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  1. #1
    Join Date
    Feb 2007
    Location
    Hot'Lanta... home of the Falcons!

    What can $150 million get you?

    In what should be not shocking to anyone, Allen Iverson's bank account is being seized because AI is broke and cannot pay money that he owes to a jeweler.

    AI made more than $150 million in his basketball career, probably many millions more from endorsements too, and it is all gone -- largely to pay for the scores of "friends" who made up his huge entourage and the lavish jewelery he bought for himself and his mother.

    Still, the notion that AI could blow that much money... wow. Monty Brewster would be proud.

    -Jason "if AI got a penny every time someone said, 'PRACTICE, WE TALKIN ABOUT PRACTICE...' he'd be rich again pretty soon" Evans
    Why are you wasting time here when you could be wasting it by listening to the latest episode of the DBR Podcast?

  2. #2
    Join Date
    Dec 2007
    Location
    Cary, NC
    I once heard a great description of the psychological profile of families at different income levels. Lower-income families tend to see money as a way to meet basic needs. Middle-income families see money as something to be saved for the future. And high-income families see money as something to be managed.

    So what happens in basketball (or other professional sports for that matter, but the effect seems the most pronounced in basketball) is that you get these kids who come from low-income families who all of a sudden become millionaires. Yet to them, money is still just a way to meet basic needs, because that's all they've known growing up. Their definition of "basic needs" simply changes, and when their careers end they are left with nothing.

    It's not really fair to expect someone who grows up in poverty to magically become a shrewd financial investor who knows how to manage exorbitant amounts of money. Hopefully they'll surround themselves with good people who can be trusted to advise them appropriately. But as we all know, that doesn't always happen either.

    It's easy to pass judgment on these guys and say it's their own fault, but I think most people in their situation with their background would probably do the same thing. Hopefully the NBA or maybe the players union will start to take some accountability into advising these guys when they come into the league. But then again what 19 year-old with a $10 million contract is going to listen when someone tells them to start saving for their future?

  3. #3
    Quote Originally Posted by UrinalCake View Post
    I once heard a great description of the psychological profile of families at different income levels. Lower-income families tend to see money as a way to meet basic needs. Middle-income families see money as something to be saved for the future. And high-income families see money as something to be managed.

    So what happens in basketball (or other professional sports for that matter, but the effect seems the most pronounced in basketball) is that you get these kids who come from low-income families who all of a sudden become millionaires. Yet to them, money is still just a way to meet basic needs, because that's all they've known growing up. Their definition of "basic needs" simply changes, and when their careers end they are left with nothing.

    It's not really fair to expect someone who grows up in poverty to magically become a shrewd financial investor who knows how to manage exorbitant amounts of money. Hopefully they'll surround themselves with good people who can be trusted to advise them appropriately. But as we all know, that doesn't always happen either.

    It's easy to pass judgment on these guys and say it's their own fault, but I think most people in their situation with their background would probably do the same thing. Hopefully the NBA or maybe the players union will start to take some accountability into advising these guys when they come into the league. But then again what 19 year-old with a $10 million contract is going to listen when someone tells them to start saving for their future?
    I don't agree that most people in their background would probably blow $150 million. Of course even if they might, why can't lawyers turned agents at least guide them properly?? I guess the typical attorney agent cares only cares about his %%

  4. #4
    Join Date
    Dec 2009
    Location
    Durham, NC
    Quote Originally Posted by UrinalCake View Post
    I once heard a great description of the psychological profile of families at different income levels. Lower-income families tend to see money as a way to meet basic needs. Middle-income families see money as something to be saved for the future. And high-income families see money as something to be managed.

    So what happens in basketball (or other professional sports for that matter, but the effect seems the most pronounced in basketball) is that you get these kids who come from low-income families who all of a sudden become millionaires. Yet to them, money is still just a way to meet basic needs, because that's all they've known growing up. Their definition of "basic needs" simply changes, and when their careers end they are left with nothing.

    It's not really fair to expect someone who grows up in poverty to magically become a shrewd financial investor who knows how to manage exorbitant amounts of money. Hopefully they'll surround themselves with good people who can be trusted to advise them appropriately. But as we all know, that doesn't always happen either.

    It's easy to pass judgment on these guys and say it's their own fault, but I think most people in their situation with their background would probably do the same thing. Hopefully the NBA or maybe the players union will start to take some accountability into advising these guys when they come into the league. But then again what 19 year-old with a $10 million contract is going to listen when someone tells them to start saving for their future?
    Personally, I am also sympathetic to the sociological explanation. A lot of these kids really are thrust into a totally new world and are not prepared, which is why I think it is a good thing that most professional sports leagues are starting (or looking into starting) financial education programs for their members. But at the same time, $150 MILLION DOLLARS!?!? Good god, man. How could Iverson possibly have been unaware of the obscene sums bleeding out of his accounts? How do you even spend that kind of money? What kind of things do you buy? Thinking about the better ways that cash could have been used... can't help but shake your head.

