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How and Why Athletes Go Broke (2009)

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Re: How and Why Athletes Go Broke (2009)

#101

Post by marnett »

IntronExon wrote: post #12
whatshisface wrote: post #8

Earlier quoted context omitted.

The biggest difficulty with that theory is that when people loose money to loan sharks they stop buying other things. So as far as either the national economy or the sum of all lobbyists (whichever you think the government is most beholden to) are concerned it's not good on average when people loose everything.

Average people don’t lose everything, they live in debt, and increase their debt. Credit cards and student loans, medical bills and mortgages. People who make sound financial decisions don’t roll over debt on their cc’s, or allow for a housing bubble. They might be swayed by arguments that single-payer healthcare wouldn’t lower costs. They might even question the value of spending trillions in Iraq and Afghanistan.

Myself and my sound financial decisions question nothing about Iraq/Afghanistan. HAL performed amazingly in that period.

Re: How and Why Athletes Go Broke (2009)

#102

Post by WalterBright »

southphillyman wrote: post #50

The stereotype is that many of these athletes go broke because they are foolhardy with money. I appreciate that this article highlighted that a lot of these guys go broke because of scamming financial advisors. The athlete attempts to do the responsible thing and hires someone they are led to trust with managing their assets only to be ripped off. I'm not sure how financial literacy prevents this from happening when…

Never set up a discretionary account with a broker. The discretion thing means they can make decisions on what to buy and what to sell. In return, you pay commissions on the trades, plus a percent of the value of your portfolio.

Their incentive is to trade as much as possible. This is awfully tempting, even for the most ethical broker.

Re: How and Why Athletes Go Broke (2009)

#103

Post by aphextron »

I’ll assume for this conversation we are referring to black and latino athletes in the US. In that case, a lot of it comes down to family. A $10 million contract is a life changing windfall for a single unnattached person with no extended family to support, or whose extended family already is self sufficient (as a much greater proportion of white people in the US naturally are). But when you are the first person in your entire family tree to have above a 5 digit net worth, you immediately become liable for everyone, and it can quickly go to squat. Its called the “brown tax”. Escaping poverty can be almost impossible for an individual when they are weighed down by these obligations. It doesnt matter how financially literate you are when your aunt is being evicted from her apartment or your cousin needs bailed out of jail.

Re: How and Why Athletes Go Broke (2009)

#104

Post by airstrike »

specialist wrote: post #88
IntronExon wrote: post #6

Earlier quoted context omitted.

I have an unsupported conjecture that critical thinking skills and financial literacy aren’t taught in (US) schools more or less intentionally. Financial literacy would harm the business models of institutions offering many types of loans, mortgages, lines of credit, etc. Truly educated consumers are harder to fleece. Critical thinking dovetails with that, and would probably make it harder for ideological, religious,…

re financial literacy Robert Kiyosaki and Sharon Lechter have been telling everyone who will listen since at least 1997. https://en.wikipedia.org/wiki/Rich_Dad_Poor_Dad re critical thinking Years ago, one candidate for my state's Superintendent of Public Instruction aggressively opposed adding critical thinking and problem solving to the curriculum. It'd distract from all that useful standardized testing. She won. Se…

Rich Dad Poor Dad ain't exactly peer-reviewed research or even solid advice for that matter. It's a lousy self-help book at best.

Re: How and Why Athletes Go Broke (2009)

#105

Post by WalterBright »

ChuckMcM wrote: post #55
southphillyman wrote: post #50

The stereotype is that many of these athletes go broke because they are foolhardy with money. I appreciate that this article highlighted that a lot of these guys go broke because of scamming financial advisors. The athlete attempts to do the responsible thing and hires someone they are led to trust with managing their assets only to be ripped off. I'm not sure how financial literacy prevents this from happening when…

Agreed, look at it from their perspective. They haven't been around a lot of money before, they don't have a lot of friends who have been around a lot of money either, so they don't really know even what questions to ask to understand the people who are arguing to be their financial advisors. Perhaps major league sports would do well to help train their athletes in the basics of financial management in order to help…

The best thing a person can do in such a situation is to put the money in a savings account, and then set about learning what to do.

Nobody is going to have their best interests at heart but themselves. If you want to have money, you have to learn to manage it yourself. There's not really a choice about it.

Also, hire a properly licensed CPA. Make sure to listen to his advice on taxes. Don't give him a financial incentive to benefit if you follow his advice.

Re: How and Why Athletes Go Broke (2009)

#106

Post by talmand »

majormajor wrote: post #80
talmand wrote: post #70

Earlier quoted context omitted.

I'm curious as to how hockey is any more expensive than any other sport that has player equipment and a privileged background is more beneficial to making it to the professional level than any other sport. Could it be that black kids as a group just isn't that interested in playing hockey?

In most of the US you can't even practice ice skating without paying money. Compare that to the number of basketball courts out there for pickup games, or fields where football could be played. It's not solely that the equipment costs more, it's that practice directly requires money, and practice time is the biggest overall driver of excellence. Professional race driving is another example of this. Tennis another not…

So the problem is lack of ice and not directly related to economic status? If one goes far enough north, or south, where ice is easily found for practice then the costs decline? So it's more where people choose to live versus the cost of the sport as a whole?

Re: How and Why Athletes Go Broke (2009)

#107

Post by WalterBright »

specialist wrote: post #85
test6554 wrote: post #62

Earlier quoted context omitted.

It's not their responsibility though. The player could take a course on their own initiative.

Which courses do you recommend?

I'd start with a course on basic accounting, which you can get at your local community college. It's critical to be able to read and understand a financial statement, and it's not that hard, either.

Re: How and Why Athletes Go Broke (2009)

#108

Post by ghostly_s »

aphextron wrote: post #103

I’ll assume for this conversation we are referring to black and latino athletes in the US. In that case, a lot of it comes down to family. A $10 million contract is a life changing windfall for a single unnattached person with no extended family to support, or whose extended family already is self sufficient (as a much greater proportion of white people in the US naturally are). But when you are the first person in y…

I get what you meant, but I would suggest being careful with language like calling white people 'naturally' self-sufficient.

Re: How and Why Athletes Go Broke (2009)

#109

Post by talmand »

potta_coffee wrote: post #78
talmand wrote: post #70

Earlier quoted context omitted.

I'm curious as to how hockey is any more expensive than any other sport that has player equipment and a privileged background is more beneficial to making it to the professional level than any other sport. Could it be that black kids as a group just isn't that interested in playing hockey?

Just about every high school has a football team, equipment is often paid for via fundraisers/carwashes etc if it's not in the budget. Hockey is generally not a high school sport, young people have to pay to participate and do so completely on their own time outside of school.

So it's just as possible as football, but the locals decide to not offer hockey in the same way? What if predominately black high schools in large cities started demanding hockey teams?

Re: How and Why Athletes Go Broke (2009)

#110

Post by albertgoeswoof »

efa wrote: post #83
lazerpants wrote: post #72

Earlier quoted context omitted.

This is why there should probably be an early age pension system for these athletes. The major sports leagues could certainly afford it (and it would lower players upfront salaries some).

Agree. My young son was recently in a car accident. As part of the agreement with the insurance company he got some compensation. But this is in the form of an annuity with yearly payments when he turns 18. This protects him from parents looking to blow the money and from him blowing the money when he turns 18.

This might be a bit rude, but can I ask what the compensation here covers? It seems odd to me to receive compensation for an accident from 10-15 years ago, without anything in between?
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