As the NBA draft comes to an end, freshmen join and sign their first professional contracts; when the free agent market opens, player salaries have skyrocketed. The maximum salary contracts in the past are no longer surprising now. Many third and fourth players , even role players have the opportunity to get salaries in the tens of millions, not to mention that it is common for young ace stars to get contracts with annual salaries of more than 40 million.
However, there are many highly paid players in the NBA who go bankrupt soon after retiring, while there are also players with low salary levels who can still maintain a steady income and a quality life.
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New Wealth Training Camp
Imagine a young man in his early 20s who has never even used a credit card, but suddenly has millions of dollars. The first thing that comes to mind is probably not investment and financial management, but how to celebrate and have fun.
NBA players focus on training on the court, but ignore the importance of investment and financial management. According to a 2016 survey by the Players Association, 85% retired players regretted not doing financial planning at the beginning of their careers. Evan Waxman, director of the professional player accounting company EisnerAmper, believes that rookies Players often do not understand taxes and other expenses and spend their first contract without restraint. "It is important to have a budget mentality. Players who are prepared usually build a good team, including agents, accountants, insurance and financial experts. "
Jason Katz, a senior investment manager at UBS and a financial advisor to many NBA, MLB and professional football players, mentioned that the biggest challenge is managing a large amount of wealth in his 20s. According to Spectrem Group, a US market research organization, hundreds of people around the world have The average age of 10,000 assets is 66 years old, and only 1% is under 35 years old. Katz's experience over the past 25 years shows that most players need about six years to acquire sufficient financial intelligence and another five years to establish a financial plan and team.
However, with a huge income at a young age, many players will fall into the trap of getting rich quickly, especially when their values collapse quickly and they lose the concept of prices, so they buy luxury cars and yachts without mercy. Katz usually recommends that rookies rent their first house, but players usually spend a lot of money to buy a house and decorate it to look like they like. However, it is difficult to sell it after changing teams. "I think the best time to buy a house is to sign the second contract. Plan your financial plan carefully first," Katz said. Waxman will advise rookie players to invest their income in stable targets first. Usually the contract will have a base salary and incentive bonus. The base salary is used for life and stable investment, and the incentive bonus is used for non-necessities.
Greg Taylor, vice chairman of the players union, has worked closely with the NBA in recent years to help players start financial planning as early as possible. The NBA has cooperated with the players union to organize freshman training (Rookie Transition Program) for rookie players in 1986, and financial planning seminars have become more popular in recent years. It is a key plan of the NBA. "We have many plans, and rookie financial management seminars are one of them. We will also arrange financial consultants for players to consult." Taylor said, "Athletes' careers are short and ups and downs, even for super players who receive high salaries. There are also bankruptcies among football stars, so we need to remind them from a young age to plan early and instill in them the ideas of increasing revenue, reducing expenditure and prudent financial management."
De'Aaron Fox believes that the financial course is very practical, "This course particularly attracted me. I understand the importance of setting a budget every month and not letting myself make ends meet." Grant Williams said that after finishing the course, he gave up the idea of buying a luxury car, " It turns out that the car turned into negative equity as soon as I bought it.”
“When rookie players sign a rookie contract, they usually expect to receive their salary and enjoy themselves to the fullest, but soon the reality will hit, including taxes, living expenses, personal training expenses, nutritional supplements, and then buying a house, getting married and having children. Wait." Justin McCurdy, a well-known financial consultant, said, "Most young players are not interested in financial management. This is the most troublesome part. We will force clients to participate in financial management courses regularly."
Although the league, the players union and the teams have tried their best to remind them, it is still difficult to control the young people who rarely have large sums of money. "Many players come from poverty. Entering the NBA and getting a lot of money is like a dream come true. , it is difficult to convey to them the concept of increasing revenue and reducing expenditure," Taylor said.
Compared with the persuasive guidance of experts and officials, the most convincing teaching materials for young players are the cases of seniors going bankrupt and getting rich.
