Archive for the ‘Athletes’ Category

How Former Boston Red Sox Pitcher (allegedly) Cost Rhode Island Taxpayers $75 Million

Monday, July 16th, 2012

During his heyday as pitcher for the Boston Red Sox Curt Schilling always had a reputation for shooting his mouth off; for going against the grain. But with 216 wins and three World Series titles under his belt, Schilling could afford to be outspoken – or arrogant, as his critics would put it. Recurring injuries caused him to retire from the sport in 2009, but Schilling remained in the public eye thanks to his tireless political advocacy supporting Republican candidates for office as well as his frequent media appearances.

Schilling has always been an avid gamer, starting with tabletop pen and paper war-games and eventually moving on to more advanced computer games. Of particular interest to Schilling were MMORPG’s (massive multiplayer online role playing games) such as Everquest and World of Warcraft, where thousands of players across the world simultaneously take part in adventures in a persistent virtual world.

Schilling, whose estimated net worth was $50 million at the time of his retirement, decided to make the jump from game player to game developer in 2005. His plans were nothing if not ambitious – Schilling recruited bestselling fantasy author R. A. Salvatore, comic book legend/entrepreneur Todd McFarlane and former executives from Comcast and Electronic Arts, placing them in key positions in his new company.

Initially called Green Monster Games, Schilling’s game development company changed its name to 38 Studios in early 2007; the 38 being a reference to Schilling’s jersey number. 38 Studios continued to expand throughout 2007 and 2008, acquiring developer Big Huge Games from publisher THQ in May 2009.

Originally headquartered in a 30,000 square foot office complex in Maynard, Massachusetts, executives in 38 Studios announced that the company was going to relocate to Providence, Rhode Island in 2010. What prompted his sudden relocation? A $75 million enticement in the form of a guaranteed loan from the Rhode Island Economic Development Corporation. The RIEDC describes itself, according to its website, as a “quasi-public agency, the Corporation serves as a government and community resource to help streamline the business expansion in, and relocation to, Rhode Island.”

The $75 million loan guarantee was strongly supported by then Republican Governor Donald Carcieri, was touted as a ‘job creating initiative.’ 38 Studios executives promised to bring 450 direct jobs to Rhode Island as part of the loan agreement.

Now would be a good time to point out that although 38 Studios was established in 2006, continued to expand as a company up to 2009, negotiated the loan agreement with Rhode Island in 2010 and relocated to Providence by mid 2011, they had yet to release a single game amid all this corporate maneuvering.

The average big budget game (or AAA games, as they are known in the industry) typically takes between 2 and 3 years to complete, has a staff of hundreds of developers working on it and requires budgets nearing hundreds of millions of dollars (source). While video games are a $75 billion industry (according to 2011 figures from Gartner Inc), the vast majority of AAA games barely break even or fail to make a profit. Most big publishers stick with established franchises that are known sellers, making new intellectual properties a tough sell.

38 Studios released their first game, Kingdoms of Amalur: Reckoning, in February 2012. A single-player action role-playing game from a new developer was always going to have a tough time in a market dominated by military first-person-shooters, MMORPGs and casual smart-phone games, and that is the unfortunate fate that befell the ambitious Kingdoms of Amalur. While the game was fairly well reviewed (Metacritic score: 80%), it was a financial disaster. The game sold 1.2 million copies since launch, far short of the 3 million retail copies it needed to sell just to break even on development costs.

In the wake of the lukewarm reception Kingdoms of Amalur got from the market, officials in the Rhode Island governor’s office began to grow increasingly concerned over their $75 million investment in Curt Schilling’s company. 38 Studios missed a scheduled loan payment in May 2012, and it was revealed that the company failed to make payroll that month. Emergency meetings between current governor Lincoln Chafee and the Rhode Island Economic Development Corporation were held to discuss with the impending crisis. Accusations and counter accusations were thrown about in the press, but by this point the writing was on the wall. In May 24, 2012 38 Studios closed its doors and filed for Chapter-7 bankruptcy.

Although the studio closed down, the matter is far from settled. It was announced in early June that “Rhode Island state police, the attorney general’s office, the U.S. Attorney’s office, and the FBI are launching investigations into the company.”

