x Abu Dhabi, UAEMonday 24 July 2017

Too much bling leads to financial sting for NBA players in the end

A 2009 report by Sports Illustrated claimed around 60 per cent of former NBA athletes are broke within five years of retiring, this despite the National Basketball Association confirming the average player salary is in the region of $5m per annum.

Scottie Pippen, left, was able to handle the Detroit Pistons' defence but not his finances, even though he made more than US$180 million over his career.
Scottie Pippen, left, was able to handle the Detroit Pistons' defence but not his finances, even though he made more than US$180 million over his career.

Scottie Pippen won six NBA championship titles and earned more than US$180 million (Dh668m) during his career in the NBA, yet his prolificacy with a basketball was matched only by his profligacy with regard to his personal finances. Shortly after the former Chicago Bulls forward retired in 2004, it was revealed he was close to broke, the result of a reckless lifestyle that was epitomised by his purchase of a $4m Gulfstream jet, which was in such disrepair it was grounded.

Pippen, however, is far from an anomaly. Allen Iverson made more than $150m during his 15-year playing career, but saw most of it disappear to the extent that last year, during a divorce proceeding, he pulled out the pockets of his slacks and proclaimed, "I don't even have money for a cheeseburger". Similar story for Antoine Walker: $108m, broke. Derrick Coleman? $87m, filed for bankruptcy. Latrelle Sprewell, Eddy Curry, Kenny Anderson, the list goes on.

A 2009 report by Sports Illustrated claimed around 60 per cent of former NBA athletes are broke within five years of retiring, this despite the National Basketball Association confirming the average player salary is in the region of $5m per annum. The reasons, while consistently similar, could likely have all been prevented had athletes been better advised.

Robert Horry, the seven-time championship winner, retired in 2008 having amassed more than $50m and has since carved out a career commentating for ESPN.

He has also worked with BBVA Compass, the Spanish financial giant and official bank of the NBA, and is quick to stress to today's athletes the need for financial self-restraint.

"It's the way of life," he replied when asked for his explanation to the remarkable number of his peers who have filed bankruptcy papers. "I hate to say this because I am a part of that culture, but it is mostly black athletes. Black athletes always felt like they have to show off that they have money. People already know who you are; you don't have to go out and buy a $40,000 watch. Hell, you can go out and buy a $10 watch, it's still going to tell the same time."

Horry, who was not wearing any watch when he spoke to The National during Abu Dhabi Summerfest this week, was taught finance during his time at the University of Alabama before being drafted by Houston Rockets, where he won two championship rings alongside Hakeem Olajuwon.

He was 37 when he retired and recalls planning for life after basketball, warning his family they would need to get jobs and find ways to make money because he would no longer fund their expenditures.

"That is one of the things guys have to learn," the Houston resident said. "The hardest word to say is 'no'. I know it's not easy saying 'no' to mom and dad, but you gotta say it."

Horry describes as "fortunate" the time he first visited his campus bank and a staff member advised him to open an account that would preserve his finances.

"You have to find the right people and that's what athletes need to stop being scared of," he said. "Go to another athlete who hasn't lost their way and say 'Hey dude, what did you do to preserve your finances? How can I be like you?'

"No guy is going to start telling people: 'I helped Tim Duncan with his finances'. You never want to see another athlete suffer. It looks bad upon the NBA and its players. It makes us look like we are stupid, we are dumb, we don't know how to handle money."

One hundred and fifty million dollars. Or $150,000,000. Or $150m. Whichever way you look at it, it appears inconceivable to most people who watch the NBA that anybody could possibly go from bringing in that size of wealth to not being able to afford a $2 cheeseburger. Yet time and again, reports emerge of multimillionaires pronounced bankrupt.

Greedy advisers, mis-education, swollen entourages, poorly researched investments, lavish lifestyles - they all take their toll.

"If guys have two sets of parents and they are not together, that is two houses you have to buy - and your house," Horry explained.

"And if you get divorced, well, you pretty much have four houses. I'm not even going to go into the cars and friends and trying keep up with the Joneses."

The 42-year-old Maryland native draws an analogy between life on the court and life off it.

"You have to understand your role," he said. "If I am the 12th man on a team, I cannot do what LeBron [James] does because LeBron has crazy money and I don't.

"Just like on the team, you are not going to go out there and take 20 shots. LeBron takes 20, but you're going to take your two and be happy. That's what you gotta do when you're spending. You can't do what they do."

LeBron James, ranked No 4 in the Forbes' list of the world's highest-paid athletes, owns a $9m house in Miami, a 350,000 square-foot compound in Ohio (complete with bowling alley and barber shop), holds a minority stake in Liverpool Football Club and bought his wife a $300,000 engagement ring. His annual salary with Miami Heat is $19,067,500, which is more than seven of his teammates' salaries combined. James also brings in $42m annually in endorsements.

Such disparity in wages could also be a key factor in Sports Illustrated's worrying 60 per cent figure. The average salary might be around $5m, but it is a distorted figure due to the incomes of players such as James, Kobe Bryant ($30.5m per annum) and Dirk Nowitzki ($20.9m).

The lowest earning NBA player registered for this year - Mario West of Brooklyn Nets - earned just $20,103.

Steve Aschburner, who works for NBA.com and has written about basketball for 25 years, estimates the median salary is closer to $3.5m annually. Add to this the fact one in four NBA players are out of the game after just one season and that the median career lasts only four years, suddenly the gloriously rich landscape that rookies perceive to lie ahead of them does not seem quite so clear.

"If you're really the 'average' NBA player, chances are you're looking at earning somewhere between $500,000 and $1.5 million, for four years," wrote Matthew Heimer for the Wall Street Journal's Marketwatch website. "After taxes and paying your agent, you might clear $2 million by the time your career ends - but, of course, you're 'retiring' at age 25 or 26.

"If you've held on to your money, you've got a tremendous launching pad for the rest of your life."

If, instead, they have been trying to keep up with the Joneses - or, worse, the Jameses - then the future could quickly turn bleak.

They could soon, like Pippen, Iverson, Walker and the rest, become one of the 60 per cent.

The could become broken men.

 

gmeenaghan@thenational.ae

 

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