Who Manages Risk for Athletes?
Stop me if you have heard this one before: A successful professional athlete did a poor job managing his finances, and he is now in serious debt.
Professional athletes need to maintain strict control over their finances. They also need someone who assesses their risk and manages their varied investments. I am not talking about a financial adviser, but I am referring to a person who keeps track of everything for the busy athlete who cannot handle his own personal dealings.
The recent fiascos involving former Mets pitcher Livan Hernandez and Celtics forward Antoine Walter are instructive. Hernandez is being sued by his lender for his home in Miami and he is subject to liens from two neighborhood associations, the pool guy and the state of California. This article breaks down Hernandez's financial problems.
As for Walker, he has debts of more than $4 million according to a Boston Globe article. What's most incredible is that Walker has earned about $110 million in his NBA career. Walker has deeper problems as well - he's facing multiple felony counts for passing bad checks.
I can understand how athletes squander a lot of money. I hate to generalize, but many come from underprivileged backgrounds, have a sense of entitlement and have a large number of people depending on them, from family to friends to assorted hangers on. But athletes have to learn how to manage their life, or they will become overwhelmed, and possibly face jail time.
An anonymous former teammate of Walker's hits the nail on the head with this analysis:
“I know Antoine has enjoyed himself,’’ said a former teammate. “He had a good time, as all professionals who are in that situation should. But there’s tough lessons you learn about the responsibilities that come with being a professional athlete that makes a lot of money. Sometimes this is one of the consequences to that.’’
This quote is a brilliant analysis of what it means to be a professional athlete. There are tough lessons. In my opinion, all athletes should have a risk manager on their payroll. This person would be an attorney who does not get paid a commission from endorsements or salary. He earns a strict hourly rate and analyzes any and all business or financial deals. He would work in conjunction with the player's marketing agent, financial adviser and accountant. If an athlete will not take responsibility for his own finances and wants to abdicate that responsibility, then he has to have unbiased and disinterested (meaning people who do not benefit financially from the deals) people to help him.
By the way, remember a couple of weeks ago when we blogged about whether an agent should be proactive in managing the media coverage of his client? Walker's agent did not comment for the Boston Globe article, and his lawyer did not return the newspaper's calls. Only the prosecutor was willing to go on the record, and Walker has not defended himself. This means that Walker's story is out there on the Internet for everyone to see, and Walker has been "indicted" by the court of public opinion no matter what happens. Until Walker and his people speak out, Walker will have the reputation afforded to him by the Globe article (not to mention the hundreds of blogs and aggregators which will pick up the story).
