Donâ€™t Get Bamboozled Like These Professional Athletes
January 17, 2011
This is a guest post by Jeff Rose. Jeff Rose is an Illinois Certified Financial Planner and co-founder of Alliance Investment Planning Group. He is also the author of Good Financial Cents, a financial planning and investment blog and he is currently working on his first book entitled Soldier of Finance. You can see more about his mission at the same titled blog Soldier of Finance.com.
Let’s face it – most of us (especially if we’re men) have wanted to be professional athletes at some point in our lives. What a life! You make barrels of money to travel around the country, play a game you love, and talk to reporters about it. If you’re really good (or just really famous), you get all kinds of untold millions from TV appearances, speaking engagements, and product sponsorships. What life could be better than that?
It Doesn’t Make You Invincible
What we forget so easily is that professional athletes are not superhuman. They’re people like us. And no matter what the announcers say, no matter how unbelievably amazing the local papers make them out to be, they’re still just people like you and me. And they still have to be careful with their money.
John Elway Scammed
John Elway is a prime example. He invested $15 million with a hedge fund manager. Turns out, that hedge fund manager was actually running a ponzi scheme (like the famous Bernie Madoff scheme from earlier in 2009. A ponzi scheme is run by using invested monies to pay out to previous investors, but the money isn’t actually invested). Elway is a rare case though – he actually got back most of his money. But not before $3 million of it went missing down the tubes of a big lie.
Elway was one of about 65 people who had invested money with Sean Mueller, which totaled around 71 Million dollars. Near the time of his arrest, he only had about 9.5 million dollars left. Whoops.
Michael Vick Scammed
A similar thing happened to Michael Vick. Having invested with an advisor who worked with a number of other NFL players, Vick was part of an investment pool of $3 million dollars that was never invested in the high end luxury investments his advisor purported to sell. Instead of investing the money, Vick’s investor used it to support her other business ventures. Turns out, she was barred from trading securities in September 2007. Double whoops.
One of the many caught up in the Bernie Madoff ponzi scheme was baseball great Sandy Koufax. He and his high school buddy New York Mets owner Fred Wilpon, along with other people associated with the New York Mets all took a hit from Madoff. People like former mets infielder Tim Teufel, former owner of the Philadelphia Eagles Norman Braman, and former New York Islander Bob Nystrom. Also affected were Mets associates like Sterling Mets, The New York Mets Foundation, and the Mets Limited Partnership.
Should I keep going, or do you see my point?
Want me to tell you about how former New York Jets quarterback Mark Brunell went bankrupt through a series of bad real estate deals that ultimately landed him with $5.5 million in assets to pay of $25 Million in liabilities? What about NBA players like Antoine Walker? Or Derrick Coleman. Both bankrupt.
Being a professional athlete does not guard you against financial mistakes. Nothing does. But being a Soldier of Finance certainly helps.
Jeff Rose is an independent financial advisor who loves Crossfit workouts, writing about Roth IRA Rules and craves In-N-Out burger. You can follow his updates on Twitter: @jjeffrose.
All posts by Ben Edwards