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How and Why Athletes Go Broke (2009)

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Re: How and Why Athletes Go Broke (2009)

#201

Post by tim333 »

wepple wrote: post #199
tim333 wrote: post #186

Earlier quoted context omitted.

Savings accounts don't do great over the long term. The safest thing is usually just to buy real estate as long as the prices aren't stupid.

You start with “the safest thing is..” then suggest property, only if they have knowledge of what prices are reasonable. Doesn’t sound safe. Index fund would probably be safer. Or savings account.

Do you know many people impoverished in their old age because they bought a couple of houses (assuming no mortgages)? Bank savings inflate away, stocks crash, houses are typically as safe as houses.

Re: How and Why Athletes Go Broke (2009)

#202

Post by dizzystar »

talmand wrote: post #111
SheepSlapper wrote: post #71

Earlier quoted context omitted.

Skates are more expensive than cleats. Hockey sticks break or are grown out of, and decent ones are a few hundred bucks.

A quick look at Google shopping disagrees with shoes vs skates and hockey sticks. Although I'm not up to speed at what qualifies as a decent hockey stick and the required cost.

A decent pair of hockey skates are $300+. You also have to take them in to get sharpened every week if you are that aggressive on them. This is $60/mth.

You also have to invest in padding, helmets, gloves, socks, and so on.

Re: How and Why Athletes Go Broke (2009)

#203

Post by ggm »

jhowell wrote: post #65
ggm wrote: post #13

In many situations, people who are identified as being at risk have somebody else placed in control of the finance, by court action. Brain injury patients for instance. Hmmm.. hang on.. whats the major risk factor in the football circuit again? Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some…

It seems that we, the people that read about athletes and celebrities losing their money while we commute to work feel the best course of action is less control. Arguably similar, people in technology who hunt equity at the expense of future financial stability. We consider their competence at managing money in the but not the latter.

Actually we do. Lots of online resources council new ict startup entrants not to be seduced by vesting, try to point out the huge downside potential risks. The small group of people who do hunt it, are quite distinct from the people who enter sport for huge short term up front money with inadequate skills to manage it. YC isn't combing high school and college touring cash now for brilliant ideas.

Re: How and Why Athletes Go Broke (2009)

#204

Post by ggm »

LordKano wrote: post #89
Kluny wrote: post #49

Earlier quoted context omitted.

Really, taking their adult autonomy away is the first step? How about education? This might be anecdotal, but I feel like we don't hear these athlete bankruptcy stories as often about hockey players. Why? Because they're all white, not black. Putting a kid through junior hockey is expensive and hockey players tend to come from privileged homes with much better financial education than young black football players. Th…

I would consider a much less drastic step. Mandatory contribution of 10% of their income into an investment account and that has a maximum annual withdrawal of 1% until age 55. If they otherwise destroy their finances, they'll at least be able to afford a place to live.

Not a bad idea. Here in Australia we call that superannuation. 9% of salary is mandatory.

Re: How and Why Athletes Go Broke (2009)

#205

Post by ggm »

Kluny wrote: post #49
ggm wrote: post #13

In many situations, people who are identified as being at risk have somebody else placed in control of the finance, by court action. Brain injury patients for instance. Hmmm.. hang on.. whats the major risk factor in the football circuit again? Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some…

Really, taking their adult autonomy away is the first step? How about education? This might be anecdotal, but I feel like we don't hear these athlete bankruptcy stories as often about hockey players. Why? Because they're all white, not black. Putting a kid through junior hockey is expensive and hockey players tend to come from privileged homes with much better financial education than young black football players. Th…

To this Making them sign away control of their money sounds like a new version of the old story of infantilizing black people by removing their adult rights, "for their own good". Yes, that's certainly a dimension. And it works in Australia too, where aboriginal workers had their cash both sequestrated and then stolen.

