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How and Why Athletes Go Broke (2009)

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Re: How and Why Athletes Go Broke (2009)

#211

Post by ggm »

seanalltogether wrote: post #32
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. So this looks great at first right? It's like a lotto winner taking the lifetime payments instead of the lump sum. The problem is you can take loans against that money very easily,…

Yes. I see now that "a fool and their money are easily parted" lives on. I don't know what to do about that.

Maybe a ten percent retain and the moral of the story is you are a former millionaire who now has a small stipend to remind you how stupid you are.

Re: How and Why Athletes Go Broke (2009)

#212

Post by rconti »

alvah wrote: post #86
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…

I'm not convinced it's as black and white as that. Look at the example given (Rocket Ismail). Not to pick on an individual, but he doesn't seem to be taking responsibility for any of his losses, even with the supposed "hindsight" he now enjoys: -"One of his advisers pitched the idea as"fail-proof, with no downsides," Ismail recalls. He never recouped his money and has no idea what became of the restaurant." -(COZ Rec…

I think the issue is, we're all thinking they're stupid for not realizing the risk of their investments, but maybe they do! Or maybe they recognize half or a quarter of the risk. But they don't understand the alternatives. Nobody is on the "other" side saying "invest in mutual funds!"

They probably get "exciting business opportunities" and "help your friends and family" and "spend it all on hookers and blow!" and the "exciting business opportunity" might sound like the best way to keep their fortune going compared to the other options.

Re: How and Why Athletes Go Broke (2009)

#213

Post by WalterBright »

tim333 wrote: post #201
wepple wrote: post #199

Earlier quoted context omitted.

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.

Houses cost property taxes, insurance, and maintenance. Those have been known to force seniors out of their homes.

Re: How and Why Athletes Go Broke (2009)

#214

Post by JiNCMG »

30 for 30 did an episode on this. It was so interesting and while true many get scammed out of their money, a lot more are spending it check to check.

Quotes from the show "I had more mortgages than HUD" "I had 30 to 40 cell phone contracts" "No athlete wants to earn a few percentage points in bonds. They wanna go for the big dollars, Open restaurants, clubs and car washes! They conquered sports now they will own their next endeavor"

Worst stat from the show: 60% of athletes are broke within 5 years and 70% are divorced within 3 years.

Shocking stat: There is (was?) a website that tracks athletes as they go from town to town so women can go hook up with them.

Many of these quotes are from the big money makers in various sports (NBA, NFL, MLB). They also interview the ones that were able to maintain their money. Like Jamal Mashburn who told his mom that he was going to set her up with a new house and car and before he could finish she told him to save it and take care of himself first.

Re: How and Why Athletes Go Broke (2009)

#215

Post by rconti »

QittyQat wrote: post #162
pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

I have a very vivid recollection of 8th Grade Civics units on personal finance, budgeting, and tax management. In this unit we were awarded a salary through a lottery system and had to learn to live within the means of our salary. Students would pair up and find homes to live in by reviewing ads in the newspaper. We would have to learn to set aside money for savings, groceries, and for fun. We also learned how to inv…

Nope. Graduated HS in '99, not a word about personal finance. Yes, time value of money calculations in some math classes, but nothing about actual personal finance. No civics, no home ec. Just math, science, humanities, etc. Granted, I went to a very tiny public school... but still.

Re: How and Why Athletes Go Broke (2009)

#216

Post by jdavis703 »

Jtsummers wrote: post #95
jessaustin wrote: post #91

Earlier quoted context omitted.

Like any employer, it isn't actually in leagues' interests for their employees to have financial acumen. Your boss loves to see your new $50k vehicle in the parking lot.

You're right, them having debt like that means they're more likely to stick around (because they can't afford to quit). But it also means they could be more mercenary (seeking out the jobs that get them out of the debt, or let them keep spending themselves into debt). Debt also puts people into compromised positions. Having worked around defense stuffs, that's an exploitable position. And people will exploit it. It's…

For six figure debt? I was under the impression that six figure mortgages were pretty common...

Re: How and Why Athletes Go Broke (2009)

#217

Post by closeparen »

dizzystar wrote: post #200
closeparen wrote: post #190

Earlier quoted context omitted.

>everyone should have the right to basic understanding of personal finances and basic economics. This is silly. Living within your means is like doing the dishes or the laundry. When someone "doesn't know how" or "needs to learn how" it's not that they're missing or failing to comprehend information. Even if they lack it, it's trivial to acquire. The relevant entities are discipline, habit, and values. This is not so…

Everyone below a certain income starts with insufficient income to go to college, buy a car, go to the dentist, and many other things. Living paycheck to paycheck is a very real thing, and it only takes a minor circumstance to cause massive debt. You don't even need a credit card to find yourself up to your eyeballs in debt.

Yes, and financial literacy isn’t going to help.

Re: How and Why Athletes Go Broke (2009)

#218

Post by jdavis703 »

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

They need more financial games. I remember playing Railroad Tycoon as a kid and realizing I could run a pump and dump scheme against the AI. At the time of course I didn't know there was a phrase for pump and dump, or that it was a well known financial play, but that game put me on good footing to both get a very rough understanding of the stock and debt markets. My own nefarious behavior probably also gave me a more cynical outlook on financial transactions.

Re: How and Why Athletes Go Broke (2009)

#219

Post by emodendroket »

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…

This is a total bummer because really, these guys would have been much better served just investing in an index fund with the schlubs than with these guys trying to sell them fancy instruments and investments in dubious businesses. Yeah, the potential return is smaller, but probably plenty.
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