PTFO - How and Why Athletes (Still) Go Broke

[0] Welcome to Pablo Torre finds out.

[1] I am Pablo Torre, and today we're going to find out what this sound is.

[2] Keeping up with the Jones is real.

[3] You want everyone to know you have money.

[4] You see a guy in a locker room with a certain car.

[5] You want to have a better car than him.

[6] Right after this ad.

[7] You're listening to Draft King's Network.

[8] So, Todd Burak, welcome.

[9] This is an odd episode for me because I know a lot about you and a little at the same time.

[10] So how should I be introducing you here at the top?

[11] So I currently lead the sports and family office banking team at City National.

[12] Been in this athlete wealth management world for a better part of a decade and a half at this point, former college basketball player, but we'll leave the Syracuse part of this out of it.

[13] I'm not going to pick my nose like you guys did Beheim, although I might be tempted to.

[14] But the reason why I have brought you in today is because you, and correct me if I'm wrong, You're familiar with my work, Todd.

[15] Yes, I've been tracking your How and Why Athletes Go Broke article from Sports Illustrated in 2009 waiting for this opportunity to reach out and say, I think I'm the only person in the world who knows that it's the 15 -year anniversary.

[16] Let's talk about this.

[17] This is the story that most people come up to me still to talk about.

[18] It was the most read article in the history of s .i .com.

[19] Wow.

[20] Which is all to say, not that, you know, let's check out how good my shit is.

[21] It was also that was a topic at 5 ,000 words that I had reported on motives and causes and stories about athletes getting a ton of money and then losing it routinely.

[22] And so it resonated with people.

[23] And with you, it landed how?

[24] Like, how did it hit you at the time?

[25] I was at a point in my career where I was sort of trying to figure it out.

[26] And I read that article and I remember being like, I'm going to fix that problem.

[27] And that was the moment in my career where I just focused everything and my power to get onto the track to help athletes and those around them, make better decisions, make more of the financial aspects of being a professional athlete, you know, last for their full lives.

[28] So that, it was, I got to say thank you for that because it was really the moment in my career was like, I found my passion point.

[29] I'm going after that.

[30] Give me the sense of the caliber of clients that you deal with.

[31] Yes, I mean, we routinely work with half of the NBA lottery every year, half of the top 20 picks in the NFL draft.

[32] I would say you know, we've probably got over a thousand active professional athletes that we touch in some way financially.

[33] So it's been a very unique and exhilarating vantage point for the last, you know, 15 plus years.

[34] Yeah.

[35] You're welcome, Morgan Stanley, by the way.

[36] You're welcome.

[37] I did all that.

[38] Me. I did that.

[39] City National Bank now.

[40] Oh, city national bank.

[41] Yeah.

[42] Whatever.

[43] You're welcome as well.

[44] So before we go any further here, I do need to admit that I should not take all of the credit for why my article from 15 years.

[45] years ago, became such a thing, the thing that sent a college athlete like Todd into a new career path, and a thing that inspired its own 30 for 30 documentary by the great director Billy Corbin, entitled Broke.

[46] Because the subject of this story has always been a tabloid gold line.

[47] It's full of scammers and insane decisions and rich athletes going bankrupt at truly stunning rates that we'll discuss in a minute here.

[48] But what I wanted to find out back in 2009 was the sociology behind it, behind the how and the why of why athletes go broke so often.

[49] And so I divided it up into four sections, which we'll revisit, starting with what I called the lure of the tangible.

[50] That was the section header because, yes, I did treat the story kind of like it was my sports journalism college thesis.

[51] But what I wanted to find out today with you was what has changed in the 50s.

[52] years since.

[53] And so besides Todd, you're also going to hear from veteran NFL lineman Justin Pugh, for instance, who got drafted in 2013, four years after the article came out.

[54] I went from asking my mom for $100 to get Chipotle and Subway for the week to signing with the New York Giants being a first round pick, 19th overall, and getting a $4 million signing bonus.

[55] I will also talk to Antoine Walker, the NBA All -Star.

[56] who earned $112 million before filing for bankruptcy in 2010.

[57] Just two years after he retired.

[58] I think my first paycheck was $1 .6 million.

[59] So I'm living in Massachusetts, which is a very high state.

[60] So I just say I saw $800 ,000, $8 .50 of that.

[61] I bought a condo for $300 ,000, bought my mom a house for a half a million, a couple of cars.

[62] I'm in debt, technically.

[63] All of which relates to why Todd read my story, went to business school at NYU and then worked at, yes, Morgan Stanley, and then Citi National Bank, devoting his entire life to this specific subject.

[64] Your original article back in 2009 talked about the lore of the tangible.

[65] Yeah.

[66] And for me, the lure of the tangible is about remaining relevant.

[67] It's about keeping a celebrity or like an identity in the community, right?

[68] If you have a stock and bond portfolio, no one really is going to talk about that.

[69] But if you own five car washes, all of a sudden he's a leader in the community, And you don't see as much of that now, but you see it in other ways, right?

[70] Like, and I'll, you know, every athlete wants to stay in the media.

[71] Some of them are great, but a lot of them do it to remain relevant and to keep that identity of being a celebrity, being attached to the game.

