While researching my topic about how bankruptcy is a reality for many professional athletes after their career, I have learned about the factors that can lead an athlete to bankruptcy, the programs provided to help athletes avoid bankruptcy, and how smart investments and good endorsements can keep an athlete away from ever filing for bankruptcies.

I found out that the major factors are overspending, Poor investment decisions, Career duration, and a lack of finance knowledge. in one of my past blogs I wrote about overspending and I used Allen Iverson as an example, to show how even someone who is considered to be one of the best NBA players of all time has made the wrong decisions when it came to money.

I didn't know until I did this research that both the NBA and NFL have a rookie transition program that go over the most important aspects of being a professional. The fact that both programs talk about the importance of using your money responsively surprised me, because of how many athletes make the news for their lack of common sense when it comes to spending money.

I also found out that Michael Jordan made smart choices with his money during his career and is now making over $80mil a year.

Michael Jordan is an example of an athlete who after his career, became successful in business

While there are tons of athletes who end up broke by the end of their career, however, there are a few who invested their money responsively and are successful in the world of business.  An example is Michael Jordan.

Michael Jordan is considered to be the greatest basketball player to have ever played in the NBA. Jordan is a 6-time NBA Finals MVP, and he never lost in the finals. Jordan was a superstar player in college and "Nike saw the marketing potential of Jordan, drafted third overall by the Bulls, and offered him a five-year contract worth $500,000 annually plus royalties. It was a huge sum at the time for a shoe deal, but it was a partnership that would lead both parties to unprecedented heights.
Jordan took the court his rookie year in 1984 in a pair of red and black Air Jordans, which matched the Bulls’ uniforms, but did not feature any white per NBA protocol. The league banned the shoes and fined Michael $5,000 every game for wearing them. Nike covered the fines and capitalized on the attention with a commercial with the following voiceover: “On September 15th, Nike created a revolutionary new basketball shoe. On October 18th, the NBA threw them out of the game. Fortunately, the NBA can’t stop you from wearing them.” A marketing juggernaut was born.
One of every two basketball shoes sold in the U.S. last year carried the Jordan brand. Factor in Nike-branded shoe sales into the mix, and Nike has a near monopoly in basketball with market share of 92%, according to SportsOneSource. Adidas (5.5% market share), Reebok (1.4%) and Under Armour UA -1.28% (0.7%) are still searching for answers to Jordan. Outside of Nike, MJ’s earnings get a boost from long-time endorsement partners Gatorade, Hanes, Upper Deck and Five Star Fragrances for his cologne line. He’s also added deals with 2K Sports and Novant Health in recent years. In addition, he owns seven restaurants, a car dealership and his most valuable asset, 80% of the NBA’s Charlotte Bobcats. Jordan used himself as the carrot to help close a Bobcats sponsorship deal with Novant in 2012." (Badenhause) This shows that Jordan is someone that every professional athlete should look up too, because he has been retired for the NBA for 10 years and his  yearly earnings are over $80 million dollars, and he is also the owner of a NBA team, the Charlotte Bobcats.



Work Cited
Badenhausen, Kurt. "How Michael Jordan Made $90 Million In 2013." Forbes. Forbes Magazine, 27 Feb. 2014. Web. . http://www.forbes.com/sites/kurtbadenhausen/2014/02/27/how-michael-jordan-made-90-million-in-2013/.

Bad business decisions

"It's no secret that professional athletes make boatloads of money both on the field and through lucrative endorsement deals, but what many fans don't realize is that these big-money stars often blow all their cash in spectacularly bad business ventures. Professional athletes love making off-field investments, whether for retirement or for fun, but sometimes masquerading as Donald Trump winds up leaving these guys (and gals) in more debt than they could have ever imagined. Typically, these horrible business investments stem from famous athletes' associations with non-investment professionals, including friends, family members, other celebrities, and ever-mysterious "business advisors." It's a shocking revelation: being young, rich and famous doesn't always equate to having sound business judgment (or immunity from scams)." (Franchise Help)

An example is Torii Hunter "This star centerfielder was made famous for miraculously robbing home runs by climbing the fence.  Hunter said he invested  $70,000 in an inflatable raft invention. According to Sports Illustrated, "The pitch was that when high-rainfall areas were flooded, consumers could pump up the device, allowing a sofa to float and remain dry." Turns out it was Hunter taking the bath, however: "The guy I invested with came back and wanted me to put in more, about $500,000,'" he says." (Franchise Help) This example shows that when athletes don't know a lot about business and what it takes for a business to be successful, that it could blow up in your face.