  5. #5
    Quote Originally Posted by Jderf View Post
    Personally, I am also sympathetic to the sociological explanation. A lot of these kids really are thrust into a totally new world and are not prepared, which is why I think it is a good thing that most professional sports leagues are starting (or looking into starting) financial education programs for their members. But at the same time, $150 MILLION DOLLARS!?!? Good god, man. How could Iverson possibly have been unaware of the obscene sums bleeding out of his accounts? How do you even spend that kind of money? What kind of things do you buy? Thinking about the better ways that cash could have been used... can't help but shake your head.
    That is a WHOLE lot of entourage and Jewels.

  6. #6
    Join Date
    Mar 2007
    Location
    Virginia
    The phenomenon is not restricted to athletes and movie stars either. I forget the exact percentage but the vast majority of lottery jackpot winners are broke within a few years of winning. It amazes me that when people suddenly come into large sums of money that the first thing the do isn't talk to a reputable financial planner. Rule number one in life should be know what you know and seek out advice for things that you don't know. I am so glad that I was raised to save for a rainy day. That may be one of the most important lessons my parents ever taught me and one that I am trying to teach my children (not easily done at ages 5 and 8). It sometimes means that you are not always driving a shiny new car but it also means that when that older car breaks down, you can afford to have it repaired. The unfortunate thing about the athletes, movie stars and lottery winners is that they have the money for the new car and to save for the rainy day but they instead but 8 six figure cars!

  7. #7
    The union angle is interesting. Rather than financial education or literacy (which will go in one ear and out the other of a young person the same way alcohol, drug, safe driving, pick-your-topic education does), why not mandate that some portion of a player's compensation be set up in some (future) income producing fashion? That is, x% of each check goes to creating the income stream, downstream. Make it a standard part of the NBA contract. That way, AI could have blown through $135 million, but $15 million would've been forcibly directed into some other vehicle, which he could then blow bit by bit, later.

  8. #8
    Quote Originally Posted by Reilly View Post
    The union angle is interesting. Rather than financial education or literacy (which will go in one ear and out the other of a young person the same way alcohol, drug, safe driving, pick-your-topic education does), why not mandate that some portion of a player's compensation be set up in some (future) income producing fashion? That is, x% of each check goes to creating the income stream, downstream. Make it a standard part of the NBA contract. That way, AI could have blown through $135 million, but $15 million would've been forcibly directed into some other vehicle, which he could then blow bit by bit, later.
    Such a thing exists in all the major sports leagues, in fact. All the players' unions run Taft-Hartley retirement plans and quite generous 401ks. However, players generally cannot access these until their 50s or 60s, the same as most union plans and social security.

    I'm not sure they can start paying out at the typical sports retirement age (30-35) without changes in federal law. Also, such plans are designed to support an upper-middle-class lifestyle, but not an NBA playa lifestyle.

    I agree most athletes could use much better financial planning, but think this is more a matter between employee and union, not employee and employer.

  9. #9
    Join Date
    Mar 2007
    Location
    Charlottesville, Va
    I bet a lot of them do have financial managers but the managers are intent on transfering the players money into their own account. Can you imagine the money making deals that these guys are pitched every day to swindle them out of their money. And, A lot of these deals take in their share of millionares that you would think would be more savy. A friend of mine asked me about an investment being pitched to him that would give him a way of making a 100% return within a year. He was a smart guy. I tried to explain to him what reasonable returns would be based on acceptable risk, and why all sorts of alarm bells should be ringing. It took him three years to tell me I was right and how much money he lost.

  10. #10
    Quote Originally Posted by Kilby View Post
    I bet a lot of them do have financial managers but the managers are intent on transfering the players money into their own account. Can you imagine the money making deals that these guys are pitched every day to swindle them out of their money. And, A lot of these deals take in their share of millionares that you would think would be more savy. A friend of mine asked me about an investment being pitched to him that would give him a way of making a 100% return within a year. He was a smart guy. I tried to explain to him what reasonable returns would be based on acceptable risk, and why all sorts of alarm bells should be ringing. It took him three years to tell me I was right and how much money he lost.
    What is that old saying: If it seems too good to be true...

  11. #11
    Join Date
    Feb 2007
    Location
    North Raleigh
    Quote Originally Posted by Indoor66 View Post
    What is that old saying: If it seems too good to be true...
    I'm partial to:
    "I spent my money on women and booze - the rest I just *urinated * away.."

