It is hard to imagine a world-class athlete more prepared for NBA riches than Adonal Foyle.
His adoptive parents were both professors at Colgate University, where the erudite Foyle would graduate magna cum laude with a degree in history. Picked eighth overall in the 1997 draft, Foyle had a “financial team” to negotiate his first contract.
Still, the money came into Foyle’s life with the force of a hurricane.
“Complete fear about what I was going to do,” recalled Foyle, who played 12 years in the NBA. “Even though we had a plan, we had talked about what we would do, and I’d get my financial team together and stuff like that, even with all of that, it was just that ‘Oh, my god’ moment of, like, ‘This is a big deal. I gotta manage this; I gotta do something.’”
In the NBA, as in most sports, players are not paid until their season starts. That means getting drafted in June, but not collecting a paycheck until November.
And that first check is usually a whopper.
“That shock, for me, was very important, because it signified a few things, which was, one, ‘Holy cow,’ from an athletic perspective and from an achievement perspective,” said Foyle, who pocketed more than $63 million for his career.
NBA salaries increased roughly 70 percent in the last four years. Salaries in other sports are rising as well, creating instant millionaires of young athletes often incapable of handling the responsibility.
That’s where a financial advisor, an accountant and a life coach can help the high-net-worth athlete client at least get started out on track.
“The natural instinct of a young person that comes into money is to want to go and spend some of that money,” said Foyle, who has written three books on athletes and money. “Because you’ve never had it. So, that natural instinct has to be curbed and it has to be controlled.”
After retiring in 2010, Foyle spent two seasons as director of player development for the Orlando Magic. The role put him in close contact with the needs of the players as they adjusted to life as highly paid professionals.
Although he was used to talking financial planning with teammates and sharing his advisors with them, Foyle recalled counseling a Magic player that he could not reach.
“So I started to figure out how to break down finance to a person who had never had interactions at that level with this level of finance,” he said. “I started talking about where you grow up, how people view money, the psychology of money, the sociology of money.”
That led Foyle to write his first book, Why Players Go Broke: An NBA Player’s Advice for Keeping Your Wealth. He followed up with two more books on athletes and finance.
Few players have 10-year careers, and Foyle noted that the average NBA career is 4.7 years. For a lot of players, that means one contract.
“You should see it as, ‘If this is the last contract, what could I put away for a rainy day?’” Foyle explained. “And really, those should be the constraints.”
Foyle’s most recent book is titled The Athlete CEO. The concept of an athlete considering himself the CEO of his many different investments and business interests is shared by Steven Goldstein, who heads the Sports and Entertainment practice at Grassi & Co. in New York City.
“The minimum salary in the NFL is now $480,000,” Goldstein said. “There are a lot of businesses that start off in their first year that don’t come close to making $480,000 a year.”
Goldstein developed the CEO Athlete program, which focuses on the “ABCs” of the high-net-worth athlete: accounting, budgeting and cash flow.
“We could take it and make it much more complex, depending on the level of sophistication or income that the athlete has,” Goldstein said. “But what we’ve discovered is that keeping it simple through the ABCs, the athlete understands that now they have to think of themselves as a business.”
Some simple concepts can go a long way to helping the athlete CEO avoid becoming another bankrupt magazine cover story subject, he said. For example, Goldstein advises clients to set up one account for regularly budgeted expenses and a second account for their vast income.
“That will help them not get into situations where they are tapping into their money to buy the homes, to pay for their entourage, to have all their family members grab at them,” he said. “And it just enables them to have hopefully peace of mind and control over what they’re doing.”
‘The Earlier, The Better’
Based in New York and Florida, the Archer Financial Group represents about 200 athletes, along with some celebrities and entertainers. Tom Archer is a former baseball player and a current scout for the Chicago White Sox.
It is always an advantage to get the athlete as early as possible — the earlier, the better — before they get drafted and before they get married, Archer said.
Many athletes want complete financial management, said Archer, adding that “we’ll only do what we’re asked to do.”
The whole package starts with a will, trusts for asset protection and other documents to give the player some long-term wealth stability, he said.
