March 29, 2024

Sports Business

Mistakes Athletes Make

With league minimums now at $400,000 for baseball players and $457,588 for the NBA, how can they blow all that dough?

Mike Vogel | 5/1/2011


Failed business partnerships and bad real estate investments forced quarterback Mark Brunell into Chapter 11 bankruptcy in 2010. [Photo: Al Bello/Getty]
» Overleverage. Some athletes are on the hook for a line of credit through their agents based on their projected selection even before the draft. Debt takes veterans too. Failed business ventures and bad real estate investments forced New York Jets backup quarterback Mark Brunell, a Ponte Vedra resident and former Jacksonville Jaguars starter, to file for bankruptcy last year.

» Spending. Most wage earners coming out of college get years to mature before earning six-figure sums. Athletes get a few months. Retired Tampa Bay Bucs defensive end Chidi Ahanotu says he only began to focus on his long-term future after his sixth year, in 1999, when he got a $30-million, six-year contract. "Truthfully, in the NFL, your career can be over any moment. My feeling was let me enjoy it and let me live up to my means while I can." Ahanotu was waived two years later and pocketed just $4 million after taxes of the $30 million, since NFL contracts aren't guaranteed. His advice to rookies: "Don't buy anything because the NFL career is short. Don't spend a dime. Live the same way you did in college. The average career is three years. At most, you're only going to play 10 years. Get out of the culture of the NFL — 'I got to buy a big chain because my buddy did.' You don't have to keep up with the Joneses."

» Family. "There's a lot of pressure from the family" to share new wealth, says Boca Raton CPA Art Hurley, a partner in Daszkal Bolton and founder and managing partner of Game Plan, the firm's division that provides tax and financial management services to athletes. A 21-year-old player who tells his early-40s mom she'll never have to work again is often overpromising. "It's great intentions, (but) you can't do that if you're a second-round pick for the NFL with a $1-million signing bonus and $300,000 a year. You tell them, 'Don't do it' and they listen or they don't."


Bernie Kosar filed for bankruptcy in 2009. [Photo: Bennett Raglin/Getty]
Divorce and child support shred finances. In 1999, a Miami Herald headline on an article on former University of Miami great and Cleveland Browns and Miami Dolphins quarterback Bernie Kosar and his successful post-career business ventures was "Winning the Money Game." A decade later, he filed for bankruptcy with $9.2 million in assets and $18.9 million in debt. He owed his ex-wife $3 million.

» Ventures. "They know we make a lot of money and try to sell us and use us," says Eagles cornerback Asante Samuel, who lives in Broward and played at Boyd Anderson High in Lauderdale Lakes. Based on their playing lifespan, athletes in their 20s should invest like 60-year-olds. Instead, they listen to people pitching risky, illiquid business ventures and real estate deals. "It's the illiquidity that kills them," says Ed Butowsky, a Dallas money manager. Athletes are moths to the flame for nightclub, movie and record label investments. "Everybody's got something for them. Everybody wants to slice a piece off of them," says Rudy Molnar, an Orlando Ameriprise financial adviser to athletes.

Even when they avoid exotic investments, athletes can make bad decisions with the rest of us. In March, published reports said Chicago Bulls forward Carlos Boozer invested $1 million in InnoVida, a Miami manufacturer of affordable housing components that ended up in receivership amid scandal and allegations of missing money. But Miami business heavyweights, not preoccupied with pro ball, also invested.

» Theft. In March, Broward sports agent Rodney Fernandez was arrested on grand theft charges for allegedly helping himself to $305,000 from the bank account of Anaheim Angels first baseman Kendrys Morales, his client. Former Jacksonville Jaguars running back Fred Taylor, one of many players with Florida connections ensnared in the scandal around convicted agent William "Tank" Black, sued Black and his associates in 2000 after investing $3.4 million — $2.4 million of it from his first signing bonus — in Black's enterprise.

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