In 2013, I wrote two posts on professional athletes handling their money poorly. Thanks to Nerdwallet.com, where I have begun writing on their Ask an Advisor platform (I am not compensated for this), there is finally a good story to read. Nerdwallet interviewed Eric Sogard of the Oakland A’s. Eric and his wife work with a CFP(R) financial planner. Since joint the MLB, their big splurge on his $510,000 annual contract was a beagle for $1700, purchased at the mall. Plus a house. (not from the mall, I presume)
Eric’s salary is $10,000 over the MLB minimum for 2014, as he is not yet eligible for salary arbitration. In 2013, the average salary was $3,386,212. For those who do not know, players are eligible for salary arbitration after year 3 and before year 6 in the League.
Here is the piece fromNerdwallet. Written byon April 2, 2014
“The face of major league baseball wears glasses? That was very nearly the case when, over the winter, the Oakland A’s bespectacled second baseman Eric Sogard finished second in an online fan poll for the #FaceofMLB—besting the likes of former league MVP Buster Posey. Not bad for a guy who broke into a regular starting role just last year.
Eric caught our attention at NerdWallet for two reasons: his wearing glasses gave rise to the nickname “Nerd Power,” and it turns out he’s a great example of a professional athlete who’s financially responsible. On the eve of the 2014 season, we chatted with Eric and his financial planner, Brett Dimas from OFS Wealth, about the lessons he’s learned about money, some of the first big purchases he made (including one pricey pup), and how he’s working today to set his family up for the future. “
NerdWallet: When you were a kid, how did your mom and dad first teach you about money? Do you remember your first money lesson growing up? Read more
In Seattle, highly touted former NBA center (drafted in 2004) Robert Swift, finally left his foreclosed house, after the new owners were going to contact the local sheriff to evict him.This young man went from high school straight to the pros. He may have known a lot about basketball, but not a lot about life, or money, I warrant. Swift attended Garces Memorial High School in Bakersfield, California. It’s a self-described rigorous prep school that offers AP, honors and college prep classes. Like many schools of its type, sports programs seem to receive as many awards as academics. One wonders what Robert Swift’s high school academics were like, and did anyone care about what he did off the court? The Daily Mail of the UK stated in a March 2013 article that Robert’s parents may have pressured him to turn down an offer to attend USC in California, and go pro instead for a first check of $4.4 million. Who lost in this story? The Seattle SuperSonics certainly; Robert Swift as well. What the pressures were on him from his parents, peers and other advisors, we’ll likely never know. Swift barely played in the NBA due to injuries and his less than stellar performance, despite being a first round draft pick.
What happens to pro athletes? How can they be helped? Economics professor of Annamaria Lusardi had three suggestions in her blog post this spring on Ray Williams, a former NBA player whose obituary was in the NYT this March.
- Let’s make sure that athletes graduate from college so they have a degree they can rely on after they stop playing (Ray Williams did not graduate from Minnesota, where he studied after a year at San Jacinto Junior College in Texas).
- Let’s add money management to their courses before they go pro. We all need those courses, but the athletes even more!
- Finally, let’s create programs for professional athletes so that when they stop playing they can use their fame, skills, discipline, outstanding shooting touch, and superb body control to dazzle in their new jobs.
I have a colleague who is helping someone we might have called a dot-com millionaire thirteen years ago. She is helping him and his family with risk management while he is earning so much money. ($2,000,000 plus/year). Their house is paid off, the children’s college plans are fully funded, they have purchased long-term care insurance, you get the idea. With better advice (or a class or two), Robert Swift might still have some of the reported $11.5-20 million he earned while [not] playing in the NBA.
Oh, parents of young athletes going pro-one more thing! If Robert Swift had taken $2,000,000, less than 50% of his first check and invested it for 35 years (to age 53), he would have had $16,000,000 before taxes and before accounting for inflation. Related: Pro Athletes Part One