[Marxism] How (and why) athletes go broke

Louis Proyect lnp3 at panix.com
Thu Mar 26 13:47:41 MDT 2009

March 23, 2009
How (and Why) Athletes Go Broke

Recession or no recession, many NFL, NBA and Major League Baseball 
players have a penchant for losing most or all of their money. It 
doesn't matter how much they make. And the ways they blow it are 
strikingly similar


What the hell happened here? Seven floors above the iced-over Dallas 
North Tollway, Raghib (Rocket) Ismail is revisiting the question. It's 
December, and Ismail is sitting in the boardroom of Chapwood 
Investments, a wealth management firm, his white Notre Dame snow hat 
pulled down to his furrowed brow.

In 1991 Ismail, a junior wide receiver for the Fighting Irish, was the 
presumptive No. 1 pick in the NFL draft. Instead he signed with the 
CFL's Toronto Argonauts for a guaranteed $18.2 million over four years, 
then the richest contract in football history. But today, at a private 
session on financial planning attended by eight other current or onetime 
pro athletes, Ismail, 39, indulges in a luxury he didn't enjoy as a 
young VIP: hindsight.

"I once had a meeting with J.P. Morgan," he tells the group, "and it was 
literally like listening to Charlie Brown's teacher." The men 
surrounding Ismail at the conference table include Angels outfielder 
Torii Hunter, Cowboys wideout Isaiah Stanback and six former pros: NFL 
cornerback Ray Mickens and fullback Jerald Sowell (both of whom retired 
in 2006), major league outfielder Ben Grieve and NBA guard Erick 
Strickland ('05), and linebackers Winfred Tubbs ('00) and Eugene 
Lockhart ('92). Ismail ('02) cackles ruefully. "I was so busy focusing 
on football that the first year was suddenly over," he says. "I'd 
started with this $4 million base salary, but then I looked at my bank 
statement, and I just went, What the...?"

Before Ismail can elaborate on his bewilderment—over the complexity of 
that statement and the amount of money he had already lost—eight heads 
are nodding, eight faces smiling in sympathy. Hunter chimes in, "Once 
you get into the financial stuff, and it sounds like Japanese, guys are 
just like, 'I ain't going back.' They're lost."

At the front of the room Ed Butowsky also does a bobblehead nod. Stout, 
besuited and silver-haired, Butowsky, 47, is a managing partner at 
Chapwood and a former senior vice president at Morgan Stanley. His 
bailiwick as a money manager has long been billionaires, 
hundred-millionaires and CEOs—a club that, the Steinbrenners' pen be 
damned, still doesn't include many athletes. But one afternoon six years 
ago Butowsky was chatting with Tubbs, his neighbor in the Dallas suburb 
of Plano, and the onetime Pro Bowl player casually described how money 
spills through athletes' fingers. Tubbs explained how and when they 
begin earning income (often in school, through illicit payments from 
agents); how their pro salaries are invested (blindly); and when the 
millions evaporate (before they know it).

"The details were mind-boggling," recalls Butowsky, who would later hire 
Tubbs to work in business development at Chapwood. "I couldn't believe 
what I was hearing."

What happens to many athletes and their money is indeed hard to believe. 
In this month alone Saints alltime leading rusher Deuce McAllister filed 
for bankruptcy protection for the Jackson, Miss., car dealership he 
owns; Panthers receiver Muhsin Muhammad put his mansion in Charlotte up 
for sale on eBay a month after news broke that his entertainment company 
was being sued by Wachovia Bank for overdue credit-card payments; and 
penniless former NFL running back Travis Henry was jailed for nonpayment 
of child support.

In a less public way, other athletes from the nation's three biggest and 
most profitable leagues—the NBA, NFL and Major League Baseball—are 
suffering from a financial pandemic. Although salaries have risen 
steadily during the last three decades, reports from a host of sources 
(athletes, players' associations, agents and financial advisers) 
indicate that:

• By the time they have been retired for two years, 78% of former NFL 
players have gone bankrupt or are under financial stress because of 
joblessness or divorce.

• Within five years of retirement, an estimated 60% of former NBA 
players are broke.

• Numerous retired MLB players have been similarly ruined, and the 
current economic crisis is taking a toll on some active players as well. 
Last month 10 current and former big leaguers—including outfielders 
Johnny Damon of the Yankees and Jacoby Ellsbury of the Red Sox and 
pitchers Mike Pelfrey of the Mets and Scott Eyre of the 
Phillies—discovered that at least some of their money is tied up in the 
$8 billion fraud allegedly perpetrated by Texas financier Robert Allen 
Stanford. Pelfrey told the New York Post that 99% of his fortune is 
frozen; Eyre admitted last month that he was broke, and the team quickly 
agreed to advance a portion of his $2 million salary.

The Wall Street meltdown is only the latest threat to athletes' 
financial health. "Athletes have a different set of challenges from, 
say, entertainers," says money manager Michael Seymour, the founder of 
Philadelphia-based UNI Private Wealth Strategies. "There's a far shorter 
peak earnings period [in sports] than in any other profession, and in 
many cases they lack the time and desire to understand and monitor their 

In 2005 Butowsky began inviting sports figures—some well off, some 
not—to what he calls his financial "boot camps," elementary sessions 
that go from defining a bond to explaining a diversified portfolio as 
the equivalent of a balanced meal. There is no charge for the sessions 
or pressure to sign up with Chapwood, according to Butowsky, who calls 
this service his "mitzvah to sports." The financial adviser, who helps 
counsel Thunder forward Kevin Durant pro bono, hopes merely that the 
sessions will reflect well upon Chapwood. Such goodwill is easy to earn: 
The bar for radically improving the financial habits of pro athletes, 
Butowsky acknowledges, is low enough for a toddler to trip over.

"Oh, I've seen it all," says veteran agent Bill Duffy, whose clients 
include Suns guard Steve Nash and Nuggets forward Carmelo Anthony. "A 
pro athlete's money is supposed to outlive his career. Most players 
never get that."

Why? Where do they go wrong?


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