Pro Athletes = Amateur Money Managers

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.”

Related Posts with Thumbnails

Tags: , ,

Leave a Reply

CommentLuv badge