“I like to make sure my guys are buttoned up and there’s nothing left to chance,” Archer said.
Then the firm tackles estate planning and tax implications. A key is to properly acquire assets in a way that doesn’t unnecessarily inflate the player’s estate, Archer explained.
Getting The Most Out Of Life (Insurance)
“A lot of guys will go out and buy a life insurance policy and they’ll own it personally,” he said. “By owning it personally, if you buy a $10 million life insurance policy, upon death it’s in your estate. So now you’ve just inflated your estate by $10 million.”
A better move is to put that $10 million policy into an irrevocable life insurance trust. That is just one example of how financial planning can save a high-net-worth client a lot of money, Archer said.
Another Archer strategy is to “pack money.” For example, using a chunk of money to take advantage of the life insurance tax-deferred growth element, Archer said.
“Let’s say a guy’s making $3 million or $4 million a year and we’re going to pack $250,000 a year into an insurance plan,” he said. “We’ll do that with the lowest death benefit that we can get and build the cash value as high as we can. And we’ll use special-access-type trusts to keep it out of the estate while still allowing them to be able to take it as retirement income.”
All of the responsible planning is good backup for those players who want to take risks. Archer likes to prepare as though his clients will take risks.
“You should do that, you know, if you’re young,” he said, “but this way, you’ll know that you have this foundation base of guarantees.”
Sometimes, though, a player looking at a bad deal needs to be told it is a bad deal. Archer, who grew up in the South Bronx, is able to deliver that message effectively.
“If a deal’s a loser, I’ll tell them straight out, ‘All I can tell you is that I wouldn’t put my money into this deal,’” Archer said.
Fall of Shame
Sugar Ray Robinson
The biggest boxing stars are known for drawing large crowds in the ring and living large outside of it. Sugar Ray Robinson set the standard early.
Born Walker Smith Jr., Robinson won 91 consecutive fights around the world during his heyday from 1943 to 1951. In a 2002 survey by The Ring magazine, Robinson was named the best fighter of the previous 80 years.
And he traveled with an entourage befitting a king, Archer said. In fact, Robinson is credited with originating the modern-day sports superstar “entourage.”
“He had a cook that traveled with him, and he had a jester that traveled with him to make him laugh,” Archer said. “And I mean he had everything.”
Things were good while Robinson was winning boxing titles and fighting for large purses. In 1958, he defeated Carmen Basilio to regain the middleweight crown and become the first boxer to win a divisional world championship five times.
After going 85-0 as an amateur, Robinson fought 200 professional bouts. He won 173 of those, with most of his losses coming in the 1960s as he desperately tried to recapture the spotlight.
Robinson drove a flamingo-pink Cadillac and traveled with a team that included, at various times, a barber, voice coach, masseuse and dwarf mascot and a man who whistled while the boxer trained.
When Robinson first traveled to Paris, a steward referred to his companions as his “entourage,” he wrote in his autobiography. Despite initially balking at the term, Robinson came to use it himself when referring to his team.
Robinson kept fighting because he already had financial problems. After his boxing career ended, he launched an entertainment career that foundered.
Robinson was broke by 1965, he wrote in his book, having spent all of the $4 million he made inside and out of the ring. A month after his last fight in 1965, Robinson was honored with “Sugar Ray Robinson Night” at Madison Square Garden, where he was honored with a massive trophy.
“When he went back to his apartment in New York, he didn’t even have a table to put it on,” Archer said. “And so you hear those kind of things and you say to yourself, ‘Holy mackerel.’”
When Rollie Fingers played Major League Baseball, he stood out on every field that he played. The 71-year-old Fingers still sports the famous handlebar mustache that draws attention wherever he goes.
Fingers starred for three teams during his 17-year career. Beginning with the team that signed him out of high school, Fingers reached the pros with the Oakland Athletics in 1968. After starting a handful of games, he moved to the bullpen and in 1992 ended up as the second reliever ever elected to the Baseball Hall of Fame.