Emails obtained by the Associated Press later revealed that an official with the RIEDC who was involved in finalizing the $75 million deal contacted 38 Studios’ chief financial officer for a possible executive level position in the company. As a result of the scandal, the entire board of directors of the Rhode Island Economic Development Corporation have either resigned outright or are looking to leave once their terms are up (source).

Investigations into the company are currently underway – expect more political fallout and possible criminal charges before the dust settles.

$55K Dinner for Cowboys, no big deal!

Friday, October 8th, 2010

Dez Bryant’s elders on the Dallas Cowboys roster decided to teach the rookie a lesson, and in the process, revealed how little they have learned about life in pro sports. As part of a hazing ritual for the first-round draft pick, according to ESPNDallas.com, veterans rang up a dinner and fine-wine bill of $54,896 at a Dallas steakhouse and passed the entire tab to Bryant.

Any hope that the story might be a hoax faded dramatically when Bryant’s adviser, David Wells, essentially confirmed it. Still, the numbers seem implausible.

Dez Bryant's teammates take him to the cleaners. (US Presswire)

Almost $55,000? A Dallas public-school teacher with a bachelor’s degree needs at least 14 years’ experience to earn a comparable salary. A master’s allows the teacher to reach that level after a decade. Yet Bryant’s teammates chose an establishment where bottles of wine top $500 and he ended up paying for the equivalent of a three-bedroom house in Detroit.

Did the older Cowboys bother to consider how this extravagance would look if word about the meal got out? With a labor fight brewing, the last thing NFL players need is to appear completely out of touch with average Americans.

Yes, the lavish prank targeted a rookie who signed a contract worth a guaranteed $8.3 million before he had ever played a down professionally, and then refused to play along with the ritual of carrying the veterans’ shoulder pads after practice. The spirit of the occasion might appeal to fans who have seen Draft Day busts cart off huge portions of their team’s payroll. But the numbers on that tab add up to disrespect for the many athletes who do earn their money and ignorance about the reality of finances for an NFL player.

Sports Illustrated last year published a story estimating that 78 percent of the league’s players found themselves in financial distress two years after retirement, either because of divorce or unemployment. Even if that figure were only half-correct, it would be profoundly disturbing.

It’s bad enough when athletes undermine themselves, wasting fortunes on plainly unsound investments or, in the case of Adam Jones, “making it rain” at a Vegas strip joint with $40,000 worth of bills stashed in a garbage bag. For that matter, it’s shocking that many Americans lay out that kind of money and more for weddings.

But Bryant had virtually no way of preventing this blow to his financial future. He either went along and paid the bill, or risked permanent ostracism in the locker room.

And $54,896 is an uppercut to his bank account. Given the size of his contract, it might not seem to be. But add up the taxes, the outlay for agents and other representatives, and he surrenders at least 30 percent of that $8.3 million. Tally the financial support he may be expected to provide for family members, and … well, no one will feel sorry for him, but if his body wears out before he gets another deal, he won’t remain a rich man unless he is very, very prudent.

His older teammates should be teaching him that, not pressing him to spend more than the cost of a year at Stanford or Yale on an impromptu banquet of steak and wine.

These sorts of incidents tend to hand owners an edge in labor negotiations that they don’t deserve. As both the NBA and NFL are trying to rein in player salaries, any tales of excess will build a case against the athletes.

Twelve years ago, during the lockout that wiped out half of the NBA season, point guard Kenny Anderson, then with the Celtics, made the mistake of agreeing to lay out his finances for a story in the New York Times. He earnestly described using some of his $6 million salary to create a business that generated jobs and covering the mortgage for his mother’s house. But what caught everyone’s eye? In jest, Anderson said he might have to part with one of his eight luxury cars, which required $75,000 in insurance and maintenance costs.

The backlash was ruthless. Anderson’s eight cars became a punch line. No one asked how many NBA owners, then crying poor, had extensive car collections. For that matter, no one will hear how much Cowboys owner Jerry Jones spends at a steakhouse, although he did jokingly squabble with Saints coach Sean Payton over a bottle of wine worth close to $300 on a visit to an Indianapolis restaurant during this year’s combine.