[72] Yes, that whole adage, which is a cliche, but true about how every athlete dies twice.

[73] Of course, biological death.

[74] And then when you retire, because there's an ego death there that none of us, by the way, would enjoy.

[75] And that's the other part of why I'm into this story and why I want to talk to you about this is because it's not just a, let's feel bad for guys who made tons of money in some cases, although not all cases, which is also relevant to the conversation.

[76] It's also about how these guys in what they don't learn, I think they're like a lot more of us than we would like to admit.

[77] Yeah.

[78] In terms of can you define a mutual fund?

[79] Yeah.

[80] Right?

[81] That's a broader conversation, A broader part of this where K through 12 financial literacy is just not a thing.

[82] Correct.

[83] Which is insane.

[84] It's insane that we, some of the stuff that we spend time on in middle school learning, like crazy formulas, but like you don't teach them about anything related to taxes or budgeting or what's a debit card, like this basic stuff.

[85] So this is a broader problem.

[86] It's just so happens that if you're an athlete who makes 95 % of their lifetime earnings in four years or five years or six years, if you make a mistake, you don't have a chance to rebound from it because you don't have earnings beyond that.

[87] If you're a regular 23 -year -old who's got 40 years of earnings history, you can make that same mistake because you've got another 33 or three decades to come back from it.

[88] So that K -12 financial literacy thing is a big part of this story.

[89] And that part, what you just said about the compression of time when it comes to your window to earn the most money you'll earn in your entire life, that part is fairly particular to the athlete experience.

[90] Totally.

[91] The idea of you got X number of years before, on average, in lots of cases, it's less than four.

[92] Now you've got to figure out what the next thing is.

[93] You've got to completely reinvent yourself.

[94] And therein lies a big part of this challenge too.

[95] I mentioned before, like your original article created that passion point for me. Most people have no idea what they want to do in their lives.

[96] Like, and so when you have that North Star, everything that you're doing is getting to that point.

[97] But now you've got, you've lost that one, you've got to figure it out all over again, and they'll come and say, oh, I want to work in business.

[98] I'm like, that can mean 6 ,000 different things.

[99] But in all seriousness, look, so much of the virality of the story, which came out in the era before, really, virality, it was like pre, or at least early social media, was about these statistics.

[100] And these are statistics that I want your vantage point on, as you maybe remember them even without even consulting this document, because they became a real thing that I now just need to, like, caveat and clarify.

[101] Well, I think, so the big one was 78 % of NFL players are broker within financial distress within two years of leaving the league.

[102] The other one was 60 % of NBA players within five years of retirement.

[103] I mean, 78 % is a lot of, it's a lot.

[104] Is a super majority.

[105] But what was stunning to me, and I want your thoughts about all of this, truly, is that there just wasn't anything better or anything else that I could find.

[106] There's like the only thing that's been done in all this time to even try to figure it out.

[107] The National Bureau of Economic Research did something a few years ago where they tried to find something super quantifiable.

[108] And so they pulled bankruptcy filings and they compared the list of bankruptcy filings to a roster of former NFL players and they compared the rate of actual bankruptcy filing to the regular rate for normal people and the NFL's rate was slightly higher.

[109] Big whoop.

[110] Okay, so just jumping in here to clarify, the actual statistic that I published in Sports Illustrated in 2009 thanks to multiple NFL Players Association sources and NFL League sources as well.

[111] Quote, by the time they have been retired for two years, 78 % of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

[112] End quote.

[113] But the other study that Todd is referencing focused exclusively on bankruptcy filings.

[114] The bankruptcy filings of NFL draft picks in specific between 1996 and 2003, meaning that no undrafted NFL players were included in the study, even though undrafted NFL players make less money and are also about a third of the league, almost.

[115] But the reason I bring this study up now is to point out that bankruptcy filings alone are an incredibly limited measure of who in America is truly broke.

[116] Bankruptcy, if you are not familiar, is a highly specific and elective legal process where you opt in to publicly proving and admitting that you can't pay your debts, which happens to be the exact admission that many athletes I interviewed desperately wanted to avoid making on the record, even if they were by any reasonable standard, broke.

[117] Great leaders will tell you if you can't measure it, you can't manage it.

[118] Yep.

[119] There is nothing better than what you did in 2009, and we can debate the merits of that number, but there's nothing better than that that quantifies this from an output perspective.

[120] I understand that athletes' challenges clearly are different.

[121] And so what are the ways in which these guys, as athletes, just share these habits that recur, that seem endemic to the population and the profession.

[122] A lot of this goes down to what I call the difference between the athlete mentality and the professional athlete mentality.

[123] They're very different things.

[124] If you were to walk into any Division I football program right now, they've got probably 95 players on the roster, 70 of which are scholarship, another 20 walk -ons, and ask them what percentage of those players think they're going to play in the NFL, the vast majority of hands would go up.

[125] So there's this athlete mentality from, you know, when you're a young kid, I'm going to play in the NBA, I'm going to play in the NHL.

[126] And everyone's like, stay in school, focus on that.

[127] Like, that's not going to happen.

[128] And then you get to college and you're like, I'm going to play in the league.

[129] And everyone's like, stay in class, that's not going to happen.

[130] And then you make it.

