, “Winning the Money Game: Lessons Learned From the Financial Fouls of Pro Athletes”.
“There’s a lot of fear,” Foyle says. “Guys are vilified. They’re waiting to see who goes into the lottery of going broke.”
Of course, it’s not a lottery, a game of chance. Pro athletes go broke due to a constant series of bad decisions, and seemingly no amount of cautionary tales — from Tyson to Iverson to Holyfield to William “The Refrigerator” Perry — can stop them.
“Lots of guys are having trouble,” says Foyle, who also has a masters in sports psychology. “But they won’t talk about it. They think, ‘I don’t want to be one of those guys,’ and they’re hiding it.”
The litany of superstars who’ve taken themselves down is endless, and Foyle discusses most of them in his book: Mike Tyson, who tore through $300 million on multiple homes, cars, jewels and pet tigers. In 2003, he filed for bankruptcy.
Baseball great Curt Schilling made $112 million over 20 years, but went so broke that in 2013 he begged the Baseball Hall of Fame to return his bloody sock from a famous pitching performance
against the Yankees so that he could auction it off. (It brought in more than $92,000). Later that year, Schilling held an estate sale, hawking everything from a Hummer golf cart and a baby
grand piano to old power chargers, used crutches and unopened DVDs.
“I sold all that stuff to pay the banks back,” he told the Boston Globe. “Instead of filing for bankruptcy and keeping it all, I sold it all. It sucks.”
The house went, too, listed for $3 million. It sold for $2.5 million — half of what Schilling paid for it in 2004.
Evander Holyfield burned through his $230 million fortune on a 235-acre Utah estate, which has 109 rooms and included at least one monthly electric bill of $17,000. There was also a $550,000 loan he took out to pay for landscaping; $200,000 in back taxes, plus alimony and child support for three ex-wives and 11 children.
Divorce and child-support payments, Foyle writes, are two things most young athletes never anticipate. “Early in my career, I heard a league official say that once they retire, there is an 87 percent divorce rate among NBA players,” he writes. “Although I haven’t verified this number, based on what I’ve witnessed, it seems about right.”
And then there’s the phenomenon of pro athletes fathering multiple children with multiple women. Foyle cites “Where’s Daddy?”, the classic 1998 Sports Illustrated cover story that explored this phenomenon. Shawn Kemp, then a forward for the Cleveland Cavaliers, had an on-court meltdown that year that was attributed to his stress over child-support payments: At 28, he had seven children.
By age 20, former NBA firebrand Latrell Sprewell had fathered three children by three women. The article listed NBA stars from Patrick Ewing to Larry Bird to Scottie Pippen to Jason Kidd to Stephon Marbury to Isiah Thomas as those making child-support payments on out-of-wedlock kids.
“I’d say there might be more kids out of wedlock than there are players in the NBA,” one top agent told the magazine.
NBA star Jason Caffey (earnings: $35 million over eight years) filed for bankruptcy in 2007, after his arrest for nonpayment of child support, which carries mandatory jail time. He has 10 children by eight women.
“The only reason I filed for bankruptcy was to get these arrest warrants off me,” he told the Press-Register. Perhaps. But it was also reported that Caffey’s monthly income was just $7,000.
There are two financial obligations that can never be dismissed by bankruptcy: child-support payments and taxes.
“The average football, baseball or basketball player owes around $1 million in federal taxes each year,” Foyle writes. “The key word here is ‘owes,’ because not everyone chooses to pay. But eventually the IRS catches up.”
MLB All-Star José Canseco earned $45 million over the course of his career; he filed for bankruptcy in 2012. In an article he wrote for Vice magazine, Canseco failed to see the big deal.
“The issue is very simple: If you’ve got friends and family, the more money you make, the more you spend on them,” he wrote. “So let’s say you spend half your money on them and the rest on yourself and the cost of living. It may so happen that during all of that, you forget to pay your taxes.”
Additionally, pro athletes are also subjected to what’s known as “the Jock Tax.” All players with the NFL, NBA, MLB and NHL have to file taxes in every single state in which they play during each fiscal year. “What frustrated me was seeing the amount of difficulty players were having in my sport,” says Foyle, who spent 13 years in the NBA. “When I started talking to older NBA players and asking, ‘What is the landscape in retirement?’ the answers shocked me.”
Far too many of them, he found, had not only failed to plan for their future, but lacked a basic understanding of money management.
“Almost none of us come from wealthy families,” Foyle writes. “The vast majority of us do not even come from middle-class families. Instead, we sign multimillion-dollar contracts as 20-year-olds with little or no financial knowledge.”
In a 2009 Sports Illustrated report, ex-NFL player Raghib “Rocket” Ismail described what it was like to sit in a meeting about his financial future as a very young, naive athlete: “I once had a meeting with JPMorgan,” he said, “and it was literally like listening to Charlie Brown’s teacher.”
Almost never discussed, Foyle says, is the psychology of the poor athlete suddenly made rich, and the financial demands that family and friends will almost always place on him. “When your parents come and ask you for money, or your entourage member, you know you can say ‘no’ — but what’s the cost? Parents will say, ‘We raised you; we took care of you.’ Friends will say, ‘I always had your back.’ These people are attached to the athlete psychologically.”
Far more often than not, the pro athlete, no matter how famous and seemingly invincible, has no money in a 401(k), no savings in case of a career-ending injury, no trusts held for access at a later date. “After you’ve beaten up your body, instead of retiring in some semblance of peace, you’re pinching pennies,” Foyle says.