The good news for players is that fans generally have come to accept the multimillion-dollar deals of star athletes and even have grown frustrated with team owners who won’t pay top dollar for talent. The players feel resentment only if they fail to perform or explain discontent with their contracts by saying they need to feed their families.

In the end, Anderson did turn out to be living beyond his means. About six months after the end of his 14-year career, during which he earned $63 million, he declared bankruptcy. That fate awaits many of the players who dined on Bryant’s dime Monday night. If they thought a surprise bill of $55,000 constituted a joke, they’re headed for ruin. Nobody notched a win at that dinner, except the staffers who collected the tip.

Pro Athletes = Amateur Money Managers

Friday, October 8th, 2010

After the first day of his fraud trial on Aug. 30, Rumeal Robinson was chewing on a steak at a downtown Des Moines restaurant. Dressed in an olive suit, he wore a Seiko watch bearing the logo of his alma mater, the University of Michigan. Back in 1989, Robinson gave the Wolverines their only national basketball championship, nailing two free throws in the final seconds to edge Seton Hall by a point. While he never blossomed into a National Basketball Assn. star, the former first-round draft pick earned about $5 million during six years in the league and hundreds of thousands more playing overseas. Now, according to prosecutors, it’s all gone—and as he ran through the money, they allege, Robinson committed 11 counts of financial fraud, including a kickback to his banker related to a failed real estate deal.

While other former NBA players have squandered their riches—bigger earners such as former Celtics All-Star Antoine Walker and Nets 1990 top draft pick Derrick Coleman each filed for bankruptcy protection in the past 12 months—none are looking at 30 years in prison. That’s what Robinson, 43, could get if he’s found guilty. What rankles him, though, is that the entire defense strategy of his lawyer, J. Keith Rigg, rested on Robinson’s incompetence as a businessman. “For all his good intentions, Rumeal doesn’t have a background in finance, business, or development,” Rigg told the jury. “Mr. Robinson doesn’t know what he’s doing.”

If that’s the case, he’s not alone. An alarming number of professional athletes suffer financial ruin late in their careers or after they’ve retired. Walker and Coleman lost their earnings in unwise real estate investments. New York Jets backup quarterback Mark Brunell’s Florida property ventures landed him in bankruptcy court this spring with $24.7 million in liabilities and $5.5 million in assets—which may explain why, at 40, he’s still playing pro football. Ex-Philadelphia Phillies center fielder Lenny Dykstra tried to create a one-man financial empire—including the ill-fated Players Club magazine—built on bad checks. He sold off his World Series ring to pay creditors.

From 6 percent to 8 percent of NBA players end up broke, estimates National Basketball Players Assn. spokesman Dan Wasserman. Sports Illustrated, however, has reported that 60 percent are in serious financial trouble within five years of retirement. “Usually it’s one or a combination of three things,” says Joseph Geier, a financial adviser for New York Yankees first baseman Mark Teixeira and other athletes. “Lifestyle, family, or bad business ventures.” For some it’s all three. Walker earned more than $110 million in the NBA, but he supported a large entourage and gambled recklessly. He also started a venture capital firm and real estate company that both hemorrhaged money. Coleman, who made more than $87 million playing basketball, picked a bad time to invest in Detroit real estate. Since both men’s earning curves peaked in their mid-20s, it was increasingly difficult for either to recoup such losses with each passing year.

To avoid this fate, the NBA and the NBPA co-host a three-day seminar on financial management for incoming rookies each summer. (Professional football and baseball have similar programs.) “It’s Finance 101,” says Mike Bantom, the NBA’s senior vice-president of player development. The emphasis is on saving, spending habits, and investing. “You get your paycheck, but you don’t get any instructions with it,” says Los Angeles Clipper star Baron Davis. And there’s social pressure to maintain a luxurious lifestyle, says former Sacramento Kings forward Lawrence Funderburke. “Chris Webber and Mike Bibby used to make fun of me because I drove the same car to practice for two years,” he says.