The price of getting rich: 60% NBA players went bankrupt less than 5 years after retiring
In 2022, Bucks owner Marc Lasry participated in the "Bloomberg" forum and inadvertently revealed that his star Giannis Antetokounmpo opened accounts and deposits in 50 banks at once. The reason is that Antetokounmpo, who was born in poverty, only knows how to save money, so he often opens accounts nearby to save money for convenience. , making Lasry sweat over his risk control, "I spent a lot of time explaining to the players what investments they can make. I told him not to open accounts in 50 banks to save money. If JP Morgan Chase Group collapses, all its banks will also Yes. I told him the importance of diversification and diversified investments, and guided him to buy U.S. Treasury bonds or other investment targets.”
According to the players union tracking, the average seniority in the NBA is about 4.5 years, and about 60% NBA players went bankrupt five years after retirement. “The challenge for professional players is that they have high short-term income when they are young, and they do not have the time or need to understand the importance of investment and financial management. Michael Seymour, founder of asset management company UNI, said that well-known agent Bill Duffy also believes that most players do not realize that their current salary may be the most generous income in their lives.
Usually player salaries seem generous, but after spending about 40% taxes, 8% league custody funds, and 4% agent commissions, they usually get less than half of it. Taking Stephen Curry as an example, his salary in the 2017-18 season was 34.68 million, but he actually got it. There are only about 15 million.
According to a 2016 survey by Fortune magazine, NBA players spend an average of US$510,000 per year. Louis Vuitton, Apple and Maserati are the three most common luxury goods. Many players spend money on yachts, hotels, private jets, casinos and luxury homes. However, the scariest thing is not the one-time cost, but the recurring costs, such as luxury home and yacht management fees.
Furthermore, many players have been defrauded due to insufficient financial intelligence, or have suffered financial losses due to excessive trust in wrong financial experts, including Tim Duncan and Kevin Garnett. "Many players will leave their money to relatives or friends for management. Then he just walked away." Seymour said, "There are also players who actually managed the money with his AAU coach." Erick Strickland believed his father to invest 1.8 million in real estate. In the end, not only did he make no profit, but he also lost half of the cost; Scottie Pippen in 2005 In 1986, Abdul-Jabbar sued his legal firm for a loss of 27 million due to improper investment. Abdul-Jabbar also sued his broker for the same reason in 1986.
The fact that players don't know how to refuse is also the reason for their losses. "The moment you sign the contract, all your old and new friends will contact you, expecting you to provide financial aid or a job. Players rarely refuse cruelly," said Richard Lapchick, a professor of operations management at the University of Central Florida. . Metta Sandiford-Artest once spent $30,000 a year renting a house to six good friends. Vin Baker followed his friends and opened a seafood restaurant together. In the end, it not only went bankrupt but also left a debt of $900,000.
Family disputes and intimate relationships are also one of the main reasons why players leak money. Stephen Jackson shared that he once broke off his engagement at the wedding because his fiancée was unwilling to sign a prenuptial agreement. Dwyane Wade spent 15 million on divorce proceedings alone, Michael Jordan also paid 168 million to his ex-wife during the divorce, and Blake Griffin paid his ex-fiancee 30,000 a month.
And the divorce is not the worst. Shawn Kemp received 91.57 million in his career. After retirement, it was revealed that he had 11 illegitimate children. Eventually, his financial situation fell into crisis and he declared bankruptcy. Dennis Rodman also couldn't pay alimony because of too many illegitimate children, and Dwight Howard also... Illegitimate and overspending to the point of having to sell individual awards and play overseas in the interim.
Allen Iverson probably combines all the factors. His career salary as a player alone is more than 150 million, and he is worth at least 250 million with endorsement contracts. He once owned many luxury homes, jewelry and luxury cars, raised a group of brothers to enjoy together, and went to and from nightclubs at any time. Casinos and other high-consumption places were burdened with legal fees and alimony after divorce, and they once faced bankruptcy in 2018.
Reginald Jackson is the vice president of Capital Advisors Consulting, which specializes in financial planning and management for professional players. In the past two years, the impact of the epidemic has highlighted the importance of wealth management. “In the past two years, I have probably seen clients most frequently. Time, in the past few years I only spent time reporting on income, expenditure and asset growth. But under the influence of the epidemic, many players will come to inquire about ways to increase revenue and reduce expenditure."