An other example is Antoine Winfield "the top-ranked defensive back in the country in his draft class -- was a first-round pick out of Ohio State University. Unfortunately, the standout defender soon saw half of his $3.5 million signing bonus go down the tubes when his close friend and adviser Dunyasha Mon Yetts pilfered the funds in the name of responsibly managing Winfield's investments.  In reality, Yetts used the money to make highly speculative (and extremely poor) investments, and then he went even further by actually moving some cash out of Winfield's accounts and into his own. All this was hidden from Winfield, who believed his friend wasThis star centerfielder was made famous for miraculously robbing home runs by climbing the fence.  Hunter said he invested  $70,000 in an inflatable raft invention. According to Sports Illustrated, "The pitch was that when high-rainfall areas were flooded, consumers could pump up the device, allowing a sofa to float and remain dry." Turns out it was Hunter taking the bath, however: "The guy I invested with came back and wanted me to put in more, about $500,000,'" he says. busy investing the funds for a healthy profit." (Franchise Help)  Winfield made the mistake of having his close friend be in charged of his money and investments, because his friend ended up stealing from him and taking advantage of him.

Works Cited:

"20 Famous Athletes and Their Worst Investment Blunders." Franchise Help , n. d. Web. 12 Apr. 2014. https://www.franchisehelp.com/blog/20-famous-athletes-and-their-worst-investment-fails/.

 

 

 

How overspending can cause Professional Athletes to go Bankrupt

Overspending is something that can affect a wide range of people, but one group of people that can get affected hard is professional athletes. Scott Bercu, a financial accountant for professional athletes, "believes this group spends like mad, and blows their savings too rapidly. He said, 'They see their salaries as infinite, like it doesn't end, like they can't spend it all. But if you get $5 million a year, by the time you get done paying your agent and taxes, you have $2 million left to spend.'" (Crooks) I believe that Bercu's view about how athletes spent their money is true, but I think it only is a small group of with in the community of professional athletes. One example is Allen Iverson, in a blog by Brian Warner, He states that "Throughout his career Iverson's wasteful spending was legendary. He frequently traveled with an entourage of up to 50 people. He showered these same people with luxurious jewelry, expensive cars and exotic vacations. He was also a bad gambler in both senses of the word. Iverson was known to drop over a million dollars gambling in a single evening in Las Vegas and Atlantic City. Allen's financial problems came to light after his wife of eight years Tawanna filed for divorce and demanded custody and full support for their five children. In a December 2012 court disclosure, Iverson told a judge that his monthly income was $62,500 but his expenses were $360,000! Of that $360k, $125k went to paying back various creditors and another a large chunk goes to mortgages. Iverson-owned homes in Denver and Atlanta were eventually lost to foreclosure and a Georgia judge ordered him to repay nearly $900,000 to a local jeweler." (Warner)  I was in awe after reading the blog about Iverson, because Iverson is one of the greatest player of all time and the fact that he is now broke is just mind boggling. Warner's blog showed me that although Iverson make over $150million in his career, that the way he spent his money is cause him to become broke. The reckless spending Iverson did, is also being done by current players. Iverson's story is one that all athletes from every sport should be aware of, because it could help them see that spending money recklessly is a path that could lead to ending up broke.
This picture uses Iverson's famous rant about practice to show what some athletes including Iverson thinking about saving money.

Works Cited:
Crooks, Ross. "From Stoked to Broke: Why Are So Many Professional Athletes Going Bankrupt?." Mint life, 22 Feb 2013. Web. 5 Apr. 2014. https://www.mint.com/blog/how-to/from-stoked-to-broke-why-are-so-many-professional-athletes-going-bankrupt-0213/?display=wide.
Warner, Brian. "Bankrupt Allen Iverson Has A $30 Million Reebok Trust Fund That He Can't Touch Till 2030." Celebrity Networth, 01 Mar 2014. Web. 5 Apr. 2014. http://www.celebritynetworth.com/articles/celebrity/bankrupt-allen-iverson-has-a-15-million-reebok-trust-fund-that-he-cant-touch-till-2030/.