[131] And they're like, this might be your only deal.

[132] So your entire life, you basically said to everybody around you, I know what you're saying.

[133] I'm the exception.

[134] Yes.

[135] So there's this mentality when you get to the league and when you get to investments like that, yeah, I know 95 % of these private businesses fail.

[136] People have been telling me that shit my whole life, I'm different.

[137] So that's the athlete mentality their whole life.

[138] They've been thinking a certain way.

[139] It's really tough to change that.

[140] And look, a bunch of that thinking, this assumption that I am not like those other guys, I'm different, that is clearly self -inflicted, as Antoine Walker would be the first to admit.

[141] I had a car feds.

[142] At one point, the highest of my life I had eight, nine, ten, ten.

[143] cars.

[144] Can I drive 8, 9, 10 cars?

[145] Of course not.

[146] But I had a car fetish.

[147] But I also had a car fetish where I like to fix them up, like put rams on them, music.

[148] So I'm putting that extra 15, 20, 25 ,000 into a car because I wanted to fix it up and make it really, really nice.

[149] So that was a fetish of mine.

[150] And when it came to investing in business ideas, someone else's private investments with the 95 % fail rate that Todd was referred.

[151] to.

[152] Yeah.

[153] Antoine did that too.

[154] I decided to put, do a huge real estate company.

[155] The reason why I wish I would have said no is that I was playing.

[156] I was in the middle of my career.

[157] I had someone else running the company.

[158] I was not there on a day -day basis and let things get out of hand.

[159] Stories like this, you should know, are endless across pro sports.

[160] And they also get significantly weirder.

[161] Because retired All -Star outfielder, Tori Hunter, once explained to me how he once invested $70 ,000 in an inflatable raft that would sit underneath your furniture.

[162] So when your house flooded, the raft would inflate and float your sofas to safety.

[163] That invention did not work out.

[164] But the prospect of finding a winner, making a gamble on an investment, it remains this almost athletic thrill, as Justin Pugh, who played in the NFL for 11 years and counting, can attest.

[165] I made some bad investments, and I'll talk, I love to talk about them.

[166] I invested in a startup in China called D -D.

[167] Who knows where that money will go?

[168] And it looked like this new shiny object.

[169] You look at Alibaba, you look at some other companies that IPOed and did great, and you feel confident, and then all of a sudden you put $250 ,000 in, and now you're looking at it's 50K.

[170] Or you invest in a pizza franchise and all of a sudden COVID hits and you, you know, walk away with 25 ,000 of the 150 you put in.

[171] It seems fitting that former NFL receiver Rocket Ismail, whose personal legend was built on pulling off improbable kick returns, has a list of his own.

[172] Rocket told me that back in 1991, he lost $300 ,000, investing in a knockoff hard rock cafe.

[173] And then he proceeded to bankroll a religious -themed movie that went nowhere, three calligraphy stores that closed, a nationwide phone card dispenser business, an oxygen -based cosmetics invention of some kind, and a music label.

[174] All of them were supposed to be different.

[175] All of them ended up the same.

[176] You look at some of these athletes, athletes who are at the top of the pyramid, both on the court and in business, right?

[177] Magic Johnson is the example that gets pointed to all the time.

[178] If you look at Magic's story in detail, before he started making things happen, he started a sporting good store in L .A. that didn't work out.

[179] Now, Magic had the opportunity because of his name and his earnings potential to come back from that.

[180] But everyone sort of skips over that aspect of his story and says, you know, you need to try to be magic.

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[194] So it's really important to understand that to aspiring athlete moguls, the Michael Jordan of athlete investment, even more than Michael Jordan himself, is Magic Johnson.

[195] It's very simple.

[196] He had eyes in the back of his head.

[197] Before he played, you could get seats.

[198] That's why they call him what they do.

[199] The great thing about life is, you never know what you might want to do next, with American Express card, it can be anything you like.

[200] Magic Johnson earned roughly $40 million as Los Angeles Laker in the 80s.

[201] But after that eponymous sporting goods store that Todd mentioned failed, early on, costing Magic about $200 ,000, the guy went on one hell of an investing run, the kind that everybody that I've talked to freems about.

[202] Magic entered highly successful joint venture partnerships in real estate and health care and movie theater, and Starbucks franchises, and on and on and on, until in October of 2023, it officially finally happened.

[203] Magic Johnson joins the 10 -figure club.

[204] The former athlete is now a billionaire.

[205] According to Forbes, Magic's net worth is around $1 .2 billion.

[206] He's a partial owner in a number of sports teams, including the Washington commanders, of course.

[207] But it's his 60 % stake in a life insurance company that put him over the billion dollar benchmark.

[208] But when I interviewed Magic for my story back in 2009, asking for the secret to his business success, he immediately honed in on one simple rule, a rule that Magic says he has told to every aspiring mogul who has ever called him, from Shaq to Dwayne Wade to Alex Rodriguez.

[209] He says that if anyone ever calls up Magic Johnson with a pitch that involves their own friend, or family, Magic Johnson is automatically not interested.

[210] The quote is, it won't even be a conversation.

[211] They hire these people not because of expertise, but because they're friends, well, they'll fail, end quote.

