Author Topic: financial confusion on ESPN  (Read 8258 times)

rob in cal

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financial confusion on ESPN
« on: May 26, 2014, 03:55:31 PM »
I heard an interview today on the Mike and Mike ESPN radio show today wherein a former athlete was discussing the financial plight of former athletes.  This is a legitimate subject, especially for the many former ones who only played a few years.  But the basic implication of the talk was that outside of the very top level of athletes, the Lebron James, the Peyton Mannings etc, pretty much most other professional athletes will need future careers.  In fact, a huge chunk of former athletes who've played professionally in top leagues, (NFL, NBA, NHL, MLB) for more than about two years, should be in great shape financially, as they should easily have been able to save 60-80% of their take home pay.  Of course this doesn't happen, but it would be so easy for well paid athletes to be FIRE in just a few years; even playing at league minimums, after a couple of years a player should have about 400k invested and making more year after year, this isn't rocket science.

viper155

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Re: financial confusion on ESPN
« Reply #1 on: May 26, 2014, 06:21:06 PM »
And most professional athletes are not rocket scientists. Mostly, they come from low income backgrounds and don't have a clue on how to handle a working mans income let alone instant millions. Paying these guys the amount of money they make is, often times, more harmful than helpful.

Jags4186

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Re: financial confusion on ESPN
« Reply #2 on: May 26, 2014, 07:47:04 PM »
I heard this interview also.

I think what we forget is that the players themselves are a business that has expenses. If you are a mlb player making minimum salary...500k/yr you still have to pay an agent, union dues, lawyers, etc. maybe that drops you to 400k gross. Then you pay high marginal taxes....so take 35% from that. You're down to 260k take home. So if you make league minimum and play the average 4 years it is unlikely you're set for life.

trailrated

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Re: financial confusion on ESPN
« Reply #3 on: May 27, 2014, 10:54:10 AM »
I think it is also important to note most are young and just out of college. They think they are invincible and will have 20 year careers in their sport when the average is 4 years or less. They like many young people figure they can save more....later. It is sad to see but financial planning courses should be mandatory after signing their first contracts.

Jamesqf

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Re: financial confusion on ESPN
« Reply #4 on: May 27, 2014, 11:01:48 AM »
If you are a mlb player making minimum salary...500k/yr you still have to pay an agent, union dues, lawyers, etc...

Why in the world would you expect to pay an agent?  Don't know about baseball, but in most of the world the agent only gets a commission if he brings in new business.  So if an agent lands an endorsement deal or something, he gets a percentage of that, but not a regular paycheck.  And of course treating the player as a business means the commissions and all the rest are business expenses, deductible from income.

lisahi

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Re: financial confusion on ESPN
« Reply #5 on: May 27, 2014, 11:22:12 AM »
If you are a mlb player making minimum salary...500k/yr you still have to pay an agent, union dues, lawyers, etc...

Why in the world would you expect to pay an agent?  Don't know about baseball, but in most of the world the agent only gets a commission if he brings in new business.  So if an agent lands an endorsement deal or something, he gets a percentage of that, but not a regular paycheck.  And of course treating the player as a business means the commissions and all the rest are business expenses, deductible from income.

The agent generally lands the player the contract that gets him his annual paycheck -- the agent gets a commission out of that. Now I don't know whether it's yearly, or just a one-time thing, but agents are involved in salary contract negotiations. They do get money from that which will be taken out of what the player earns.

Fishingmn

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Re: financial confusion on ESPN
« Reply #6 on: May 27, 2014, 11:29:16 AM »
And most professional athletes are not rocket scientists. Mostly, they come from low income backgrounds and don't have a clue on how to handle a working mans income let alone instant millions. Paying these guys the amount of money they make is, often times, more harmful than helpful.

I'm guessing a lot of them also get hounded to no end by family members and friends about their money and expectations of handouts not unlike some lottery winners.

And yes, I'm sure 98% of athletes use an agent to negotiate their contract which are typically in the 3-5% range according to online sources. Agents can certainly make a big difference in compensation, especially once athletes are past their rookie deals.

marty998

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Re: financial confusion on ESPN
« Reply #7 on: May 27, 2014, 03:52:57 PM »
This is quite prevalent among Aboriginal and Pacific Islander cultures for players in our major football codes (mostly rugby league).

Expectations are built because "the family" has invested so much in the development of the young player, so when he does hit the top level then the family expects a handout.

These players tend to end up with very little because these families are so large and so spendy.

The Fake Cheap

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Re: financial confusion on ESPN
« Reply #8 on: June 02, 2014, 08:57:44 PM »
Yes I caught this show as well, by accident.  I really enjoyed it.  There was a great quote from someone, maybe one of the Ravens players when it comes to spending your money:
"Live like a king for a year....or live like a prince forever."

