When I watched the draft this year, eagerly waiting to hear my clients’ names announced, I couldn’t help but notice, as I do every year, the excessive amount of diamond encrusted bling on the watches, earrings and rings of the NFL’s newest millionaires. No telling what kind of hardware was hanging from their necks under the $3,000 suits.
Now, don’t get me wrong. I have no problem with a guy treating himself to a nice watch or piece of jewelry – even a nice suit for the big day – but my experience has been that the guys who go big early on their bling and material fixes most likely will end up in the 75% of players who eventually go broke once their careers have ended.
It’s commonplace now for rookies to borrow and spend over $300,000 before draft day and another $300,000 before they’ve signed their first contract. Believe it or not, there were many late round picks who bought $70,000 cars and were easily $50,000 in debt by draft day. These players are, unfortunately, prime candidates for fiscal destruction. When players are not held accountable for their spending habits in their first year in the NFL, they are likely to carry on spending beyond their means for their entire careers and beyond.
I know you’re wondering why the financial advisor or the agent won’t step in and stop the spending madness. Well, for one, both professionals may come across as being judgmental to the player, which usually results in getting fired. Furthermore, the agent or the advisor was the one who secured the loans in order to ink the new client. Yep, we are the enablers. And if it’s not us, it will be somebody else.
Lending a client a reasonable amount of money isn’t a bad thing, but it should come with some serious guidance.
The dilemma for an agent or financial advisor is that if we are asked by a potential 1st round pick for a substantial loan, we will most likely say “yes” to get the client. Large cash advances against future marketing dollars are given out like candy to the top draftees. I personally don’t play that inducement card. If I were asked by a top ten pick for a large loan, I would probably say yes, but only if I thought the player would be responsible and take my guidance. However, much of these large up-front loans, usually disguised as marketing advances, come with very little supervision from the providing agency or financial advisor. Thus, the euphoric but addictive spending habits begin and don’t stop until the money is gone.
My top 5 giveaways to spot potential victims of the 75% category:
1) $50,000 diamond-encrusted watch purchased prior to draft day. I spotted several of these on day one of the draft. I don’t think they were Folexes. If $50,000 was spent on the watch, just imagine how much was spent on the car and other material possessions.
2) $200,000 or more in loans taken out before draft day. Knowing how some other agencies and financial firms work their rookie packages, my guess is that there were over 30 to 40 jumbo lines of credit or marketing advances floated to rookies. The scary thing is that there will be many players, and I mean many, drafted in the later rounds who will have to fork over their entire signing bonus to pay back their loans.
3) The $75,000 or more car. If you know a rookie who purchases a new car or truck for more than $75,000, he will most likely have exotic taste that comes with a big price tag. One thing I have learned in this business is to let a player treat himself to a nice car. However, the previous year’s model with less than 20,000 miles can be had for a deep discount. Players throw more money away on cars and their accessories than anything else I know of.
4) First class to Vegas or Miami. I encourage my players to have some fun and blow off steam, but if you know a rookie who has made multiple trips to Sin City and or South Beach before he signs his contract, the odds are he is getting addicted to the exciting lure and temptations these places have to offer. With suites at the sexiest hotels starting at $600 a night, bottle service at $2,000 a night, a three-day weekend can cost a fast 10 Gs. Throw in some bad luck at the tables or a yacht rental, and it easily goes up to $50,000.
5) Rolling with an entourage. I love the show Entourage, but I hate to see my clients roll with one. Entourages cost money. Players have a guilt complex sometimes that make them feel compelled to share their new fortunes with their friends and families. Once the faucet is opened to support the entourage, it’s hard for young men to shut it off. Can you say “Allen Iverson?”
I would love to see potential pro athletes get some basic life skills coaching prior to their respective drafts. The NFL puts on a very comprehensive rookie symposium in June but, for some it’s too late, as the bad habits and the taste for the finer things have taken a grip on the their wallets and won’t let go ‘til the money runs out.
Follow me on Twitter: @jackbechta