[212] And so this is the second section of the story, which is misplaced trust and how you get to figuring out who can you actually trust when suddenly money has flooded into your life.

[213] That dynamic is basically this, right?

[214] I've been around for 18, 19, 20 years.

[215] these people were never here all of a sudden I'm about to sign a contract that's going to pay me $5, $10, $15, $20 million and everybody wants to talk to me so your sort of bullshit meter is going to be like where you've been my whole life now all of a sudden you're showing up I understand why you would put your guard up like this guy's been with me my whole life they took me to practice they did this that and the other I trust them sometimes they're literal family that challenge of like A you've never been here before B no one in my family has ever had to hire a family financial advisor or hire an accountant.

[216] I wouldn't know how to look up your, you know, FINRA disclosures and what that would mean or like what questions to ask to be able to filter out some of the nonsense.

[217] So even those street smarts of hiring people in my mind is like should be part of the early financial education for this.

[218] It's like forget about talking about asset allocations and stocks and bonds and all that crap.

[219] Let me just tell you how to spot the red flags.

[220] That initial challenge of even putting the right people around you is tough.

[221] But the question then is, how do you navigate a life that feels like it's most parallel to a lottery winner?

[222] Right?

[223] And I wonder what you think of that metaphor.

[224] If that's, of course, there are limits to it.

[225] But the notion is, look, when you win the lottery, you don't win it because you've been really good at managing money.

[226] You win it because of something else.

[227] In this case, of course, something else is a product of hard work and extreme discipline many times and coaching and all of that.

[228] But it's not related.

[229] to how good you are in managing a portfolio.

[230] Yeah, there's a lot of elements of sudden wealth syndrome and sort of survivors' guilt.

[231] There's different like aspects of this that you can point to that make it challenging.

[232] Saying no to friends and family who've been around forever is incredibly difficult.

[233] And that's been the downfall of a lot of athletes who have been super well paid because they weren't able to say, yeah, mom, I got to cut you off.

[234] Like, I can't give you this monthly stipend.

[235] I can't buy you that house because they've been there forever.

[236] I come from very humble beginnings.

[237] I'm the oldest of six.

[238] I watch my mom struggle to try to take care of us and raise us.

[239] You want to take care of the people that have supported you for, you know, 18, 19, 20 years, whatever, however long it takes you to get into the league.

[240] So you want to basically start with that dynamic.

[241] And one of the things I did do on top of us moving, obviously out the city to the suburbs, I bought my brothers and sisters' cars.

[242] The thing was I bought them really nice cars.

[243] They got Mercedes and luxury cars, so that's what their first car was.

[244] Now, was that probably the right way they do it?

[245] No. But that's what I did.

[246] Like, I brought my brother since once they, so once they got to the A's they can start to drive, that's the cars they got.

[247] Those were their first cars instead of giving them, say, a Honda accord.

[248] You get so caught up in, you know, making the team or, you know, focused on the keeping the main thing, the main thing.

[249] And it's like, yeah, I know that's a problem, but I'll deal with it at the end of the season.

[250] And then it gets to the end of the season.

[251] And it's like, yeah, it's fine.

[252] And it just sort of starts to build up and over time.

[253] But you can quickly tell who's going to be a challenge.

[254] But that's part of the process of coaching the player and the folks around them.

[255] And having seen it and not being shy about having those tough conversations, you know, that's part of the role is to say, listen, I know you think you're being helpful.

[256] But I've seen this before.

[257] Let's have an honest conversation about how you can be a constructive part of this team.

[258] Right.

[259] Look, some of the scared straight numbers here, which are explicitly according to the NFL Players Association, to the point of what happens if you don't intervene.

[260] Between 1999 and 2002, this is a three -year period.

[261] Again, dating ourselves now because 15 -year anniversary of this story, even further back than that, at least 78 players lost a total of more than $42 million because they trusted money to financial advisors with questionable backgrounds.

[262] So it's even trickier to discern which of these professional.

[263] Maybe these white guys who I have never met before are going to be actually on my side.

[264] You're not going to get everything perfect all the time.

[265] So that's why you've got to be cognizant of reevaluating.

[266] And I tell guys this all the time.

[267] And this goes back to the K through 12 financial literacy thing.

[268] Most people don't know what the heck they're talking about when it comes to finances.

[269] And if you're sitting at the table and you're the athlete, everybody around that table works for you.

[270] And you've got to be comfortable to say, you know what, I don't get it.

[271] This doesn't make sense to me. And if something doesn't feel right, trust your instinct and ask them and ask them again until you feel confident that you know the answer.

[272] Because a lot of times you'll get people, and this is not just athletes.

[273] You go into these meetings and you feel like they're talking a different language and you just kind of want to sit back because you don't want to be the person who doesn't know, you got to cut that shit out.

[274] I think many people I know, myself included, fall prey to this where you don't want to seem stupid.

[275] But there is another notable difference between professional athletes and people with normal jobs.

[276] Because professional athletes have all of their salary information publicly available in online databases, which means that they are often surrounded by sharks, as in shark tank, but also predatory lenders.

[277] Let's just take a trip down the spectrum from I've been in the locker room where, guys are hitting up loan sharks to pay their bills in the offseason.