In 2020, the average income of North American professional players is less than 25%. "At this time, it depends on whether the players' daily investment and wealth management are in place. With good planning, they can naturally face it with ease, but players who usually spend money and manage money negatively will face challenges." Jackson said. "We usually help players plan a year's reserves, or make adjustments according to different contracts. In addition, revenue and expenditure management is very important. I emphasize the importance of increasing revenue and reducing expenditure. The goal is to help players establish concepts and stabilize long-term cash flow."
Antoine Walker is a famous case of bankruptcy. During his playing career, he received more than 100 million more than Jordan. However, he bought a large number of luxury cars and surrounded a group of friends with evil intentions, and finally had to declare bankruptcy. Kenny Anderson's career income exceeded 60 million. He declared bankruptcy as soon as he retired in 2005. He also detailed his squandering expenses: 3 marriages, 8 children, 8 luxury cars, a luxury house for his mother and himself, and at least 10,000 yuan a month. "Social expenses" and spending 3-5 thousand yuan on relatives and friends from time to time.
Stable financial management team
"Currently, all the salary I receive is deposited in the bank." Celtics star forward Jayson Tatum said. He joined the NBA in 2017 and played for 4 seasons, with a cumulative income of more than 30 million U.S. dollars. All his living needs depend on the brand. Endorsement.
Tatum understood that an athlete's career is limited very early. As soon as he joined the NBA, he discussed the allocation of income with his agent and followed his mother's advice to save all the salary he received. "My mother asked me to keep accounts since high school and college. Since I started my career, I have been constantly reminded of the importance of fortune telling and financial management, and she is now my most trusted advisor.”
But unlike Antetokounmpo, each of Tatum's accounts has its own purpose, including buying real estate, investing in funds and stocks, investing in side businesses, etc. "I will discuss it with my mother and put the ball in the right place," Tatum said.
In 2020, he signed a three-year contract with the Pacers for 6.5 million. For Aaron Holiday, although this amount of money is not enough to make him rich, proper planning and establishing a reasonable income and expenditure are enough to ensure that his family is fully clothed. After signing the contract, Holiday did not celebrate like other players, but called his financial advisor, "I am very active in saving money. I almost didn't touch my salary in the first year, but after signing this contract , I began to want to do some more active investing, and I spent time learning about stocks, bonds, and real estate.”
PJ Washington, who is about to enter the third season of his career, has begun to gradually feel the importance of financial management. "I recently started discussing Guihua with Tyler Herro about Guihua outside of basketball. We both directly understand the rapid changes in the profession. If you want to continue to live a quality life, , we must find other ways to make money.”
Washington chose a novel investment method and became the first NBA player to sign a contract with SportBLX, a platform for unique sports asset shares that allows ordinary people to purchase equity in teams, athletes and horse racing, and participate in their profits and growth. "I first If you don’t want to put restrictions on investment areas, try as many ways as possible to create channels that can provide stable income.”
Derrick Rose can be called the strongest "renter" in the NBA. He learned to invest in real estate from his teammate Loul Deng during the Bulls days. He currently owns at least 23 properties in Chicago, all of which are for rent. According to Forbes, Rose relies on real estate every month. Earn at least 400,000.
Entrepreneurship investment science from Zhifu Bang
Many smart and well-planned NBA players began to make good use of connections and funds to invest early. "Having money early is a bad thing and a good thing, it all depends on how you use it." said Baron Davis. Davis suddenly left the NBA due to injury in 2012. , but he has participated in many investment cases during his playing career. The most successful investment was Vitaminwater, which was sold to Coca-Cola for 4.1 billion in 2007. "The best resources for players are connections and exposure. As long as they are used well, they will find a lot of satisfaction." Everywhere is an opportunity.”
Further reading:Jrue Holiday’s social enterprise investments
In April 2021, Coinbase, the largest Bitcoin exchange in the United States, went public. Its market value once climbed to US$86 billion, becoming the exchange with the highest market value in the United States. When looking at the list of investors, it was surprising to find that Kevin Durant was an early investor and also an investor. Thirty Five Venture, the investment company he founded with Rich Kleiman, has been the most successful investment project to date.
