According to a story in Yahoo Finance:
Former NBA player, Antoine Walker, 38, earned over $110 million throughout his NBA career, more than four times the average player in the league. All that money, though, didn’t stop this All-Star from going broke.
Walker’s financial problems began his first year in the league as a 19-year-old rookie with the Boston Celtics in 1996. Although he had a financial advisor help him establish a plan for his long-term finances, Walker had other ideas about what he wanted to do with his newfound wealth.
“Through my young arrogance, being ignorant to a degree and being stubborn and wanting to do my own thing with my money, I went against a lot of his wishes,” Walker told Yahoo Finance.
The rest of the story is predictable. Walker spent lavishly on his relatives, buying them multi-million dollar houses and expensive luxury cars. He spent lots of money on himself and got himself a “posse”
His generosity extended beyond his family to his many friends and acquaintances. From lavish all-expenses-paid trips to luxury gifts for his friends, Walker made sure everyone in his circle enjoyed the lifestyle he led. With his fellow NBA players, Walker gambled extensively – losing $646,900 in just two years.
He then made things worse by going into debt, “investing” in real estate. For a financial rookie he poured money into things he didn’t understand, undoubtedly persuaded by sales people who saw a naïve man with lots of money.
…Walker had a plan to put his income to work and bought more than 140 properties along the South Side of Chicago. Whether it was land to build on or commercial and income properties, Walker had a full-range of real estate investments meant to maintain the lifestyle he had built for his family after retiring from the league.
With the housing bubble and bust, Walker found himself defaulting on loans where he was the personal guarantor, losing value on land, and failed to get a handle on the legal issues that followed.
He finally declared bankruptcy, with liabilities exceeding assets by over $8 million.
This is almost exactly the same path that most lottery winners walk. Unaccustomed to their sudden wealth, they buy things for themselves, their families, their friends and anyone who has a hard-luck story. If they are especially unlucky, they get sold “investments” like real estate that they don’t understand, on credit. That is a recipe for disaster. They imagine that the pot of gold they found is unlimited. It isn’t.
They may find a financial advisor. A good financial advisor will tell them “no.” But people who come into sudden wealth rarely take no for an answer. So they ignore the financial advisor. It really doesn’t take that long to run through millions of dollars.
So what’s the lottery winner or the next highly paid sports star to do? The first thing is to realize that there is no such thing as unlimited wealth. The second thing is to learn to say “no” and get a good financial advisor who will say that for you.