User:Mfs57/sandbox

Wiki #6

Basketball (added late information to basketball that I forgot to put into my sandbox earlier)

In the National Basketball Association, of the players that are five years out of retirement, there are an estimated 60% of these athletes that go bankrupt regardless of what they make (Torre). Success stories as businessmen are not overwhelmingly uncommon, but we still see NBA retirees struggling to make it in the business world. An example is Vin Baker, who had to retire from the NBA due to alcohol problems, who also had a seafood restaurant that was shut down due to nearly $900,000 in mismanaged debt (Torre). This struggle among NBA players has often been cited as miscommunication or no communication between players and those who are managing their finances (Torre). NBA athletes have often lost money due to distrustful people mismanaging their money in high risk-reward situations; however there are also those that do not have a money manager or do not listen to their wealth manager and fail to practice rational business decisions (Torre). In the past, this has been attributed to both greedy and distrustful entrepreneurs taking advantage of NBA players’ inexperience of business knowledge, but there have also been many cases where player ignorance is the main source of these personal losses (Torre). With no background knowledge of even the most basic financial matters, the NBA often consists of players who often struggle at a young age with their finances that carry over into their retired years (Torre). Many players have fallen into the trap of trusting friends, previous coaches, or family with their finances, which according to successful retired basketball star and businessman Magic Johnson, is a plan that is destined to fail (Torre). In addition, an entourage can hurt a player’s financial status because an athlete often feels compelled to help friends and family in need when he or she has made it to the higher level, which was a major downfall of former NBA player Kenny Anderson (Torre). The NBA has observed over the years that many of their players do not have proper life insurance, or even formal estate planning that is necessary for the families of these athletes (Journal of Financial Planning). The NBA and NBAPA has not made the progress that the NFL and NFLPA has made on implementing necessary guidelines for money managers and insurance agents that hope to represent these athletes (Journal of Financial Planning). Previous stars in the league, such as Scottie Pippen, have lost millions of dollars due to poor management that occurs from wealth managers, who do not fit the credentials to be managing millions of dollars in assets (Torre). The NBA needs to address the message that earning money after the league is not the correct path for everyone to follow, and that maintaining revenue might be a more strategic plan for certain NBA players.

Managers and Investments

Overall, having wealth managers is important for Professional athletes due to their limited experience in handling finances. A large portion of professional basketball players grew up with little or no discretionary income, and with many players in the NBA not having a full college degree to understand the importance of investments and savings, budgeting is an area that produces great difficulty post-retirement (Neumann). Since cash flow among athletes will typically only occur until athletes are around 35, money managers need to understand what an appropriate budget is, and consider factors in the market such as taxes, insurance, retirement planning, and the condition of the market for investments (Reinhold). Professional athletes have often not been educated about instances on field, such as injury or disability, which can impact personal life in the future (Neumann). Specialized sports wealth managers that work in this particular niche market of professional athletes have past experience with these issues, and thus can implement risk management measures that professional athletes rarely consider without advisement (Neumann). In this industry, obtaining disability insurance for athletes is essential to future cash flow of players if an injury is to occur unexpectedly, which given the eractic nature of sports, can occur at any time in an athlete’s career (Neumann). Players in the NFL similarly do not know who to trust with their money, and unfortunately can make the mistake of choosing to leave their money in the hands of friends and family who often turn out to be irresponsible or ill fitted to manage finances (Sullivan). In 2001, the N.F.L. Players Association developed a program to evaluate financial advisers and assist players in attaining more honest and accurate financial advice (Sullivan). The program requires financial planners to have clean regulatory records, at least five years of experience, and a college degree (Sullivan). Programs like this could emerge in more player associations and leagues, due to the consistent financial problems of professional athletes across many sports channels. Unfortunately, even when players have appropriate money managers and investors bringing in cash for athletes, it often does not prevent the process of athletes continuing to spend the money irresponsibly, and thinking that the cash will always continue to come in (Torre).

Education

Education can often be overlooked by professional athletes, once they have made it to their desired sports league. This is a major concern because many professional athletes have no funds or career options to fall back on (Caryna). Without a college degree, higher education, or in some instances even a high school diploma; there are limited options to explore in the world outside of athletics (Caryna). Well established athletes like Shaquille O'Neal and Ray Lewis have gone back to receive their college degrees, despite their incredible success in their respected athletic professions (Caryna). One side of the argument says that college athletics and the educational institutions often do not do a great job of accommodating their student athletes for their future endeavors outside of sports, and that the overall relationship between schools and athletes can be perceived as commercial, rather than educational (McCormick). In college athletics, such as basketball and football, coaches appear to control athletes in and out of season of their respected sport (McCormick). With incredibly demanding schedules that almost always requires players to miss classes to focus on their athletic performance, one side of the argument is that it can be difficult to state that schools implement policies and coaches that respect athletics and education equally at a university (McCormick). Universities have been able to counter these arguments by complying with NCAA rules on limits of practice time and extracurricular activities for the sport that do not pertain to the classroom (Caudill and Long). Universities often argue that not only do these athletes receive an opportunity of a higher education that they might not have necessarily been able to receive, but that these skills enhance competitive drive, discipline, and teamwork skills in future work settings (Caudill and Long). While scholarships that provide opportunities for those who may not have gotten into the university, based on previous academic performance or financial status, have been the central argument for universities justifying their athletic standing and policies; arguments of synergies on and off the field may more commonly come up to defend universities for implementing high standards in athletic performance (Caudill and Long). Regardless of these allegations against universities, education is extremely valuable to professional athletes because the average athlete rarely has a long tenure and cannot make their income last for a sustained period of time (Caryna).

Some believe that the universities are not to blame, and that students often pave their own path. In a survey consisting of previous student athletes, athletic performance and effort was attributed to helping the development of major life skills, especially in the work force (Barton). However, this can change from person to person, and social theorists even believe that roles and identities contribute heavily to where a person is headed in life (Preacco). There are some athletes, whose personality caters to working incredibly hard on the field, rather than off the field, thus developing more of an athletic identity that can get in the way of a career path or education (Preacco). The same goes with those who have passions in education or some other activity, making student athletes think very differently from one another (Preacco).

Additional Note: Updated bibliography can be found on my sandbox user talk page