What do sports super-stars and lottery winners have in common? Both are in financial danger.
That’s a strange thing to say about people who are often multi-millionaires.
The problem is that neither the talented athlete nor the lottery winner is usually any good at managing money. That’s a harsh judgment to make but too many star athletes and lottery winners end up broke. They end up broke for many of the same reasons:
- They believe that the financial windfall they have received is inexhaustible.
- They attract too many groupies and hangers-on who are after their money.
- They spend the money they have received instead of investing it for their old age.
- The money they do invest is often lost because of poor, or dishonest, advice.
From Financial Planning magazine:
Former NFL cornerback Asante Samuel and Mega Millions lottery winner James Groves are jointly seeking $7.8 million in damages against Morgan Stanley related to investment recommendations made by a now-barred broker, according to regulatory filings….
Samuel and Groves filed their claims in FINRA arbitration in July, according to a copy of Parthemer’s CRD. From 2003 to 2013, Samuel played for several NFL teams, including the New England Patriots and Philadelphia Eagles. Groves won $168 million in the Mega Millions lottery in 2009.
In this case, Asante Samuel was persuaded to buy a night club, probably hoping to capitalize on his fame as a football player. It’s fairly common for professional athletes to open restaurants or night clubs. The problem is that even for professional restauranteurs, the failure rate is shockingly high, and athletes don’t have the training or time to run these businesses.
The story of many lottery winners is one example of ruined lives after another. Bud Post’s story is not unusual.
When William “Bud” Post won $16.2 million in a 1988 lottery, one of the first things he did was try to please his family, according to this Bankrate article.
Unfortunately, his kin was of the unfriendly sort. Post’s brother hired a hit man to kill him, hoping to inherit some money. Other family members persuaded him to invest in two businesses that ultimately failed. Post’s ex-girlfriend sued him for some of the winnings. Post himself was thrown in jail for firing a gun at a bill collector.
Over time, Post accumulated so much debt that he had to declare bankruptcy. He now relies on Social Security for income. “Lotteries don’t mean (anything) to me,” he is quoted as saying—after he lost all his money.
Is there no hope for professional athletes and lottery winners? Yes, but it requires them to know their limitations, which may include hiring professional help before they begin spending their new-found wealth.
If you’re a sports star or lottery winner who would like to retire rich, and you want to have someone to talk to about the way you can fend off the vultures that your wealth and fame attract, contact us. You don’t want to spend your time in court trying to get back what you lost.