15 years ago, Sports Illustrated did a hit piece on why the top athletes were going broke only a mere few years after making upwards of 15-20 million annually through their contracts.
This baffled me as well.
I was incredibly fortunate to be asked to join the team to investigate this and this project later became “How and Why Athletes Go Broke” in a 2009 March Madness Issue of Sports Illustrated. You can click here to read that very article.
What followed surprised me even more. I got a call to be a part of the hit series ESPN 30 for 30 which allowed me to get even more involved with the professional athlete scene where I was meeting with some of the top athletes of the day.
The documentary was released later in 2012. You can see that by clicking here.
I say all of this not to boast or brag, but simply to reflect on what I learned and share an update of the problems that still persist to this day not only with professional athletes but also with many accredited and wealthy investors.
Please see the video below for more.
Here’s the essence of the story:
The piece “Broke” comments on several of the issues that these athletes face like family issues, surrounding themselves with the wrong crowd, and more, but ultimately what I found was they were not only spending too much, but the money they did invest was a nightmare scenario.
Friends, neighbors…just about anyone was coming to these guys with offers to invest.
Ever heard of a company that inflates your furniture in case of a flood? How about a company that focuses on growing oversized tomatoes to meet the growing need for ketchup in the future?
You haven’t. Because these were deals I came across that turned out to bankrupt many of these young men.
I’m not saying this is an easy game. These kids are 21, 22, and 23 years old when they’re drafted. They have access and capabilities that they’ve never had before, and it’s hard for any of us to understand that.
But we as financial advisors have to do a better job educating these young men. What I’ve seen since the Sports Illustrated article on our side has not made me feel very good.
Life insurance agents, commission-based financial “consultants”, and others pitch just about anything to these athletes except education and a sound plan.
And the same goes for you, if you are not an athlete, you too need to be careful with who you trust your financial decisions, where you’ve placed your money, and what you’re expecting from your financial advisor.
If you have any questions, be sure to forward them to Jordan at jordan@chapwoodinvestments.com, and we would be happy to assist you however we can.
– Ed Butowsky
Disclosure:
Chapwood Investments, LLC is a SEC Registered Investment Advisory Firm. No mention of a particular security, index, derivative or other instruments in this material constitutes an opinion on suitability of any security. The information and data in this material were obtained from sources deemed reliable. Their accuracy and completeness are not guaranteed. At any given time, principals at Chapwood Investments, LLC may or may not have a financial interest in any or all of the securities or instruments discussed in this material. The guests appearing in material do not receive compensation or provide endorsements or testimonials. Past performance is not indicative of any future results.