In this regard, 11-time All-Star Allen Iverson is lucky. He blew through his $154.5 million NBA salary, spending a reported $360,000 a month on multiple mortgages, credit cards, jewelry, cars and his 50-person entourage. In 2012, one year after his retirement, his monthly income was just $62,500.
Iverson recently told Charlie Rose that reports of his financial state were untrue; that may be because Reebok, the one company where Iverson has a lifetime endorsement deal, socked away $30 million in a trust for him. He cannot touch that money until 2030 — but that was a decision made for him, not by him, and as the case of Darryl Strawberry illustrates, that $30 million may not be safe.
In 1985, when a then-19-year-old Strawberry signed with the Mets, he was given a $7.1 million contract, with 10 percent put into an annuity with an annual interest rate of 5.1 percent. Today, that annuity will pay out nearly $2 million over the next two decades — except Strawberry won’t be getting it, because the IRS auctioned it off to recover the more than $500,000 he owes in back taxes.
An anonymous bidder paid $1.3 million, securing himself $8,891.82 a month from the New York Mets until the year 2033.
Foyle, now 40 years old, has always been an outlier. Like many pro athletes, he comes from a very poor background, raised largely by his grandparents on a small island in the Caribbean. He was scouted as a teenager and brought to the States, where he lived with a foster family in upstate New York. He had never seen a car before or ridden on an elevator.
But his sudden wealth as a pro baller never destabilized him, and he credits his foster parents — his dad was an economist, his mother a professor of women’s studies and sociology — for his outlook on money.
“We had conversations about what’s important in life and how to be a moral person,” he says.
By his junior year in college, he was drafted by Golden State, and after making rookie scale for his first three years, he signed a four-year, $16 million deal. Yet Foyle says he never looked at money as reflective of his value as a player or a person; it was a tool to be deferred, to work for him.
“I always looked at each contract as my last,” he says. He talks about being the lone guy in the locker room not to buy a luxury vehicle. “I didn’t care what others thought of me when I drove a Toyota 4Runner my rookie year,” he writes. “It was what I could afford.”
He never had an entourage and didn’t buy things that would only depreciate in value: jewels, cars, designer clothes. He met with financial planners often and saved money in case he suffered a career-ending injury — which he did after 13 years in the league.
By then he knew what he wanted to do — help younger players plan for their future.
Foyle recalls one of his flights to an out-of-town game: He was reading an article on ex-NFL star Terrell Owens, who’d just gone broke.
“I was horrified,” he says. “I went up front and grabbed three rookies, the youngest guys on the plane, and said, ‘You, you and you: We’re gonna meet and talk about finances. You need to have a financial strategy.’ They looked at me like I was crazy. They had no idea what I was talking about.”
This is a discussion he hopes his book will help break open.
“We owe it to our brotherhood — and society, too — to have this conversation, in a really raw way,” Foyle says. “We all make bad decisions over the course of our career. The question is: Do we learn from it? Or do we keep doing it?”
Three infamous cases of athletes who lost it all:
NFL career: Drafted in the first round by the Tennessee Titans in 2006; named NFL Rookie of the Year.
Earnings: $34 million over his eight-year career, plus $30 million in endorsement deals.
Blew it on: $5,000 a week at The Cheesecake Factory, where Young regularly treated eight teammates (yearly cost: $260,000); also did the same at T.G.I. Friday’s, where he spent $6,000 in at least one sitting; buying out a Houston-to-Nashville Southwest Airlines flight in 2007, which sat 120 people, so that he could fly alone.
Rock bottom: According to Young’s former financial adviser, he took out a high-interest loan of at least $1 million during the 2007 NFL lockout to throw himself a birthday party. Filed for bankruptcy in January 2014.
NFL career: Hall of Famer; played total of 13 seasons for the Tampa Bay Buccaneers and Oakland Raiders, retiring in 2008.
Earnings: $82 million from the NFL. On-air talent at the NFL Network from 2008 until this February, when he was fired after his arrest on charges of soliciting prostitution and assault.
Blew it on: A $7 million estate in Florida; a De Grisogono watch (can cost $600,000); 240 pairs of sneakers; a lion-skin rug; a bad real-estate deal; $45,000 a month in alimony; and $15,000 a month in child support.
Rock bottom: In 2012, ex-wife Jamiko filed suit against Sapp, claiming he was $728,000 behind in payments. He filed for bankruptcy in April of that year. All his personal belongings went up for auction in 2012 — except his Super Bowl ring, which he claimed to have lost.
NBA career: Drafted at age 18 in 2004 by the SuperSonics; 12th pick in first round
Earnings: Estimated $10 million to $20 million over four years in the NBA; tore his ACL in 2006 and was forced to retire in 2008
Blew it on: $1.4 million home in Sammamish, Wash.; housing for his parents; two new SUVs for his parents and a new truck for himself; parties, tattoos, booze.
Rock bottom: When forcibly evicted from his foreclosed home in 2013, Swift left behind guns, live ammo, trash, feces, broken-down cars in the driveway, and unopened scholarship offers. He is now believed to be living with his parents.
Very sad. This happens all too often in the world of professional sports. Blame the unions though. They are the ones who negotiate the player benefits and post career. The players unions should contact players as soon as they retire to try and consult them. I doubt that will ever happen though. Unions usually only serve themselves.