Posts Tagged ‘Investments’

$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, 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.”