Cheddar Stacker

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Re: financial confusion on ESPN
« Reply #9 on: June 02, 2014, 09:44:50 PM »
This is a link to an 80 minute documentary done by ESPN (part of the 30 for 30 series). I watched bits and pieces one day while it was on TV.

https://www.youtube.com/watch?v=TSOAwNSv8EM

Obviously there are some very, very poor decisions here and they deserve massive facepunches (with baseball bats).

There are also many predators (agents, gold-digging women, finanial advisors, friends, family, etc.) with their hands out. Some of these guys tell stories of buying 3 or 4 houses (with loans) for mom, dad, brother, etc. and then when the big money stops they struggle to ask their family to move out of homes.

I'm not at all making excuses or justifications, it's clearly all completely ridiculous. But, if you watch some of this, you start to understand how this could happen, even to some people who don't spend all their money on cars, women, and drugs.

Paul der Krake

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Re: financial confusion on ESPN
« Reply #10 on: June 02, 2014, 09:53:31 PM »
I'm not at all making excuses or justifications, it's clearly all completely ridiculous. But, if you watch some of this, you start to understand how this could happen, even to some people who don't spend all their money on cars, women, and drugs.
Drugs are by far the cheapest of the 3 big ticket items mentioned, there's only so much you can spend on them before it becomes absolutely clear to your coaches and the millions of TV viewers that you are coked out of your mind.

Moral of the story for new recruits? Ignore women and wheels, stick to drugs.

Cheddar Stacker

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Re: financial confusion on ESPN
« Reply #11 on: June 02, 2014, 10:07:37 PM »
So I have this video link playing on my laptop right now. I'm listening while perusing the forum.

My biggest facepunch so far, Dez Bryant picked up a $56K restaurant check. When you factor in taxes that's about $100-$110K. Nuts.

MgoSam

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Re: financial confusion on ESPN
« Reply #12 on: June 03, 2014, 05:24:32 AM »
So I have this video link playing on my laptop right now. I'm listening while perusing the forum.

My biggest facepunch so far, Dez Bryant picked up a $56K restaurant check. When you factor in taxes that's about $100-$110K. Nuts.

To my knowledge that is a huge part of the issue, if you are referring him doing that his rookie year that wasn't due to him wanting to, but rather him being hazed by his team. From what I remember, he didn't want to take part in his hazing and so a wide receiver (can't remember who it was) essentially ordered him to buy dinner for a chunk of the team. This is all from memory but I also think some of his teammates took bottles of wine to go.

Psychstache

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Re: financial confusion on ESPN
« Reply #13 on: June 03, 2014, 07:44:38 AM »
So I have this video link playing on my laptop right now. I'm listening while perusing the forum.

My biggest facepunch so far, Dez Bryant picked up a $56K restaurant check. When you factor in taxes that's about $100-$110K. Nuts.

To my knowledge that is a huge part of the issue, if you are referring him doing that his rookie year that wasn't due to him wanting to, but rather him being hazed by his team. From what I remember, he didn't want to take part in his hazing and so a wide receiver (can't remember who it was) essentially ordered him to buy dinner for a chunk of the team. This is all from memory but I also think some of his teammates took bottles of wine to go.

Yeah, it was even worse than that. He didn't carry Roy Williams' pads for him so what was supposed to be a wide receiver dinner that would cost 4-5K turned into a dinner for the whole offense that featured guys doing ridiculous things to punish him like ordering a to go dinner after their dinner and getting an expensive bottle of wine and pouring it out in one of the potted plants at the restaurant. Not exactly a team building exercise.

greenmimama

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Re: financial confusion on ESPN
« Reply #14 on: June 03, 2014, 01:19:26 PM »
I have been watching this on youtube with interest, it really bothers me on so many levels, there is just so much wrong. I feel badly for the young kids who have no idea what to do, they should have been taught that growing up, but maybe their parents didn't know either, I def took for granted knowing how to open a checking and savings account and knowing where to cash a check.

I wish I knew any of them, I would be happy to walk them through simple things like that, the mama in me just wants to protect them from those around them that would take their money, it is disgusting.

kyleaaa

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Re: financial confusion on ESPN
« Reply #15 on: June 03, 2014, 01:38:27 PM »
After you pay back everybody who helped you along the way, you might really not have that much left over. If your community's help made it possible for you to reach the pro level, why shouldn't they expect a piece of the pie?

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Re: financial confusion on ESPN
« Reply #16 on: June 03, 2014, 02:20:29 PM »
The major sports leagues should do a better job with coaching and helping theses young players. After all, think how not so financially savvy the general population is in their twenties. You also have the hanger-ons and the other undesirables that glam on to these guys. A simple solution would to take some part of each year's salary and buy annuities (instead of buying that Bentley) for the players lifetime. Also, stop the greedy states from requiring tax returns on a portion of a players income because they earned income by playing ball in that state.