[278] Literally loan sharks, people outside giving loans to players at the diner down the street from the facility, all the way to being around guys like Larry Fitzgerald who are golfing with billionaires, having Mark Cuban come speak to the team when we're playing the Cowboys on Monday night football.

[279] And if you're shocked that Justin Pugh kept on spotting loan sharks, circling his Giants at a diner in Jersey, do not.

[280] not be.

[281] Because another thing to know about NFL players is that NFL players get their paychecks weekly, game to game, during the regular season.

[282] Once May comes around, June, July, that money starts getting a little thin.

[283] When you get a check for $50, $100 ,000 every week, you assume it's just going to keep coming.

[284] And it's like a psychological mind -f -fib that you're going to keep getting this $100 ,000.

[285] So when you look at the new car or you look at the watch, you're like, oh, I'm a hundred thousand dollars what's what's 20 what's 100 to uh you know get the new cyber truck and then all of a sudden when july rolls around you don't have any money coming in hey i just need to make the team and then september these game checks start rolling in again i just need a little bridge loan to get me from now until september and that's where he would get guys and i vividly remember him hitting me up but clearly he had success there was a reason he was actively marketing himself to players and yes it gets weirder I once heard about a financial advisor, for instance, who told a player that he could not reveal how much he was charging him to manage municipal bonds, turned out to be $146 ,000 every year.

[286] And the reason he said he couldn't reveal it was, quote, the Patriot Act, end quote.

[287] And then there was the story of the tall, bearded businessman in Orange County named Luigi Defonzo.

[288] Luigi DiFonzo famously presented himself to pro athletes as an Italian count.

[289] Of course, Italy had abolished its monarchy in the 1940s.

[290] Luigi DiFonzo turned out to be a felon, and also the son of a gas station attendant, and he wound up defrauding Hall of Fame running back Eric Dickerson, who later filed for bankruptcy, all of which is insane, and all of which also reminds me that there is a more relatable category of financial disaster, that's probably worth discussing too.

[291] So this third subject we've touched upon already, but clearly, like when it comes to family matters, it just feels like being blunt about divorce and the pre -nup is both a necessary conversation, but also it's inherently uncomfortable and awkward.

[292] So how do you possibly deal with this?

[293] It's one of the most challenging aspects of this.

[294] And the divorce rates are high.

[295] And a lot of that goes to you're in this one phase of life where you might be on the road eight, nine, ten months a year and you're super involved and you don't only see your family so much and then you get home and all of a sudden you're sitting on the couch.

[296] That's going to breed challenges in your personal relationships.

[297] And so the divorce rate is really high.

[298] A lot of times you might have somebody who met their significant other before they made it.

[299] And so there's that high school sweetheart that they stay with.

[300] Oh, parallel to the who do you trust?

[301] Well, the person who's been with me the longest.

[302] Oh yeah.

[303] They were with me before I made my money.

[304] So, you know, be with me for life and then you change and become a different person that a lot of that responsibility of having those hard conversations and really let's say forcing but strongly encouraging the player to sign the correct documents goes to the advisor and the team around you to you know make that part of the conversation and it's tough it's it's you know it's really tough it's clearly tough for uh yeah approximately half of america let alone the athletes yeah which seems to uh bring that number potentially even higher than that.

[305] But I also want to point out that it's not merely just divorce and getting a pre -up, it's also family planning.

[306] I mean, there was one story here that was really super affecting to me that I never forgot.

[307] And it was about Derek Thomas, the Hall of Fame linebacker, who died age 33.

[308] There was a car crash in January 2000.

[309] And he had ignored his financial advisor who had pleaded with him to please make a will to do family planning, to plan your estate.

[310] And he had earned about $30 million in the NFL.

[311] And by the time, he had he had, he had earned, he died of course that had been reduced and reduced and reduced and reduced and yeah he had again this is where it gets even trickier for him it was five mothers seven children giant legal battle some of this goes back to that athlete mentality right it's like yeah the pre -nup thing i know i know most of these guys are going to get divorced but not me not not with her we're good um i'm the exception i you know some of that goes back to that mentality and it's tough to change behavior when you're fighting against that and when you have proof that you are in fact exceptional in verifiable ways, right?

[312] It's not just the delusion of somebody who thinks that they're exceptional and despite that has no proof of it.

[313] It's somebody who actually did statistically beat the odds and now is thinking there's like a heat check aspect to it.

[314] Oh, this is going in.

[315] I'm good.

[316] I'm thinking Ali Faroukmanesh from Northern Iowa.

[317] Oh, my God.

[318] I was just thinking about Ali Farok Manash.

[319] Pull up three, transition.

[320] No one is there to rebound.

[321] Doesn't matter cash.

[322] Winning by four with 30 seconds left like four on one.

[323] Against Kansas.

[324] I'm letting that thing fly.

[325] Absolutely.

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[347] So the fourth section of this, I titled Great Expectations.

[348] It's really about how a guy wants to live, their quality of life.

[349] How high is the standard of what it means to have made it?

[350] We used to do this exercise with the NFL rookies.

[351] We bought movie prop money.

[352] Imagine like opening up a briefcase in a gangster movie, and they had all the fake cash in there.

