Darius Miles/ Former SJU Recruit's Cautionary Tale

If these players were smart, they would allow the league the act in a fiduciary capacity with regard to their contract money! If I recall the LA Lakers did just that for Kareem Abdul Jabber!
 
It is quite easy to blow a $62M dollar fortune. Much easier than the average person thinks. It is never about how much money one makes but it is about how much money one can save or invest wisely. I am more shocked when I see people able to squander hundred of millions of dollars away not $62M. I remember like it was yesterday when Omar Cook I believed said something along the lines that Darius Miles is not coming to St. John's stop reporting it.
 
It is quite easy to blow a $62M dollar fortune. Much easier than the average person thinks. It is never about how much money one makes but it is about how much money one can save or invest wisely. I am more shocked when I see people able to squander hundred of millions of dollars away not $62M. I remember like it was yesterday when Omar Cook I believed said something along the lines that Darius Miles is not coming to St. John's stop reporting it.
Click to expand...

Yeah, his not coming to SJU was very clear early. There were many eligibility concerns as I recall.
 
If these players were smart, they would allow the league the act in a fiduciary capacity with regard to their contract money! If I recall the LA Lakers did just that for Kareem Abdul Jabber!
Click to expand...

I totally agree. This line from the article says it all "An estimated 60 percent of former NBA players are broke within five years of retirement, Sports Illustrated reported in 2009.". Geez, 60 percent can make it for five years after they retire. Very sad.
 
There are a lot of issues here beyond the obvious inability to handle large sums of money.

1) Many athletes are completely unaware of the tax impact of their incomes. Even for those of us living in high tax states (NY top tier rate is just under 9%, while Florida has no state income tax. Where you live can save millions for a high salaried individual.

2) NBA players live an NBA lifestyle. This means a mansion usually mortgaged heavily. These are guys who from their net NBA paychecks could buy a $2-3 million home either for cash or paid off within 3-5 years. Instead, when the salary train ends, can't pay the mortgage and have to vacate. They don't anticipate the cost of property taxes, and a staff to run a mansion even if just for house cleaning, landscaping, and pool service. Tricking out an escalade can drive the cost towards $200,000 for a car worth a fraction of that as soon as they have taken ownership.

3) Hangers on. Keeping it real for an NBA player often means that for your neighborhood friends, you pick up the tab for every meal and drink, buy them courtside tickets to your games, and maybe even travel expenses for them. When a kid makes the NBA, his friends and family often think they've made it also.

4) Investments - even from reputable stock brokers, most investors, NBA or not, don't' realize this is simply a legalized form of gambling. Basically, if you can't afford to lose the money, an investment strategy should include a reasonable % of fixed rate or lower risk investments. NBA players though, often are enticed to make big investments in risky propositions such as real estate development, movie theatres in downtrodden area, etc.

5) Retirement planning - Many of us have IRAs and 401ks aiming at a retirement age of 65 or so. An NBA player should be preparing for an income stream that begins at 35-40, even if the income stream is modest by NBA standards. Setting aside $3-4 million for an annuity that starts paying out at age 40 is not a crazy idea for a guy who just signed a $50 million deal.

Whenever financial markets takes a huge hit, there are often plenty of houses for sale in Garden City and Manhasset when Wall Street employees either lose their jobs or stop earning big paychecks, even temporarily. So the problem isn't limited to athletes, who by inference are thought to be incapable of handling large sums of money with a long view. A lot of very smart people live over their heads and when sources of income are removed, have nothing to fall back on.
 
There are a lot of issues here beyond the obvious inability to handle large sums of money.

1) Many athletes are completely unaware of the tax impact of their incomes. Even for those of us living in high tax states (NY top tier rate is just under 9%, while Florida has no state income tax. Where you live can save millions for a high salaried individual.

2) NBA players live an NBA lifestyle. This means a mansion usually mortgaged heavily. These are guys who from their net NBA paychecks could buy a $2-3 million home either for cash or paid off within 3-5 years. Instead, when the salary train ends, can't pay the mortgage and have to vacate. They don't anticipate the cost of property taxes, and a staff to run a mansion even if just for house cleaning, landscaping, and pool service. Tricking out an escalade can drive the cost towards $200,000 for a car worth a fraction of that as soon as they have taken ownership.

3) Hangers on. Keeping it real for an NBA player often means that for your neighborhood friends, you pick up the tab for every meal and drink, buy them courtside tickets to your games, and maybe even travel expenses for them. When a kid makes the NBA, his friends and family often think they've made it also.

4) Investments - even from reputable stock brokers, most investors, NBA or not, don't' realize this is simply a legalized form of gambling. Basically, if you can't afford to lose the money, an investment strategy should include a reasonable % of fixed rate or lower risk investments. NBA players though, often are enticed to make big investments in risky propositions such as real estate development, movie theatres in downtrodden area, etc.

5) Retirement planning - Many of us have IRAs and 401ks aiming at a retirement age of 65 or so. An NBA player should be preparing for an income stream that begins at 35-40, even if the income stream is modest by NBA standards. Setting aside $3-4 million for an annuity that starts paying out at age 40 is not a crazy idea for a guy who just signed a $50 million deal.

Whenever financial markets takes a huge hit, there are often plenty of houses for sale in Garden City and Manhasset when Wall Street employees either lose their jobs or stop earning big paychecks, even temporarily. So the problem isn't limited to athletes, who by inference are thought to be incapable of handling large sums of money with a long view. A lot of very smart people live over their heads and when sources of income are removed, have nothing to fall back on.
Click to expand...
6. Divorce and child support.
 
If these players were smart, they would allow the league the act in a fiduciary capacity with regard to their contract money! If I recall the LA Lakers did just that for Kareem Abdul Jabber!
Click to expand...

I don't mean to pick on you but this is an awful idea. The league is the owners! Why would you give power over your money to your boss?

Also there's a huge conflict of interest and question of equity in the relationship. I'm not sure a power of attorney where your employer is the agent would even hold up.
 
Here is the thing. I doubt the league even cares no matter what they say and neither does the players association. A long time ago I was approached by the NFL players association because the were starting a program for players where they would basically have a list of advisors if they wanted to reference it. But it was nothing more than shakedown and basically they wanted me to pay a lot of money just to get my name on the list. There was very little due diligence etc so I didnt feel like wasting my $. And since then there were multiple times where players have gotten scammed from advisors who were recommended on that list who weren't even at big firms who were doing shady shit like commingling assets etc
 
You must log in or register to reply here.
Back
Top