Cheddar Stacker

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Re: financial confusion on ESPN
« Reply #17 on: June 03, 2014, 02:24:42 PM »
The major sports leagues should do a better job with coaching and helping theses young players. After all, think how not so financially savvy the general population is in their twenties. You also have the hanger-ons and the other undesirables that glam on to these guys. A simple solution would to take some part of each year's salary and buy annuities (instead of buying that Bentley) for the players lifetime. Also, stop the greedy states from requiring tax returns on a portion of a players income because they earned income by playing ball in that state.

NFL has a pension but you have to play 4-5 years to qualify. I'm not sure about the other sports, but hopefully they all have something similar. Hard to get the same benefit a 401K gives you with the paltry $17,500 limit when you earn $50M/year.

On the state tax return thing, it makes their returns more complex so they need a good tax pro to prepare them, but it's roughly a wash. Taxes you pay to one state are generally either deductible in the other states, or the income is excludable from the other states returns. The biggest headache is you might live in FL with 0% state tax but have to pay 13% taxes to CA. Ultimately it likely washes out to a nice 5-8% state tax rate for most.

hybrid

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Re: financial confusion on ESPN
« Reply #18 on: June 03, 2014, 02:48:14 PM »
I think it is also important to note most are young and just out of college.

Ding. Ding. Ding. They are kids when they start out, and kids do all sorts of stupid stuff. If the various sports leagues truly cared about their employees, they would squirrel away half their pay into a mandatory retirement fund that pays out like a pension.

This would drive some of the Libertarians of the world absolutely mad, but so many athletes would be better off without quite so much freedom to go from boom to bust so quickly. Better to live like a prince forever, as was noted above.

annann

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Re: financial confusion on ESPN
« Reply #19 on: June 05, 2014, 06:55:42 AM »
I heard this interview also.

I think what we forget is that the players themselves are a business that has expenses. If you are a mlb player making minimum salary...500k/yr you still have to pay an agent, union dues, lawyers, etc. maybe that drops you to 400k gross. Then you pay high marginal taxes....so take 35% from that. You're down to 260k take home. So if you make league minimum and play the average 4 years it is unlikely you're set for life.

If I had 260K take home for 4 years I would be set for life and be able to contribute to help others in life also.  I would guess most folks here could do that.

BlueHouse

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Re: financial confusion on ESPN
« Reply #20 on: June 05, 2014, 08:21:06 AM »
If I had 260K take home for 4 years I would be set for life and be able to contribute to help others in life also.  I would guess most folks here could do that.

If only I had found mmm before I succumbed to lifestyle creep. 

arebelspy

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Re: financial confusion on ESPN
« Reply #21 on: June 07, 2014, 12:47:15 AM »
I heard this interview also.

I think what we forget is that the players themselves are a business that has expenses. If you are a mlb player making minimum salary...500k/yr you still have to pay an agent, union dues, lawyers, etc. maybe that drops you to 400k gross. Then you pay high marginal taxes....so take 35% from that. You're down to 260k take home. So if you make league minimum and play the average 4 years it is unlikely you're set for life.

If I had 260K take home for 4 years I would be set for life and be able to contribute to help others in life also.  I would guess most folks here could do that.

Knowing what we know now, and spending what we do now?  Yes, probably. 

In the situation most of them are in?  Seems tough.
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Mr Mark

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Re: financial confusion on ESPN
« Reply #22 on: June 07, 2014, 08:44:53 AM »
I'm not at all making excuses or justifications, it's clearly all completely ridiculous. But, if you watch some of this, you start to understand how this could happen, even to some people who don't spend all their money on cars, women, and drugs.
Drugs are by far the cheapest of the 3 big ticket items mentioned, there's only so much you can spend on them before it becomes absolutely clear to your coaches and the millions of TV viewers that you are coked out of your mind.

Moral of the story for new recruits? Ignore women and wheels, stick to drugs.

the first international sports star was a soccer player called George Best.

He made loads of cash for the time, and ended up a famous alcoholic bankrupt and needed 2 liver transplants. His best quote:
(Reporter) "George, you made so much money over the years, what happened to it?"
George " I spent most of it on women, booze and drugs, .... and the rest I wasted!"

Otsog

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Re: financial confusion on ESPN
« Reply #23 on: June 08, 2014, 11:27:23 AM »
This is a link to an 80 minute documentary done by ESPN (part of the 30 for 30 series). I watched bits and pieces one day while it was on TV.

https://www.youtube.com/watch?v=TSOAwNSv8EM

OT, but I really didn't like this movie.  There were some short, clip interviews at the start and you are waiting for the movie to get going, but it never does.  It is 80 minutes of anecdotes with no attempt at all to do anything more.  It is like watching an 80 minute trailer.  Bit of a shame because the content matter is very interesting and every other 30 for 30 I've seen is really, really good.

Cheddar Stacker

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Re: financial confusion on ESPN
« Reply #24 on: June 08, 2014, 12:54:38 PM »
Agreed, except I was very disappointed in one other 30 for 30. Diego maradona was one of the top 10 soccer players of all time. They only did a 30 minute show on him, it was very artsy with a ton of spanish, and the production value was awful. It was hard to hear anything. Oh well.