It's not all that uncommon to hear about once wealthy athletes on the brink of .... gasp.... Budgeting. Evander Holyfield became a recent poster child for wasting a ton of money, and who doesn't know about crybaby Latrell Sprewell who (sob) lost his yacht and is losing his house?
Holyfield's $10 million house is in foreclosure. How sad that he'll lose the 109 room mansion. And he's not the only one suffering. He's supposed to pay $3,000 for the support of one of his children, but he's not paying that either. He's got nine children that the public knows about, so you can bet there are others going without child support too.
During Holyfield's boxing career, one fight brought in $34 million. There were surely many millions from other fights and endorsements. Where did it all go?
Blogger Brian Cuban details other financially-challenged athletes, including quarterback Johnny Unitas, boxer Mike Tyson, and figure skater Dorothy Hamill. So what makes celebrities so prone to ending up in financial ruin? Cuban says that for the most part, it's not stupidity or scams.
He says athletes finding fame often lack life experience which leads them to make good decisions, such as hiring people to help them properly manage their money. People who get wealthy almost overnight just don't have the same financial discipline as others who have had to budget and accumulate their wealth over a period of time.
Another wrinkle for rich athletes is that they often have a small window of opportunity to make money. Their careers are relatively short, but the money must be made to last a long time. That's not so easy to do when purchasing houses, cars, and watches, in addition to paying their agents and their taxes.
I have a very hard time feeling sorry for anyone who has struck it rich and then lost it all. Like anything in life, people have a responsibility to get themselves educated so they can make good decisions. An athlete who gets rich is in a better position than almost anyone to get educated. After all, they've got the resources and can pay people to help them.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Going for broke: Why celebrity athletes sometimes lose it all