Robinson insists he lived modestly for someone whose first contract in 1990 brought him, before taxes and agent fees, $4.7 million. “I bought a Nissan 300ZX and a penthouse apartment in Atlanta,” he says. “They were my only big purchases.”

Former Jaguars expect Mark Brunell to recover from bankruptcy

Friday, September 10th, 2010

Former NFL player Mark Brunell became the latest victim of the real estate downfall. Brunell announced last Thursday that he intended to file for bankruptcy. The following night, he filed his Chapter 11 bankruptcy reorganization.

Mark Brunell used to play as a Pro Bowl quarterback in the NFL for the Jaguars. He had a 16-year NFL career, spanning the years from 1995 to 2003. During his last 10 years, he was paid approximately $52 million. He is the current holder of almost every career record in Jacksonville. He also played as the back-up quarterback for the New Orleans Saints, winners of last season’s Super Bowl. After the last season, he became a free agent, and he has not signed with any other team yet.

Mark Brunell currently lives in Ponte Vedra Beach, and is now facing several lawsuits, mostly from failed business and real estate loans in the states of Michigan and Florida.

Brunell’s former teammates, Bryan Barker and Tony Boselli, are sympathetic, and ran to their co-Jaguars defense. Both have said that Brunell became involved in a wrong investment, like many people who also invested in real estate. These investors, however, haven’t gotten too much notice since they weren’t professional athletes. Both Barker and Boselli are expecting Brunell to eventually recover from his bankruptcy.

Professional athletes who suffer from failed businesses and go into bankruptcy usually become the talk of the town. According to Ken Ruettgers in 2006, former player for the Green Bay Packers and gamesover.org director, 78 percent of former NFL players are unemployed, bankrupt or divorced two years after their retirement. This data was questioned by Bruce Laird, former player for the Baltimore Colts and head of the Fourth and Goal group that assists former players of the league. According to him, there has been no study conducted to support that data. He, however, said that half of the players who asked for assistance during the last year, including Andre Rison, Eric Dickerson and Michael Vick, retired after the year 2000. He attributed many of the players’ financial woes to medical bills from sports injuries, some of which can leave the players disabled.

As with any investment, especially when it comes to real estate, there are always risks involved. Former NFL players aren’t exactly at a higher risk for going into financial collapse, but since they are public figures, their failures and success are expected to make headlines.

Michael Vick’s birthday party

Saturday, July 3rd, 2010

There was much action during NFL quarterback Michael Vick’s birthday party last week, with a shooting incident occurring outside the restaurant. Michael Vick is the backup quarterback for the Philadelphia Eagles.

Guadalajara, the restaurant bar in Virginia Beach where Michael Vick’s party was held, turned over to the local police the surveillance video that they were able to take of the shooting. According to Allen Fabijan, the spokesperson of Guadalajara, there were no incidents that occurred inside the restaurant nor were there any security issues inside. Also, nobody was ejected from the restaurant before the shooting incident happened. Fabijan declined to say anything about a report published in the Daily Press, wherein he said that Vick and his group left the restaurant three minutes prior to the incident. For now, his only statement is that the surveillance video was already submitted to the police.

Lawrence Woodruff, Michael Vick’s attorney, defended Vick, saying he left the restaurant before the shooting happened. According to him, his client was not involved in the shooting, does not know anybody involved in it, and was “long gone” when the incident happened.

The shooting incident happened at around 2:10 in the early morning, according to the police report. The restaurant closed that night at around 1:45 am.

A victim in the shooting allegedly received a wound in the leg and was treated at a local hospital. The victim was released last Friday. However, the police have failed to identify who the victim was. The Associated Press, however, reported that Quanis Phillips, a co-defendant of Michael Vick in a 2007 case, was treated at the said hospital during that time. Quanis Phillips was involved in a dogfighting case in 2007, which resulted in guilty pleas. Michael Vicks served a prison term for the said case.

Commissioner Roger Goodell reinstated Michael Vick to the league last season, but placed him on probation for three years after he was released from custody. One of the requirements for his probation is that he should not associate himself with felons. Part of the stipulation to his NFL reinstatement is that he should fulfill all the terms included in his probation.