[353] And so we had bought $450 ,000 of movie prop money, which was the NFL rookie minimum salary at the time.

[354] And we would put the stacks on the table.

[355] And we would call one of the guys up.

[356] in front of the team and we would ask these questions what are you going to drive where you're going to live what are you going to wear and as they made those decisions we would start taking the stacks away from the table so they could see how quickly their you know spending choices dwindled down the cash and then it was what are you forgetting obviously everybody would yell taxes and then that whole slice of the pie and their agent fees and so this giant stack of 45 you know 10 stacks was gone because they were making decisions about driving nice cars and buying the apartment in the city and all that sort of stuff.

[357] There is a lot of keeping up with the Joneses.

[358] Keeping up with the Jones is real.

[359] You want everyone to know you have money.

[360] You see a guy in a locker room with a certain car.

[361] You want to have a better car than him.

[362] Then wives and girlfriends get involved and they want to keep up with the other players' wives and it just becomes like a cold war.

[363] People don't talk about it.

[364] Everyone denies that they engage in it.

[365] Every player engages in it.

[366] If she got that ring, my wife better get a bigger ring.

[367] If I bought this kind of French bulldog, I'm getting the better French bulldog.

[368] Right.

[369] The The problem being when, for instance, Kenny Anderson, former NBA guard, great player, of course, you could tell from his bankruptcy filing in October 2005, he earned $60 million thereabouts in the league, dwindled to nothing because he had bought eight cars, monthly expenses, $41 ,000, there was child support, there was his mom's mortgage, there was a five -bedroom house in Beverly Hills, there was the $10 ,000, just he had always for hanging out money, he was giving out regularly $3 ,000 to $5 ,000 to friends and relatives.

[370] And then it goes on and on.

[371] Jack Clark in baseball.

[372] He's a baseball example.

[373] The famed slugger filed for bankruptcy, July 92.

[374] He was still playing baseball.

[375] Had debts of $6 .7 million.

[376] Ownership of 18 cars, 17 of which still had outstanding payments.

[377] And I should say that the fact that I know all of these details is why bankruptcy, again, is a nightmare consequence for a public figure concerned with great expectations.

[378] The filing can feel like this white flag of failure, a final public concession that the Joneses won, as Antoine Walker can personally verify.

[379] But Antoine's public position on the subject has actually evolved in the years since.

[380] His position now happens to be what bankruptcy court specifically demanded of him when he finally filed in 2010.

[381] And what they demanded...

[382] was honesty.

[383] When I finally went through and they had to file bankruptcy, and that ain't an easy thing.

[384] They're not going to just give you bankruptcy.

[385] You have to go prove where this money went.

[386] What happened?

[387] And that's why you see that detailed ledger coming into play like that.

[388] I had to put my championship ring in my bankruptcy portfolio because that's something that I won.

[389] That was a value.

[390] So it gets that detail into everything that you got and everything that you've earned.

[391] In fact, Antoine is now working on a documentary of his own making, and in the film, he wants to show the audience his ledger on screen, breaking down how his $112 million in career earnings, minus taxes, homes, businesses, expenses, family, entourage, friends, attorney and agent fees, gambling losses, and philanthropic donations, put him $8 .45 million in the red.

[392] You know, you hear a lot of things and people put these different reasons why you think that you lost your money and I just wanted to tell the real truth, be open and authentic, but also, the key point also is to be a learning tool for a lot of younger guys coming up.

[393] I feel like I've read most books that athletes have written about their lives off the court, off the field, to try to hone in on the psychology of it.

[394] And one of the most impactful books for me was written by a former NFL a lineman named George Coontz, Dr. Jones Coons, played linebacker for the Green Bay Packers in the 90s.

[395] And after he left the NFL, he went to Marquette and did his PhD in sociology.

[396] And he wrote a book called Is There Life After Football Surviving the NFL.

[397] And I read this book, and it was, he gave this example about a balance in people's lives and identity and sort of, you know, you work here at Meadowlark and, you know, on the weekends, you probably go hang out with people outside of this place.

[398] I strive to.

[399] For a lot of people, people, you know, their church or their synagogue on the weekends is a place to have an identity that's different than their workplace.

[400] Where do NFL players go to church in the team facility with their teammates led by a team chaplain?

[401] So every element of the NFL player's identity is controlled, even their religion within the team.

[402] Their soul.

[403] It's everything.

[404] So when that's taken away, you really haven't had a lot of experience connecting with people who, work somewhere else don't look like you come from different backgrounds weren't involved in football and so if you haven't had those reps i always try to sort of equate this back to sports if you haven't had those reps of connecting with people outside of the game when you're forced to do it it's really hard so i remember reading that book um and i was like oh shit this isn't a money thing this is an identity this is a psychology thing the question of who should have done more what is a reasonable expectation for the league and for the union, right?

[405] Because the story to me always goes back to, okay, they're the Tods of the world who are now, like, in this latter stage of conversation around this problem, who are working professionally to address it specifically.

[406] But in terms of the people who are ostensibly overseeing these guys transition into sports and out of it, what's reasonable to expect from them?