In addition to Coinbase, Durant has also invested in new exchange Robinhood, shared bicycle LimeBike, cloud data start-up Rubrik and The Player's Tribune, etc. Durant’s investment philosophy is not just about making money, but also about concepts. For example, he has recently been committed to promoting legal medical marijuana for athletes. “The sports world and even the world have stigmatized marijuana in the past, but this argument is long outdated. I and I Business partners hope to clear the name of cannabis so that it can be used normally in daily life within a reasonable range." Durant invested US$1 million in the cannabis e-commerce platform Dutchie, and so far his shares have increased to the equivalent of US$25 million.
Stephen Curry has been working in San Francisco, where the new startup industry is developed, for many years, and he naturally knows how to invest. Curry is good at finding investment projects in his own field. He has participated in investments including North American e-sports club TSM, AI smart fitness equipment Tonal, and personal coaching application CoachUp, all of which are biased towards the sports field. In September 2021, Curry announced that he has become a crypto with a valuation of 18 billion. currency trading platform FTX and will serve as the brand’s global ambassador.
In addition to Curry, Dapper Labs, the blockchain company that developed NBA Top Shot, announced in 2020 that it had received 12 million in venture capital funds, including players such as Andre Iguodala, Spencer Dinwiddie, Garrett Temple, JaVale McGee and Aaron Gordon, and then in 2021 Another 305 million investment was received, and NBA stars such as Michael Jordan, Kevin Durant and Klay Thompson appeared on the list. "We all see business opportunities from it. Player cards are popular entertainment, and blockchain is giving new gameplay and business opportunities." Iguodala said.
In 2010, LeBron James, who had just made some great achievements, asked Magic Johnson for advice, but the advice was not about basketball skills, but how to accumulate and create wealth. "Look at business from a businessman's point of view. Don't work alone. Look for professionals and people who understand you." So James took the real "big leg" and found his classmates Maverick Carter and Rich Paul to form LRMR Marketing. James started from the business he knew best and branched out into sports marketing and sports agency. The first project was what James announced that year. "The Decision" who changed teams.
In addition to starting a business, James has made outstanding investment achievements. In 2011, he bought shares in Liverpool 2%, which has increased five times, with a net profit of 25 million. He bought shares in the well-known headphone brand Beats a few years ago, and also made profits after being acquired by Apple. Enter more than 30 million. James' most successful recent investment is Blaze Pizza, a fast-growing pizza chain. In 2012, he invested in 10% for less than US$1 million. He has provided advice as a consultant many times, and even served as a spokesperson and attended events in person.
Thad Young, who is quite low-key in the NBA, is an "angel" in the venture capital world. Young founded the investment fund Reform Ventures in 2017 to specifically look for potential "giant" companies, including investing in the seed round of social data company Trufan, DraftKings, Lyft , Pinterest and SpaceX, etc., "I will do in-depth research before investing. On the one hand, I will invest in stable real estate, and on the other hand, I will look for some disruptive new technologies."
As for the most successful NBA investment tycoon, besides Michael Jordan, it is Junior Bridgeman. Bridgeman joined the NBA in 1975 and retired after 12 seasons.
At that time, NBA salary levels were not high, star players relied on endorsement contracts, and most players also had to work part-time and part-time jobs. In 1985, Bridgeman received the highest salary of his playing career, US$350,000. He had a good life, but it was not enough to support his life and family in the second half of his life. During the off-season, Bridgeman took the initiative to work as an intern at Wendy's Burger, working from the counter to the frying pan. He has worked in warehouses and also learned business models. Before retiring, Bridgeman already owned three Wendy's Burger branches.
Bridgeman founded Bridgeman Food Company in 1987 with an annual profit of approximately 25 million. It once owned 160 Wendy's burgers and 30%'s shares, and about 120 Chili's and Blaze pizzas. Even Chauncey Billups became his disciple. In 2012, he and Bridgeman were in Detroit. We bought over 30 Wendy’s burgers together. In 2016, Bridgeman sold most of his fast-food restaurant assets and invested in Coca-Cola. He also established Heartland Bottling Company to become Coca-Cola's main supplier. Today, its total assets exceed US$600 million, and its business achievements are second only to Jordan.
Billups began to cooperate and learn from Bridgeman in 2013. In 2019, he founded the new hair salon Salon Plaza and the gym Rise Nation. "Many players lose motivation after retirement, or they still make a living in the basketball field, but I like challenges, and professional players You can have funds at a very young age, and how you use and allocate them will be an important key in your life.”
