In 2009, Sports Illustrated estimated that 78% of NFL players were bankrupt or faced serious financial stress within two years of ending their careers. It also estimated that 60% of professional basketball players were broke within five years of retiring from the NBA. Athletes including Dorothy Hamill, John Daly, Lenny Dykstra, Scottie Pippen and, more recently, Mike Tyson (who is currently suing his financial advisor for fraud) have experienced headline-making money management difficulties.
It occurs despite (or maybe because of) the fact that average salaries, broken out by league, are as follows:
NBA $5.15 million
MLB $3.13 million
NHL $2.4 million
NFL $1.9 million
David Emma (right), managing director and partner at HighTower’s Masterson, Emma & Associates, manages professional athletes’ finances, a role to which he’s perfectly suited.
A finance major and a hockey player at Boston College, he won the 1991 Hobey Baker Award as the best college hockey player in the U.S. Emma went on to play for the New Jersey Devils, Boston Bruins and Florida Panthers, as well as in Europe. Yet after receiving bad financial advice during the tech bubble, he decided to commit his post-hockey career to advising former teammates and other athletes on investing their money with confidence.
“They trust me more, without a doubt,” he says of his clientele. “Being able to understand on a day-to-day basis what they’re experiencing since I also played at that level makes a huge difference.”
Emma notes the four stages he sees to the career of a professional athlete: young guys just coming in, guys in the heart of their contract, guys beginning to transition out and thinking about what to do next, and retirement.
“None of the leagues have true financial planning or financial education programs,” he says. “They just don’t want to appear to be endorsing any one system or product. They all talk about the need for sound financial planning and help with navigating their careers, but as much as they talk about it they don’t [do it].”
Not that it’s true of individual teams, however. Last summer, Emma was asked by the Panthers to do a seminar for the top 36 prospects at their training camp. They asked him to present because “I used to play for them and they know me.”
Two of the biggest mistakes professional athletes make, Emma argues, is that they don’t assemble the right team of advisors to handle their finances, and they trust too much.
“They must take an ownership role in their financial management; they have to get involved and know what’s going on.”
Just as there are stages to a professional athlete’s career, there are also corresponding stages of wealth, he notes. First, they experience wealth, and it is a crucial time in their career when they need to slow down and ask questions; they need to find time in the offseason to really educate themselves. Second, they accumulate wealth, and this stage typically can last anywhere from three to 10 years. Third, after 10 years, it’s time to take what they’ve earned and make it last.
His honesty resonates with players, although he says sometimes “too many players, especially the younger players, hear what I have to say, but they don’t listen.”
“I am not afraid to tell them that I made mistakes and didn’t pay close enough attention to what was going on,” Emma admits. Even though he would help younger teammates with finance-related issues, even going so far as to work with them to balance their checkbooks, he was wrapped up in “the worry of playing, going to the gym and working out,” so much so that even he “trusted too much.”
Something he’s determined to ensure doesn’t happen to others.
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