[407] I do think that the players associations, the leagues, partly because this story they're athletes and they're in the public eye and people seem to care about this thing so it's in the best interest of the marketing engine to make sure that you don't have bad stories that these guys do transition well it's in their best interest but I do think the PAs and the league sort of get pushed to do more than they really need to I don't necessarily think it's the league's problem to fix this the players associations just because if you look at their mission statements it's probably within their mission statement to do more And it's interesting to look at what the different PAs have done, right?

[408] The NFL PA is really the only league that has an advisor certification program from a financial advisor certification program.

[409] And you could argue the merits of that program.

[410] There have been guys who have had the certifications who've done that they shouldn't have done.

[411] And, you know, there's large financial institutions now that have gotten into this space and they've created sports and entertainment divisions.

[412] And like a lot of those guys end up being the problem also.

[413] I was going to say, like part of the issue with that, with why the NFL players association certifying these advisors is an issue is now you're telling these guys you're safe if you sign up for this and that's a whole other degree of liability sure um that's just on the flip side of what happens if a system like that exists i personally i i flip flop on this in terms of where the pas should come out me too by the way the league for instance of your employer right like the take it to its um sort of logical extreme which is the NFL is going to tell its players how to invest.

[414] That also seems kind of f*** up.

[415] The league can't hold everyone's hand.

[416] Just imagine right now if your boss in the office that you're sitting in or in the world you live in, he forced you to make this type of investment to save your money or prevented you for making that type of investment.

[417] People would lose their minds.

[418] So there's a great book called Nudge Years ago, which talked about the libertarian paternalism.

[419] So if you think about a 401k, opting in, it's like the auto, the default.

[420] is for a target date retirement based on your age plus whatever many years to your retirement as opposed to you having to opt into the 401k target date retirement fund right it used to be that your 401k like was set to zero now it's set to max and if you want to change it you got to go in there and change it so i think if you nudge people in the direction of making the right decisions right um but give them the option to change it if they go in like more often than not there's inertia and they're going to follow sort of the path that you've laid for them um they've got to be active in their decision -making to go a different route.

[421] So it's a really difficult balance.

[422] But the upside of an epidemic like this is that word does spread by way of stories and documentaries and, frankly, brave testimony like Antoine Walker's, which means that any given athlete in the modern era is, at the very least, being warned.

[423] And according to Justin Pugh, who is finally weighing retirement this off -season as a free agent offensive lineman, the resources are out there now.

[424] A pro athlete just has to be willing to concede that they're kind of like everybody else.

[425] I was in the NFL offices on Monday, meeting with their teams.

[426] They sat every department down in front of me. How can we help you, Justin Pugh, when you retire from football?

[427] The issue that the NFL runs into and the union runs into is every year there's so much turnover.

[428] Guys slip through the cracks.

[429] Guys don't want help.

[430] Guys don't want to admit that they need help.

[431] There's such as bravado in the NFL locker room and we're such competitors to go like hands in our pockets and saying, hey, help me. I don't know what to do.

[432] Guys don't do it.

[433] They'd rather face the other consequences than say, hey, I was a failure.

[434] I was one of those guys that messed up.

[435] The NFL has a lot of programs.

[436] They have financial literacy programs.

[437] They'll do free background checks on partners for you.

[438] Players also have to take accountability.

[439] A lot of the teams, and they've been.

[440] They've messed around with this, do these rookie trainings.

[441] Of course.

[442] And I've been in a lot of these financial literacy programs.

[443] I've done a lot of them myself.

[444] Yeah, how are they?

[445] Broadly speaking.

[446] You know, it's interesting.

[447] Like, one year I went to 25 different NFL teams.

[448] Oh, my God.

[449] And there was one team.

[450] I walked into the locker room, into their little meeting room.

[451] And they had about 27 guys in the meeting.

[452] Their draft picks plus all the undrafted free agent guys that were in there for camp.

[453] First three rows, nine guys per row, everybody with a pen and paper, nobody on their cell phones.

[454] Then you go into other room.

[455] other clubs and you've got guys sitting in the back with their feet up on the desk with their flip flops looking at their phones having zero interest in what you're talking to them about up there so so much of the success of those programs is about the people right if you've got a great culture in the organization and you've got a great player development director the guys are going to buy into that but if it's not that those programs are they can be a waste of time i'll talk about mortgages all the time right you're not going to really give a shit what's the difference between an arm or a fixed -rate mortgage, until you're buying your house.

[456] Until it's your money, they're not going to care.

[457] They should really focus on the street smart stuff.

[458] How do you spot the bullshit?

[459] How do you spot the red flags?

[460] Stay with that.

[461] So help me with that.

[462] How do I get better at spotting bullshit when it comes to the world of finance, as we've described?

[463] Financial services is really overwhelming and scary and detailed, and I tried to, as much as possible, keep it simple with athletes.

[464] You know, when you talk about some filters, right, there's some pretty easy ways to filter out a lot of the risk, right?

[465] If you're talking to a financial advisor, you can go on FINRA's website, look up that individual.

[466] It's pretty easy, last name in state.

[467] You can see what firm they work at.

[468] You can see their history, what licenses they have.

[469] You can see if they've got any customer complaints over the years and what they were settled for.

[470] Right.

[471] FinRA is the financial industry regulatory authority.

[472] There you go.

[473] For the record.

[474] Thank you.