  12. #12
    Join Date
    Feb 2007
    Quote Originally Posted by wilko View Post
    I'm partial to:
    "I spent my money on women and booze - the rest I just *urinated * away.."
    Now looka here...
    I did not say I was a millionaire...
    But I said I have spent more money than a millionaire!
    Cause if I had've kept all my money that I'd already spent,
    I would've been a millionaire a looong time ago...

  13. #13
    Join Date
    Feb 2007
    Location
    Washington DC
    Quote Originally Posted by hurleyfor3 View Post
    Such a thing exists in all the major sports leagues, in fact. All the players' unions run Taft-Hartley retirement plans and quite generous 401ks. However, players generally cannot access these until their 50s or 60s, the same as most union plans and social security.

    I'm not sure they can start paying out at the typical sports retirement age (30-35) without changes in federal law. Also, such plans are designed to support an upper-middle-class lifestyle, but not an NBA playa lifestyle.

    I agree most athletes could use much better financial planning, but think this is more a matter between employee and union, not employee and employer.
    Since Iverson has creditors coming after him, can they make a claim to his NBA pension? I sort of hope not for his sake. And Scottie's sake. And Antoine's sake.

  14. #14
    Quote Originally Posted by superdave View Post
    Since Iverson has creditors coming after him, can they make a claim to his NBA pension? I sort of hope not for his sake. And Scottie's sake. And Antoine's sake.
    Probably not if he's not yet eligible to receive it. Generally, retirement plan assets cannot be touched but income can be. This goes for ordinary 401k plans and IRAs as well. Even then, one is generally entitled to a base level of earnings.

    Nothing I've read says he has filed for bankruptcy yet. This may just be one creditor looking to get paid, which he may be able to fulfill from some other account, or by selling a house or something. Charles Barkley had a similar problem with a casino a few years back, but he had the money to pay it.

    If he needs money his best option is probably to play overseas, where he's less likely to have a posse of 50 people around.

  15. #15
    Join Date
    Feb 2007
    Location
    Arlington, VA
    Qualified retirement plan (e.g., defined benefit pension and 401(k)/profit sharing plan) money cannot be touched until actually distributed to the participant, except in the case of divorce. IRAs are a different matter, with state statutes governing when IRA assets are reachable by creditors. Football players also have nonqualified deferred compensation plans, as do PGA golfers. Not sure if the same for NBA players but I imagine they do for signing bonuses, for example. Assets in those plans remain the employer's until vested/paid. So, Iverson might still have a tidy sum coming to him at some point. Doesn't help him now though.

  16. #16
    Join Date
    Sep 2007
    Location
    Undisclosed
    Quote Originally Posted by hurleyfor3 View Post
    If he needs money his best option is probably to play overseas, where he's less likely to have a posse of 50 people around.
    Just how big is a metric posse?

    "Meet my deca-posse of 10"

  17. #17
    Quote Originally Posted by OldPhiKap View Post
    Just how big is a metric posse?

    "Meet my deca-posse of 10"
    Then they demand to be paid off and AI shoves them a wad... of shekels.

    He should go play in Greece, actually. Living beyond his means, making fiscal promises he can't keep, living on past glory... he'd fit right in.

  18. #18
    Join Date
    Jan 2009
    Location
    Halifax, Nova Scotia
    Patrick Ewing obviously had it right during the 1998-99 lockout when he said:
    Sure, we make a lot of money, but we spend a lot, too.
    or something to that effect.

  19. #19
    Join Date
    Feb 2007
    Location
    St. Louis
    Quote Originally Posted by arnie is still king View Post
    I don't agree that most people in their background would probably blow $150 million. Of course even if they might, why can't lawyers turned agents at least guide them properly?? I guess the typical attorney agent cares only cares about his %%
    So you don't know the facts, and just choose to cheap-shot "attorney agents"?

  20. #20
    Join Date
    Feb 2007
    Location
    Washington DC
    Quote Originally Posted by BlueDevilBaby View Post
    Qualified retirement plan (e.g., defined benefit pension and 401(k)/profit sharing plan) money cannot be touched until actually distributed to the participant, except in the case of divorce. IRAs are a different matter, with state statutes governing when IRA assets are reachable by creditors. Football players also have nonqualified deferred compensation plans, as do PGA golfers. Not sure if the same for NBA players but I imagine they do for signing bonuses, for example. Assets in those plans remain the employer's until vested/paid. So, Iverson might still have a tidy sum coming to him at some point. Doesn't help him now though.
    Ah. This is what I was thinking of. I know someone who signed away his MLB pension to his ex-wife.

    I would assume Iverson could play in one of the Euro leagues and make a little money. I did see recently he was possibly going to play in PR.

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