Business owners and those set on obtaining wealth for themselves and their families are sometimes struck with the peril of financial illiteracy. Let’s face it; higher education does a pretty poor job of getting people ready for handling and saving money, no matter how much income you’ve accumulated or how successful you’ve been. Lacking is a particular set of skills and knowledge that business people need to make intelligent and effective financial decisions. One of the worst examples of this is the multitude of athletes, thriving on a professional level, who made millions and eventually lost it all.
The crazy thing is that most of these athletes hire a multitude of financial advisors who, through mismanagement or theft, turn these multi-millionaire athletes into bad investors. According to Sports Illustrated, more than 78 percent of former NFL players have gone bankrupt or are under financial stress because of joblessness, bad investments or divorce. Within five years of retirement, an estimated 60 percent of former NBA players are also broke.
But some of the most tragic stories regarding financial mismanagement are in the National Hockey League. The following should be case studies on mismanaging your wealth and trusting the wrong people.
I grew up in the Boston area and when I was a kid, the Bruins’ Bobby Orr had reached a God-like following. He had it all; boyish good looks, charisma and a wealth of endorsement deals. Orr was also possibly the best defenseman to ever play the game. What he didn’t have was financial knowledge. They don’t teach that to a guy who started playing professional junior hockey at the age of 13.
At the end of an injury-shortened but illustrious career, Orr lost everything because he trusted the wrong people. He also discovered that just handing your money to someone and not paying attention can contribute to your waking up one day, being broke, and owing thousands of dollars to the government.
The former Red Wing and one of the greatest Russians to ever play the game let his financial advisors embezzle nearly $60 million. That forced him to go back to Russia and play in the KHL long after his career should have been over. He even had to sell his houses and watched a few get foreclosed on.
The former Buffalo Sabre made a horrible investment organized by Len Barrie, another NHL veteran. The latter got a lot of well-known hockey players to join him in investing in the Bear Mountain resort in British Columbia. Barrie was the target of suits by numerous people and went bankrupt himself and left players like Whitney broke.
Vernon, best known as a championship goalie for Calgary and Detroit, also fell prey to Barrie and lost $9.6 million, a considerable portion of his wealth accumulated in the NHL. However, he still invests in Bear Mountain, which new management has taken over.
The former Dallas Star and most successful U.S.-born player in the history of the NHL, Modano, was beset by bad investments. He lost nearly $4 million when he was advised to dump money into an entertainment corporation.
The former Islander and Blue Jacket, Peca, made a ton of money in the NHL and lost a lot of it after being lured into investing in a Mexican golf course. His financial advisor, Phil Kenner, is now in jail for duping clients like Peca into bad investments after retirement.
The moral of this story? Whether your company has assets of thousands or millions, don’t just build personal trust with your financial advisors; always stay engaged and don’t be afraid to ask questions or seek out second opinions. At the very least, take some classes on how to best manage your money.