In my defence, weak though it is, there was no moment I actually intended to refer to specifically black sportspeople. If more black people in sports in America are financially uneducated, the bias in outcome would be there. I am pretty sure immature spending behaviour is colourblind and in all seriousness I meant this across race and culture: I think huge cash incentives for young people should be constrained to last. I'm not a libertarian.

Re: How and Why Athletes Go Broke (2009)

#206

Post by ggm »

jstanley wrote: post #17
ggm wrote: post #13

In many situations, people who are identified as being at risk have somebody else placed in control of the finance, by court action. Brain injury patients for instance. Hmmm.. hang on.. whats the major risk factor in the football circuit again? Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some…

> Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some time period, and give them the income stream not the capital. No, thanks. It's their money, let them have it. If they want it to be invested on their behalf, that's fine. But it should be their choice. How would you like it if your employer to…

For 9% of my pay that's what happens. Australia has mandatory age savings. I have discretion over the investment fund. I don't get to spend the cash on hookers.

Choice is a hot button item. You value this specific choice above others. I value their long term welfare above choice in this matter.

Re: How and Why Athletes Go Broke (2009)

#207

Post by ggm »

jstanley wrote: post #37
colanderman wrote: post #33

Earlier quoted context omitted.

That is quite literally how retirement works.

But paying into a pension is optional. And to the extent that it's not (e.g. National Insurance): it should be.

It should be so we're down the Cato institute rabbit hole? Sure. You believe one thing and I believe another.

Re: How and Why Athletes Go Broke (2009)

#208

Post by ggm »

manigandham wrote: post #27
ggm wrote: post #13

In many situations, people who are identified as being at risk have somebody else placed in control of the finance, by court action. Brain injury patients for instance. Hmmm.. hang on.. whats the major risk factor in the football circuit again? Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some…

It's called personal responsibility. They're earning sums that many will never reach and it's on them to figure out what to do with it. Nobody is stopping them from asking for help and it's not like there aren't enough examples to learn from by now. Someone who doesn't have responsibility can't be forced into it.

Systems of reward for sport which dangle huge paychecks should have constraints, unless you are away deep down in the no taxes no laws hole. They can't offer drugs and sex directly. Why is that? Why can't young sports stars be paid in blowjobs and nose candy? Oh.. free to choose.. sorry I stood on your toes. Live free or die.. i don't think it works except on car licence plates.

Lots of wealthy people are ringfenced from their capital. Trust structure is fundamental to US tax law, but maybe we should undo that?

Re: How and Why Athletes Go Broke (2009)

#209

Post by rconti »

mobilefriendly wrote: post #149
ChuckMcM wrote: post #135

Earlier quoted context omitted.

I would be surprised if the bank complained. They are only on the hook for $250K per the FDIC and could cover it with a low interest interbank loan from the FED. Since their mandatory reserve is only a fraction of the cash on deposit they will happily leverage it for greater returns paying you your paltry .7% while collecting much more than that.

This highlights the problem-- the most "conservative" approach, a savings account, is actually TERRIBLE financial advice. First the money won't keep pace with inflation and second a bank failure will wipe out the fortune. That happened to savers in 2008, most notably the failure of IndyMac.

So- Your money not keeping pace with inflation is better than anyone profiled in the article managed. Worst case scenario, bank failure, they might still be better off.

Re: How and Why Athletes Go Broke (2009)

#210

Post by rconti »

WalterBright wrote: post #159
mobilefriendly wrote: post #149

Earlier quoted context omitted.

This highlights the problem-- the most "conservative" approach, a savings account, is actually TERRIBLE financial advice. First the money won't keep pace with inflation and second a bank failure will wipe out the fortune. That happened to savers in 2008, most notably the failure of IndyMac.

Of course. But you have to park the money somewhere while you learn about where to invest it. If you've got more than $250K, I'd split it up into multiple accounts at different banks.

I suspect this is per depositor not per account... but I'm not sure.
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