Tuesday, July 1, 2008

How The Hell Can You Be Broke After Making $100M?!?

Okay, I know we shouldn't kick a man while he's down. I also know that talking about a handful of guys' awful financial decisions is pretty superficial in the grand scheme of things. And yeah, I know that foreclosure/bankruptcy doesn't automatically mean you're flat assed broke.

But come on.

How the hell do you make more than $100M during the course of your playing career and somehow still end up losing your home?

I couldn't find a better news account, so I went all the way to the gutter and dug up this story on (yikes!) TMZ. Excuse me while I go take a shower.

Vin Baker may wanna lace his Reebok Pumps back up -- because the former basketballer ain't ballin' any more!

Baker's nearly 10,000 sq. ft. Conn. home is going up on the auction blocks later this month for a decent $2.3 million, according to ml-implode.com.

This isn't Vin's first dance with foreclosure -- his restaurant, Vinnie's Saybrook Fish House, also went under earlier this year.
Baker's career was one of promise derailed by bad decisions and personal demons. He started out as a solid lottery pick, became a perennial All-Star, cashed in, and almost as quickly as you can say "max-contract", was out of the league. It's pretty sad really, because he shows how alcoholism can really ruin a solid career. He went from being a poor man's Hakeem Olajuwon to merely being a poor man. Literally.

The one thing I can't really understand, however, is just where all that money went. In addition to his rookie contract, the guy signed a whopping 7 year, $86M deal with the Sonics. Baker was a preacher's kid who was supposedly very low key and never really had any substantial off-court issues (other than the obvious). There were no awful public divorces, and thus no unfair divying of assets (see: Caffey, Jason - whose baby mama came after me personally about that post). That only leaves one obvious culprit: He probably got bilked by his "financial advisors" into some really bad "business investments".

I once read that behind Doctors (who are susceptible to scams because they think they know everything), Professional Athletes are most likely to get "taken" by some get-richer-quicker money scheme. Most of them get bilked for the same reasons the rest of us do: ignorance, pride, and an unwillingness (or fear) to ask questions when there are concerns.

There's countless examples of players who trusted "their money guy" with awful "bidness propositions" and ended up on the ass end of the pyramid. Chicago Bulls Hall of Famer Scottie Pippen was playing basketball in freakin' Finland last year, supposedly to pay off a very bad investment in a private airline.

Even the NBA freely admits that 60% of their players are flat broke within 5 years after retirement. So it's no wonder that most sports leagues are advising players to focus on simply "keeping what they have" by making conservative investments (mutual funds, Roth IRAs, annuities) rather than far more risky financial decisions (open a nightclub, start a record label, giving all your money to some advisor because your teammate also did) in the name of "making more money". Because reality is, with one solid contract (think $20M or so over the course of a career) and reasonable spending, you can, and should be able to make your earnings stretch a lifetime.

Too bad Vin Baker didn't get that memo.

Question: Why do you think Vin Baker ended up broke? Could you make $25M stretch a lifetime? If so, how would you spend it to ensure you didn't go broke?

Foreclosure Sale For Former NBA Star Vin Baker's Mansion [Mortgage Lender IOM]

NBA players' financial security no slam dunk [Toronto Star]

Why Athletes Go Broke [BC Revolution]

The Finnish Love Scottie Pippen [DeadSpin]

[1] Is it just me, or does anyone else smell a hint of irony in the fact that the bank foreclosing on Baker's home is the same bank that owns the naming rights to the Boston Celtics arena? The Celts made an infamous trade for Baker a few years ago that set the team back bigtime.

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