[475] The Google that also for the record.

[476] But there's an endless number of advisors who want to help athletes.

[477] And if you use some of those basic filters, you're going to funnel out all of that crap.

[478] And then you're still going to be left with a whole bunch of advisors who could potentially be good for you.

[479] But you've substantially de -risk your chance of making a bad decision just by using some of those quantifiable filters.

[480] I personally love the idea of saying, hey, can I see your credit score?

[481] And it's a little crazy, but it helps de -risk the situation.

[482] Never only take one meeting.

[483] If you're going to hire a financial advisor, sit down with at least three, right?

[484] One pitch might sound like the greatest thing ever, and they might say, oh, we only charge 3%.

[485] Well, that sounds really cheap.

[486] You go into the next meeting, and they're like, we only charge 1%.

[487] Yep.

[488] Bring someone to the table with you who's not on your payroll, right?

[489] Bring someone, you know, maybe you go to your team and say, hey, do you have somebody that might be interested in just sitting with me?

[490] Just another sort of perspective to get to help again, filter out some of the Yeah.

[491] All right.

[492] Speaking of filtering out some of the shit.

[493] What did I get wrong, Todd?

[494] 15 years later, what did I f*** up?

[495] You didn't.

[496] In the last 15 years, I think one of the biggest things that changed, and a lot of this goes back to analytics, it's really become the haves and the have -nots.

[497] If you look at the middle class, it's gone.

[498] And this is really true across most sports because -ad.

[499] So the NFL just raised their salary caps by $30 -something million this year.

[500] Most of that money is going to the quarterbacks because what analytics will show you is it really doesn't pay to throw $7 to $10 million at a middle reliever anymore when you can get a guy on a club control making $740 ,000 whose war is going to be materially the same thing, right?

[501] Statistically no different.

[502] Yeah, value over a replacement player has become a guide to how the middle class of athletes really isn't all that necessary.

[503] Right.

[504] This is true across most sports where all of that money is being accrued at the top.

[505] It's a winner take -all system.

[506] And then everybody else is at the bottom.

[507] And it's really tough to get to that next contract because if you get to that next contract, you're no longer at the minimum.

[508] Yep.

[509] You would theoretically go into that middle class.

[510] And you become a problem now because you're costing more than they could get a replacement for.

[511] Correct.

[512] You're costing more than the day to tell you you're worth.

[513] And so that's become a really big challenge.

[514] And it's a little bit of the magic thing where everybody looks at, I don't.

[515] a professional athlete so I can do the same stuff the magic can't.

[516] Not really.

[517] You might be in the league for four years making $700 ,000 and now the league's going to spit you out and you're going to figure out some, you might spend two years trying to get back on a roster.

[518] That changing dynamic of compensation is really impactful to the financial decisions that guys have to make because that middle class is completely hollowed out.

[519] As much as there are improvements along the lines of resources and the wisdom of just people getting the word out about how often guys are getting scammed or misled or just not educated properly.

[520] There's also just this notion that the people who are truly like not as rich as their profession would suggest that class of people as bigger than ever is what you're telling me. Yeah, there's a lot of former NFL players or NBA players who made $500 ,000 because they were on a 10 -day contract or a two -way for a couple years.

[521] And they qualify, they should qualify for all of our studies that are not being done.

[522] But at the same time, they are by no means what people imagine when they imagine an athlete going broke.

[523] Right.

[524] You immediately think, oh, you played in the NFL, so you must be loaded.

[525] Like, in all likelihood, that's probably not the case.

[526] And for many of us, like, you've got to figure out what it is you want to do with your life for an athlete.

[527] They've got to do that twice.

[528] And that's really tough.

[529] Right.

[530] It's really tough.

[531] Todd, you figured out what to do with your life.

[532] the fact that I'm in any way someone who nudged you in that direction is why I have this microphone here thank you for coming in 15 years later this is awesome thanks for having me so as I sit here wondering what it is that I found out today I realize first that the billions of dollars flooding into sports over the last 15 years have in no way solved the problem of athletes going break since I reported this story.

[533] And it certainly has not created a tide that has lifted all boats either.

[534] The employers, the owners, have effectively washed away the middle class and a clear reminder of the fundamental power imbalance between labor and management.

[535] And all of it is yet another through line that connects this story to the larger American economy and the question of personal finance.

[536] And by the way, there are other developments.

[537] left to study that I never got to, like the rise of name, image, and likeness deals, for instance, which have put money into the pockets of college athletes, lots of them female now, creating a new class of even younger people who might repeat the mistakes of those who came before.

[538] And all of it is a reminder of how critical it is to still try to measure the scope of the problem, with even more rigorous quantitative research than I ever had access to.

[539] in order to manage it, as Todd said.

[540] But arguably the biggest thing that I found out today as I revisit this article, Sports Illustrated, published 15 years ago, is more personal.

[541] Because I very obviously remain proud of the work that I did.

[542] But I have also been talking for almost 50 minutes now about how important it is that pro athletes finally find a way to move on and leave their glory days, their old life behind.

[543] And so it's probably time for me to heed my own reporting and do the same.

[544] This has been Pablo Torre finds out a Metal Arc Media production.

[545] And I'll talk to you next time.