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What would you do if you won the lottery tomorrow? Would you continue adding to your car collection, buying really expensive one-of-a-kind vehicles? Would you make your own 3-D printer mold for bobble heads? Would you invest in cryptocurrency? And how would you fend off the money moths?
That’s what some professional athletes seem to think when they sign million-dollar contracts with their teams, spending it all, or putting their faith in bad investments (and bad advice), and that the money will never run out, or their careers will have a longer life span.
When it comes to the worst financial blunders, some athletes seem unable to steer away from the flashy and luxurious lifestyles that “come” with the pro sports career, or too-good-to-be-true investment advice.
(Related: 20 Best Paying Jobs for College Business Majors: 2017)
Here are some of the costly mistakes that these millionaires have made, proving a good lesson for everyone in the investing world, and serving as examples for your clients of what not do.
After 20 seasons in the NBA, Kareem Abdul-Jabbar should’ve had it all and then some. Bad investments in hotels, Arabian horses and gold coins made by his former business manager, and a lawsuit that followed, seemed to absorb all the wealth that Abdul-Jabbar had amassed during his lengthy and successful sports career, leaving him and other partners in the dust.
Vince Young played in the NFL for nine seasons, his first five with the Tennessee Titans. After being drafted third by the Titans in 2006, he signed a big five-year with the team. Over the course of this NFL career he made $34 million salary and had $30 million in endorsement deals.
According to an interview with Sports Illustrated, Young recounted that he wasn’t keeping a close eye on his finances and had a lot of debt with expenses such as picking up a $15,000 tab for one meal at the restaurant chain, The Cheesecake Factory.
Young filed for Chapter 11 bankruptcy in 2014, in a Houston bankruptcy court. Debt collectors then seized his trophies, cars and steakhouse. Young reportedly lost all of his millions.
Keeping up with the Joneses can be a real drag on one’s wallet. That’s what Terrell Owens, a former NFL player for the San Francisco 49ers, experienced first-hand. In an interview with Business Insider, Owens revealed that at the beginning of his career with the 49ers, he felt pressured to keep up with the flashy lifestyles of veteran players. He filed for bankruptcy in 2012, and has learned a lot about managing his finances and living within his means.
Between splurging in houses and being the victim of a Ponzi-style scheme by Allen Stanford, Johnny Damon, who played for the Boston Red Sox and New York Yankees, saw his sports fortune disappear. At one point, he even mentioned to CNBC that he couldn’t afford his mortgage or his personal trainer. While the total sum of money lost has never been disclosed, Damon made around $84 million during his 14-year career in the MLB. Did he lose it all? Was the money tied up in investments that Stanford had his hands in? Was his fortune returned? There are still a lot of unanswered questions that only Damon knows.
Another victim of the same Ponzi scheme that lasted more than two decades, Mets pitcher Mike Pelfrey, suffered heavy losses. He estimates that 99 percent of his investment money was tied with Standford’s fraudulent company.
But how did Stanford charm so many victims, and so many of them athletes? Some sportsmen claim that they are too preocuppied with training for the sport they master to pay attention to their finances.
Erik Bedard, another former major leaguer, along with around 20 other athletes, saw a total of $8 million in losses after a real estate investment went bad in late 2008. The real estate company that they invested “unsecured loans” with filed for Chapter 11 bankruptcy, leaving the athletes in the lurch.
Super Bowl winner John Elway might have car dealerships named after him, but at one point of his career, he was also the victim of a Ponzi scheme by Sean Mueller, who scammed him of $15 million. However, Elway seems to have learned his lesson, as he has made up for lost money and whose net worth is reported to be at $45 million.
Just like in love, trusting too fast should always be a red flag, and having a “chance” encounter with a felon posing as an Italian Count and impostor financial advisor should also make the alarm bells go off. However, NFL player Eric Dickerson didn’t think about it twice before jumping on board with Luigi DiFonzo’s advice.
Dickerson was also living in a material world as a young football player. “You go from zero to $600,000 … it was a big thing,” Dickerson explains on a video, part of his partnership with NerdWallet to bring financial education and awareness to athletes. The first thing he did after he got his bonus? He bought his mom a Cadillac, even though she didn’t ask for it. “I didn’t know what I was doing,” he admits.
The former football star filed for bankruptcy in 2008, but his current net worth is $10 million, according to TheRichest.
However, Dickerson wasn’t DiFonzo’s only victim either. The fake Count of Monte Money seemed to be targeting NFL players as part of his long-tail swindling game, which ended with him in jail, and later committing suicide.
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