In eight years in Oakland, Fingers was a key cog on three straight World Series-winning teams (1972-74). After four seasons with the San Diego Padres, Fingers hit his career apex in 1981 with the Milwaukee Brewers. He won both the American League Cy Young and MVP awards that year.
Fingers would finish his career in 1985 with 341 career saves, the most in MLB history at the time. However, hints of financial trouble can be traced to his final stop in baseball. In January 2007, Sports Illustrated reported that Fingers owed Wisconsin more than $1.4 million in back taxes dating to 1981.
Fingers eventually settled that claim, but he was already well down the road to financial ruin. In 1989, he filed for bankruptcy protection in San Diego – claiming debts of $4.2 million against a net worth of $50,000. Records showed Fingers owed money to 108 different creditors, from florists to travel agents to auto dealers.
According to various news reports from the time, Fingers’ financial woes were caused not so much by profligate spending as poor investment choices. He poured millions into Hawaii timeshares, pistachio farms, wind turbines and raising Middle Eastern race horses.
Fingers’ wife, Suzie, has said her husband was naïve and too trusting when it came to investing.
Livan Hernandez grew up very poor in the Villa Clara Province of Cuba. High-level athleticism would be his ticket out of the suffocating communism of the Fidel Castro regime. Livan and his half-brother Orlando Hernandez would both have long careers in the major leagues.
First, they had to escape the island. As Livan’s pitching talents blossomed, so did his plans to defect. After meeting recruiter Joe Cubas in Venezuela in 1994, the two planned an escape through Mexico. About a year later, Hernandez gave up his job as an official Cuban athlete and defected to the United States. Orlando would defect two years later.
Livan Hernandez debuted with the Florida Marlins in 1996 and became a star one year later. In 1997, Hernandez went 4-0 in the postseason, winning both the National League Championship Series and World Series MVP awards.
His career floundered a bit after he left the Marlins in 1999. But Hernandez would play 17 seasons with 10 teams, earning a spot on the National League All-Star team in 2004 and 2005.
Hernandez officially retired in March 2014, and his financial difficulties soon appeared. Despite earning about $53 million over his career, Hernandez filed for Chapter 13 bankruptcy in June 2017. He declared owing up to $1 million to about 50 different creditors.
Hernandez listed garden-variety debts associated with overspending and living a certain lifestyle. He owed credit card companies such as Chase and Bank of America, as well as an unpaid $220,000 loan from a Miami businessman. Likewise, he owed unpaid child support and a back tax bill to the Internal Revenue Service.
But a certain amount of financial naïveté seems to have played a role in Hernandez’s money problems. In 2010, Hernandez signed a cheap deal with the Washington Nationals and enjoyed a career renaissance.
According to The Washington Post, Hernandez handed Washington Nationals’ general manager Mike Rizzo a note in a hotel lobby in the middle of the 2010 season.
The note had a number on it: $1 million. “I play for this,” Hernandez told Rizzo, who promptly agreed and signed him to the contract for the 2011 season.
“Livan’s agent wanted to kill him,” Rizzo told the Post the following year. “That was the best contract I ever ‘negotiated.’”
Hall of Fame
George Herman Ruth had a lot of bad financial habits. He spent too much, he spent frivolously and he fumbled away his earnings power to some degree.
But the Babe was shrewd in one important aspect: The annuities he bought protected him for life. That purchase proved to be one of the best decisions Ruth ever made, once the Great Depression wiped out savings and earnings power across the country.
The annuities Ruth purchased from a competing ballplayer early in his career guaranteed him an annual income for life of about $300,000 in today’s dollars.
Many consider the Babe the best player in baseball history, and he took his last swing more than 80 years ago. The 6-foot-2, 215-pound Ruth (who frequently played much heavier) swatted 714 home runs. At his 1935 retirement, the next closest player had 378.
Babe so dominated the game that he spawned the adjective “Ruthian” to describe mind-defying feats.
Off the field, Ruth lived just as large. He crashed cars, charged into the stands to fight hecklers, was subjected to paternity suits and suspended by the commissioner for leading an offseason barnstorming team.
