Tales of retired professional athletes falling on hard times have become so common that ESPN did a documentary called "Broke" to publicize their plight. Former NBA All-Star Jamal Mashburn knows he will not be counted among retired athletes who went broke. Benzinga looks at how he bucked that grim trend.
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A Toxic Combination Leads to Financial Hardship
The irony of NBA or NFL draft day is that most of the people watching, and indeed the players themselves, believe that they are set for life after their name is called. Unfortunately, all too many players discover that life is a marathon, not a sprint. This means jumping out to an early lead in the race to lifetime wealth doesn't guarantee that's where young professional athletes will finish.
Despite earning millions of dollars, many players are beset by a toxic combination of circumstances that lead them to financial ruin. First, there is the brashness of youth. Combine that with the reality that many professional athletes come from financially disadvantaged backgrounds, leaving them to be breadwinner for themselves and their extended family.
Then, there is the fact that many young professional athletes lack financial literacy, which most young people suffer from. However, most young people don't have millions of dollars at their disposal, and if they do get that rich, it's usually much later in life when they have learned about things like debt service and planning for the future.
Poor Business Decisions
Many professional athletes do try to build for their future, but a lack of financial literacy leads many of them to invest in the worst kinds of businesses. Buying into high-risk operations or letting family members manage their finances often burns up millions in capital that would be better invested in traditional or alternative offerings.
Sadly, many more professional athletes are swindled by their agents or "financial advisors" who are in cahoots with agents to rob their clients blind. Pair this with lavish spending on depreciating assets like car collections and jewelry, and you end up with scores of former players who don't realize they're in desperate financial straits until it's too late.
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How Jamal Mashburn Bucked the Trend
When he left the University of Kentucky in 1993, Jamal Mashburn was one of the most highly sought-after players in basketball. At 6'9," he had the bulk of a power forward but the offensive skills of a guard. This made him almost impossible to defend, and he scored at will for most of his career before it was cut short by a series of injuries.
He retired in 2006 with a very solid 19.1 ppg career average but a much shorter career than he would have expected on draft night. This is where many former pros run into trouble, but Mashburn had been preparing for his post-NBA career for years. He put his money to use and built an incredibly diversified portfolio that includes:
- A real estate agency
- Five automobile dealerships
- 40 Papa John's Pizza locations
- 38 Outback Steakhouse locations
He also sits on the Fairbridge Hotels International board and is an advisor for the Revolution Global cannabis brand. Today, the Celebrity Net Worth website estimates Mashburn's fortune at $100 million. According to HoopsHype, Mashburn earned $75 million during his career. However, taxes and agent commissions gobbled up significantly more than half.
That means Mashburn has parlayed $35 million into $100 million, and he's still profiting from his various business interests. It's a rare off-the-court success story that has earned Mashburn as much respect in the C-Suite as he had on the court. Although you may not start life with as much capital as Mashburn, you can still learn from his example. Jamal Mashburn realized the key to investing is planning for the marathon, not the sprint.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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