Jose Canseco files chapter 7

[Bring_Back_Shantz]

I've got 0 sympathy for athletes who go broke.
Seriously, it's not like these guys don't have access to the kinds of people who could help them manage their finaces, or at least point them in the right direction.

If I was a pro athlete and signed a bagillion dollar contract, the first thing I would do is go to the owner and say, "Hey, you kind of seem like you've got your ducks in a row, money wise, think you could introduce me to a good financial planner?"

[MoneyGuy]

To those who detest financial advisors, a good advisor would have been able to save this guy's bacon, if he had followed the advice. If I or Slava had been advising this guy and if he'd done as we would have told him, he'd still have his money instead of being in this pickle.

[cDnStealth]

Unfortunately people who are bad with their money are bad with their money regardless of how much they make. I have a friend who has a good job that pays him pretty well and yet he is constantly living paycheck to paycheck. There are times when we'll go to a movie and he'll say something along the lines of, I gotta use my credit card or movie pass because I don't get paid for another week or two. I don't understand how someone can live like that and I've told him as much. If you don't have the money on hand to do something then you shouldn't be doing it. I've always tried to watch how I spend my money and I think I still have the student mentality where I always think money is tight even though I have quite a bit sitting in the bank. I don't feel sorry for this guy, but I understand how this kind of thing happens.

[trumpethead]

I am not surprised that a former pro athlete, who made millions in his playing career went bankrupt. That happens all the time.

What is shocking here is that he listed his assets at $20k (basically, a decent used car). I cannot for the life of me understand how you could earn in excess of $50M in your life and end up with only $20k worth of "stuff"....

[sevenarms]

Originally Posted by MoneyGuy

To those who detest financial advisors, a good advisor would have been able to save this guy's bacon, if he had followed the advice. If I or Slava had been advising this guy and if he'd done as we would have told him, he'd still have his money instead of being in this pickle.

Some of these guys who go broke do have financial advisors. Unfortunately, they're the type who make big promises and steal all their money.

[Cowperson]

"Chronic overallocation into real estate and bad private equity is the Number 1 problem [for athletes] in terms of a financial meltdown," Butowsky says. "And I've never seen more people come to me about raising money for those kinds of deals than athletes."

For the risk-averse investor, an adviser such as Butowsky would suggest allocating 5% to private equity, 7%--12% to real estate, 50%--65% to a mix of public securities (stocks, mutual funds and the like) and the rest to alternatives such as gold and hedge funds. Yet with athletes, who are often uninterested in either conservative spending or the stock market, those percentages are frequently flipped. Securities are invisible, after all, and if you don't study them, they're unintelligible. Not to mention boring. Inventions, nightclubs, car dealerships and T-shirt companies have an advantage: the thrill of tangibility.

Ego, wanting to be the big guy, is what kills them.

If they say "no" to a slick story, they worry they'll appear to be "dumb."

Its probably pretty easy to manipulate them that way. They're great targets for that.

Mostly, they're young and invincible, cash flow is extremely high and they lack the life and business experience to frame anything in terms of "time" and thus don't see the ultimate end game, the time when its all over.

A "good advisor" would be asking them what they want their lifestyle to be when they're done their career and talk to them about how much cash flow and therefore what pool of capital they'll need when its all over.

Then work towards those targets in a consistent manner.

Most professional athletes at the major league level should emerge from an average five year career, even as a journeyman, with "Drop Dead Money." That is a pool of capital generating sufficient income where you can tell anyone to "drop dead" if you don't want to work for them.

A "good advisor" would be honest with them and tell them things they don't want to hear, such as the likelihood they'll have an average five year career or a 15 year career of high cash flow.

They should have checks and balances in their advisory team, people watching other people and questioning advice. The accountant should only be an accountant. The lawyer should only be a lawyer. They're biggest enemies, in most cases, are their agents.

Never have friends or family as part of your advisory team. Never lend to friends or family without a contract and consequences. Gift them money if you must.

This, of course, is extremely boring versus the exciting alternative of being blown out of the water like Canseco.

People, particularly the young and invincible who have no concept of "time," don't value "boring" enough to be quite honest.

A famous hockey bankruptcy was Brian Trottier. Mike Modano is another more recent example of an extreme financial loss from the advice of a trusted friend.

No sympathy frankly.

Cowperson

[darklord700]

How to blow millions? Antoine Walker played in the NBA for about 10 years and made 100 millions or so.

One guy wrote one day he went to a meal with Walker that was supposed to be paid for by a sporting company. And Walker still asked everyone to get more drinks and paid for the whole thing. That guy wronte at that time he knew one day Walker will file for bankrupcy and did.

The method people blew millions might vary but it's all in the attitude.

[Ozy_Flame]

^^^ In athletes defense, they aren't raised normally - they are pressured into high-performance training and crazy schedules, the likes of which don't include the same education (academic or life experience) that the rest of us get. Finances are an after-thought for some of these guys, as it's very easy to take a million-dollar contract at age 20 and then assume the gravy train is going to flow for 20 more years and not worry about anything.

Going head-first into a large pile of cash is a common mistake many people make, whether it's $60,000 per year or $6 million per year.

Frankly, I'm surprised Canseco's asset to debt ratio wasn't worse; he's been trying alot of things to pay off his debts, including book writing and MMA fighting.

[Puppet Guy]

best Twitterverse comment about this:

Jose Canseco files Chapter 7 in Nevada and then had 2 refile because the original bounced off his head & went over right field fence

[Huntingwhale]

Thoughts and prayers

[Northendzone]

lets face it, jose really did not need a financial advisor. he could have put all of his earnings, less somewhat reasonable amounts for living expenses into a plain old savings account and been set for the rest of his life - instead he likely felt he needed 17 sports cars, 15 homes, 4,000 rolex's and make investments in schemes to sell refridgerators to eskimos.......