According to newspaper reports from the time, Ruth bought his first annuity in 1923 from Harry Heilmann, a star outfielder for the Detroit Tigers who sold insurance on the side. Ruth would ultimately fare better than his colleague. Heilmann’s insurance business went belly-up during the early years of the Depression.
“I may take risks in life, but I will never risk my money,” Ruth is alleged to have said.
Ruth’s business manager, Christy Walsh, became concerned that his client was spending money just as quickly as he made it. So Walsh set Ruth up with Heilmann, who sold the Babe a deferred annuity through Equitable Life Insurance Company (now AXA Equitable).
Ruth continued to buy annuities through the end of the decade. Walsh set it up so the Babe could withdraw the money as income when his career wound down. By the time of the first withdrawal in 1934, the country was deep in economic despair.
But the Ruths were not. News reports peg the Babe’s annual annuity payments at $17,500, or more than $290,000 in today’s dollars.
The retirement years were difficult for Ruth, as biographers have noted. He never found a second career, and longed for a managerial offer that never came. Babe lived out his life fishing, golfing and bowling his days away.
Money is one worry he didn’t have. Thanks to a shrewd investment in annuities, Ruth provided well for his wife Claire and daughters Dorothy and Julia.
Ruth was so impressed with his annuities that before died of cancer in 1948, he made arrangements for an annuity to give Claire a source of guaranteed income for the remainder of her life.
As a practicing Muslim, Olajuwon faced an additional hurdle to achieving second-career financial success: It is against his faith to charge interest to anyone.
Still, that did not stop the Nigerian basketball superstar from investing heavily in land. Olajuwon played nearly his entire NBA career for the Houston Rockets and began buying up land in that area early on.
There was the 1,500 acres of ranchland he bought in 2001. Then the 1,250 acres of undeveloped land he closed on in 2007. Along the way, news accounts popped up of the handsome profits Olajuwon was turning on properties.
In 2005, he sold 17.3 acres of land just north of downtown Houston to the city’s transportation agency for $15 million. Olajuwon reportedly paid roughly $2 million for the land some six years earlier.
Of course, it was Olajuwon’s success on the court that gave him the financial resources to become a land baron. The first overall selection in the 1984 NBA draft, the 7-footer played 16 years in Houston before adding a final season in Toronto.
Olajuwon finished his career 13th all-time in points, 14th in rebounds and ninth in steals. He is the all-time leader in blocked shots with 3,830. He was elected to the NBA Hall of Fame in 2008.
Once traded (with others) for Kareem Abdul-Jabbar, Junior Bridgeman found a home in Milwaukee. While never a star, Bridgeman had enough impact during his 10 years with the Bucks that the team retired his No. 2 jersey.
More importantly, he became a part of the Milwaukee community. That made Bridgeman’s transition to a second-career life in business a lot easier.
After he starred at the University of Louisville, the Los Angeles Lakers drafted Bridgeman eighth overall in the 1975 NBA draft. Immediately dealt to Milwaukee with three others, Bridgeman averaged nearly 15 points a game over the ensuing nine years as the Bucks made several playoff trips.
After two years with the Los Angeles Clippers, Bridgeman returned to Milwaukee for a final season before retiring.
In a Fortune magazine interview, Bridgeman recalled questioning former Bucks owner Jim Fitzgerald about entering the business world. “If you get involved with business, you only have two problems,” Fitzgerald said. “People and money.”
Son of a steel worker, Bridgeman played before the era of monster contracts. His top salary was reportedly $350,000 — very good money, but a pittance compared with the $20 million a player of his ability would earn today.
Still, he had money to invest and he chose the restaurant business. Bridgeman started with five Milwaukee-area Wendy’s, where he insisted on doing every job as needed. Relying on his leadership skills — he once served as president of the NBA Players Association — Bridgeman instilled team concepts that fueled skyrocketing sales.
“Failure was not an option,” he told Fortune.
Bridgeman kept adding restaurants and was once one of the largest franchise owners in the country before selling out in 2016 to become a Coca-Cola bottler. Today, he is the CEO of Heartland Coca-Cola, which serves parts of Kansas, Missouri and Illinois.