Jake Peavy of the Boston Red Sox allegedly spent $75,000 on what the public saw as an impulsive reaction to a World Series Trophy and new found money. He bought the duck boat that he, Mike Napoli and Johnny Gomes rode through town the day after their big victory. Was it truly impulsive spending or did he have a plan? According to Peavy, the Alabama born rookie wanted the duck boat the day he stepped into the city. With his $14.5 million salary in 2013, he was not at all concerned about putting down the $75,000. After all, he was making $24,500 per batter he faced. In layman’s terms, that meant the $75,000 for the boat was worth a single inning of outs. No sweat on his part. Besides, Peavy had future plans which remain, to paint the boat with a World Series trophy, ‘Boston Strong’ and other Red Sox’ memorabilia that would allow him and others to look back on such a happy time in his life – when the Red Sox won the World Series for the second time in the millennium.
Aside from Peavy and his duck boat, pro athletes, especially those straight out of college, spend their new found money as if it was going out of style. Most end up bankrupt after their stint due to poor spending habits and lack of knowledge on how to manage large sums of money. How does this happen you might ask? How does one spend millions of dollars and on what do they spend it? Peavy had it in his heart to buy the duck boat, but other athletes aren’t so heartfelt when it comes to spending their millions.
10. Restaurant Ownership
Maybe they think it’s an investment. Think again. Most athletes who put their money down on a restaurant lose in the end. After all, restaurants are opening and closing daily. They should know better. Vince Young of the NFL, for instance, opened Vince Young Steakhouse in Austin, Texas after signing on to the Tennessee Titans for $58 million. By the time he got it up and running alongside his love for shots of Louis XIII and the Cheesecake Factory, his debt hit the ceiling. Investment? Not so much.
9. Substance Abuse
Long nights of endless partying leads pro athletes into deep, dark, financial holes they can’t climb out of. John Daly joined the PGA tour in 1987. After winning $750,000 in the San Francisco golf tour, he lost a large portion when he vacationed to Las Vegas and played $5,000 slot machines. By vacation’s end he lost $1.5 million. According to sources, John Daly was obliged to go to rehab for alcoholism on seven different occasions. After four divorces he decided to come clean but that didn’t bring his money back.
8. Extravagant Cars
Mercedes Benz, Porsche, Lamborghini, Hummer. A college graduate’s dream come true. That’s exactly it. Most athletes, are coming out of college which means they are 22-25 years of age and are undereducated when it comes to managing money. Every young adult man’s dream is to own a spiffed out Mercedes or speedy Porsche. The money is there, so why not? Not only that, but usually they end up buying more than one. According to Tom Farley of ESPN.com, athletes need minimum three cars; a Mercedes ($80,000), a utility car ($50,000), and a run around ($30,000). In the end, the athlete spends a total of $250,000 on cars alone.
7. Million Dollar Mansions
Travis Taylor of the NFL signed onto the Baltimore Ravens and immediately bought himself a home that was fully loaded. This was before signing the actual agreement. Low and behold, a rich man’s dream is to live in an extravagant estate where he can catch up on the latest shows and recent games on his high definition TV, while lounging on his cushy leather sofa. A house, at most, will cost a pro athlete $1 million, half of which is paid upfront. Did I mention the landscape, utilities, groceries, car insurance, maid, chef and personal assistants costs? None of which is included in the upfront cost of the house, yet it’s only natural for a new found millionaire to have all these amenities. On average, the athlete will spend approximately $100,000 per year and if they are drafted to a team away from their hometown, they will spend another $25,000 on rental fees or even purchase a second home.
6. Significant Other
Don’t forget about the wife, girlfriend and/or baby mama. They need to be compensated as well. Fortunately for those rookies just out of college, there isn’t a need for such. It’s usually themselves fending for themselves (aside from their loving mother and father and baby brother). However, if the time is right and you are drafted later in the game, a pro athlete’s average giveaway to their significant other is $30,000 per year.
5. Immediate Family and Old Friends
All of a sudden you become popular again and old friends show up at your doorstep. Your new found money pays for a friend’s college tuition and your mom’s fully furnished home. After all, they were the ones who brought you to little league and washed your scuffed up, grass stained bright white knickers in the first place.
It’s not every day you see a man walk into Mario’s for a suit and tie and put down $6,000-$7,000 in one fell swoop. Maybe it is for Jenny Sedgwick, sales associate. for Mario’s retail. More than 200 athletes shop at Mario’s each spending on average $2,500 per visit but it’s the Mariners Jenny truly concerns herself with in lieu of her commission. They will at times drop a lavish $10,000 to buy tailored suits, sweat suits and ties.
3. Personal Aides
While with the Seattle SuperSonics, Gary Payton spent a total of $100,000 on his 16 aides. He hired old friends, Milton Jackson and Aaron Goodwin, to negotiate his contracts and be his press secretary, in exchange for their college tuition. He hired his parents to manage two restaurants in Oakland and Corvallis. He even hired an aide to assist in paying his bills. Payton had two accountants, two lawyers and a personal manager all of which cost him a pretty penny, but with $13.5 million per year, $100,000 was water under the bridge.
Whose ever heard of stadium taxes? Well, pro football players from the NFL can tell you all about them. According to ESPN’s Tom Farrey, taxes are a large part of the equation. Breaking it down, based on a $5 million contract, $1.9 million is taken from the first check. That’s 38%. Another $100,000 is taken due to income tax (2%) and more is taken for the stadium taxes. However, some athletes get around state income tax by purchasing homes in states like Florida and Texas where it doesn’t exist.
1. Trust Funds
It’s not every day you find pro athletes putting their new found money into trust funds, especially those straight out of college, but Philadelphia’s Michael-Carter Williams of the 76ers and his parents did just that. At age 22, Williams signed a $4.5 million contract with the team but he won’t see or handle any of the money for 3 years. For the time being, he will have to live off endorsements from Nike and Panini trading cards, states an article in the Philadelphia Inquirer. His mother, Michelle-Mandy Carter Zegrowski and her best friend are his management team. Together their goal is to see Michael as a role model for others. They want to pay back to the community that supported him every step of the way toward his thriving career.