Whether or not you celebrate your team's selections in the recent NFL Draft, you could, at the very least, rejoice in the idea that our nation's floundering gross domestic product will soon get a much-needed booster shot.
Big bags of Benjamin bills will be hurled at draftees' cleats in the form of signing bonuses/economic stimulus packages. Stashing their instant riches in a Roth IRA or a 10-year certificate of deposit won't likely be their first thought.
With money no object, some will go on extravagant shopping sprees, whipping out the Platinum AmEx faster than their footspeed in the 40. They'll select tricked-out cars, pick up the checks for $400-a-bottle champagne parties and slip their wrists into watches so diamond encrusted that Space Shuttle astronauts can use the jewelry for geographical reference.
They'll buy MTV "Cribs"-worthy homes, custom suits, reptile-skin shoes and lavish gifts for their friends and family before they've even played a single down in the NFL. It's fun for the moment but short-sighted in a long run that could destine them to be the next Mike Tyson, Michael Vick, Mr. T or MC Hammer.
"We see this every year: Many act like lottery winners, new to having money and eager to show it off and spend it like they will always have it," said Roy Hadley, an Atlanta-based attorney and financial adviser who counsels professional athletes. "They know they should probably invest, but a lot of them figure that they can worry about that later."
They forget that the average NFL career lasts three seasons. They ignore how their big-money contracts aren't guaranteed if they get cut by a team or can't play again because of injury. They overlook the fact that they can't do anything but play football. They're young. They nod like bobbleheads at the sound advice of savings — until it's too late.
Which is where Hadley, a fixer, comes in. He works for Bryan Cave LLP, which has offices in Irvine, Calif., and all over the planet. About 90 percent of his athletic clients were referred his way after their conspicuous consumption, impulsive life choices and ill-conceived investments have left these giants with their jean pockets turned out and their wallets worth more than what's in it.
"When the money's gone and their sports career is over or almost over," he said, "that's when they realize that they wasted their wealth, are broke and on the verge of bankruptcy. It's a real tragedy."
Hadley works with players to create a lifestyle and financial plan that preserves and sustains wealth long after their playing days are over. He hopes they listen, especially when he explains how a $10 million signing bonus can be gone as quickly as it arrived.
Consider that the agent gets $300,000 or a 3 percent cut of the bonus. Uncle Sam takes about $5 million for taxes. Then there's the $4 million house; the $250,000 convertible Bentley; $200,000 in new jewelry; $150,000 in a fine wardrobe; and $100,000 in nightclub outings and island getaways.
Those expenditures drop the $10 million bank balance to zero dollars, zero cents. There won't even be enough cash to buy mom an iPod.
"Some guys can blow through $10 million in a couple months without thinking about it," Hadley said. "Really. It's not hard to do, which is why having a budget and being careful about the money you spend and the people you have around you really matters."
The NFL attempts to educate players on money-management decisions during its yearly rookie symposium. Full-service agents link clients to financial professionals like Bradley, who recommends that rookies take six steps upon entering the pros.
The first is to select an established and trustworthy group of financial advisors, estate planners and lawyers who work on a fee basis rather than a commission. The next is to create and stick to a budget that includes "fun money" allowance.
The remaining steps involve making prudent life decisions "that won't lead them to financial ruin."
By "ruin," see the quarterback Vick and running back Deuce McCallister, who both filed for bankruptcy; receiver Muhsin Muhammad, who took eBay bids for his mansion; or Hall of Fame running back Eric Dickerson, who lost a fortune after investing in pyramid scheme that defrauded at least a dozen athletes.
More than 50 Super Bowl rings, including one from the 2007 New York Giants' championship, were listed on eBay on Monday. It's staggering but understandable considering that 78 percent of former NFL players "have gone bankrupt or are under financial stress" two years after retirement, according to a 2009 Sports Illustrated article.
Hadley tells his new clients to turn away from with gold-digging childhood friends and newly unearthed relatives. "Michael Vick got tied up in dogfighting because of a friend," he said.
He warns them about reckless sexual relations and unplanned pregnancies that could lead to a lifetime of child support. "Four kids from four mothers these guys barely knew could mean $500,000 in child support each year for 18 years," he said.
Hadley talks until he's hoarse about avoiding people who want start-up money for the can't-miss investment and business opportunities. "All the time I hear athletes telling me they've lost most of their money because they put it into starting a restaurant with their name on the marquee, a recording studio, a movie studio or some invention that was supposed to change everything," he said.
Regarding investments, Hadley offers athletes a sports analogy: "You don't need to hit a home run with investments. Just put your money in something secure and safe and hit for average, with singles and doubles that will pay off in the long run."
While America is tightening its money belt, some overnight millionaires will be spending and squandering their new fortunes, thinking one game at a time and putting little thought into a gameplan for tomorrow.
(c) 2010, The Orange County Register (Santa Ana, Calif.).
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