Allen "The Answer" Iverson Is Broke, $200 Million Gone

[Tugg Speedman]

http://www.forbes.com/sites/jamesmarshallcrotty/2012/02/21/allen-iverson-earned-over-200-million-in-his-nba-career-hes-now-broke-say-what/

Allen Iverson – who has earned over $154 million in salary alone over his stellar NBA career — is reportedly broke. That number excludes millions more in non-salary income, including a $50 million lifetime endorsement contract from Reebok. And the player best known as "the Answer" has no easy answer for the bills, including around $859,000 he currently owes to a Georgia jewelry store (too bad he didn't have Newt's credit line at Tiffany's). Whether Iverson can't or won't pay Aydin and Company Jewelers is unclear. Moreover, there is no evidence that Iverson has officially declared bankruptcy. But Iverson's seemingly desperate attempts at a comeback suggest that he's in deep financial trouble.

For instance, he made the Iverson equivalent of pilaf to play in Turkey and was offered plantains to play in Puerto Rico. Now comes an insulting offer to play indoor soccer for the Rochester Lancers. It's a sad and shameful denouement for a man who, pound-for-pound on his six foot, 165-pound frame, is the most gifted and fearless guard to ever play pro basketball.

Most sports fans saw this day coming. Some will point to Iverson's role in a controversial bowling alley brawl in Hampton, Virginia back when Iverson was in high school. Though Iverson ended up serving four months in prison for the crime, Georgetown coach John Thompson — in his defining Lawrence Phillips moment — overlooked the incident in recruiting Iverson, and Virginia governor Doug Wilder eventually granted Iverson clemency.

Fairly or unfairly, the affair tainted Iverson's reputation and telegraphed his later troubles, which reportedly included missed practices, refusal to train, and frequent disputes with coaches. And that's just basketball-related behavior. Iverson's troubles also included a 1997 arrest for carrying a concealed weapon (for which he pleaded No Contest and was sentenced to community service) and a later 2002 arrest (though never convicted) for trespassing, criminal conspiracy, false imprisonment, and making terroristic threats. There were at least two cases of assault by Iverson bodyguards, including a vicious one in 2006 by Jason Kane (as Iverson idly watched), for which Iverson had to pay victim Marlin Godfrey $260,000 in damages for injuries he suffered, including a torn rotator cuff, a concussion, a ruptured eardrum, and a burst blood vessel in his eye. The  judgment was upheld on appeal in 2009. Finally, there was Iverson's banishment from casinos in Detroit and Atlantic City.

In the public's mind, rightly or wrongly, these incidents built an image of Iverson as reckless and ungovernable on and off the court. So, it comes as no surprise to many that he was reckless and ungovernable in his finances. "He redefined high maintenance," said Pat Croce, Philadelphia 76ers team president and part-owner during the Iverson era.

Even with all the caveats that accompany Iverson (his troubled upbringing as "a poor black kid" and child of a single teenage mom, his need for physical protection from  extortionists and thieves, his lack of legitimate male role models, and his generous loyalty to those who protected him from harm), the Forbes education writer in me can't help but place at least some responsibility for his financial mess on the man himself.

What's sad is that the remedy was so simple and easy. For instance, I calculate that even if Iverson had passively invested (say, in a broad-based index fund like SPY) only half of the more than $200 million he reportedly made over the past sixteen years, and wantonly squandered the rest, the amount he invested would have at least kept pace with inflation. I am not talking hedge funds or sexy IPOs. I am talking large-cap staples of the American economy, with no "vig" at all to the money management sharks, Ponzi schemers, and private equity shysters that circle pro athletes and their posses. A high-rated, tax-free, long-term municipal bond ETF like MLN might even be safer, if not always more profitable.

As I learned when my beloved mother — an accumulator of seemingly expensive things – suddenly passed, most material things don't carry much resale value. Yet celebrities in general, and pro athletes in particular, think they do. Blinged-out, overly customized, and hard-to-resell mansions, diamond-studded watches, Gulfstream jets, fur coats, cheesy overpriced jewelry, and the requisite Bentley's all lose their value over time. Cars, no matter what the brand, lose value as soon as they are driven off the lot. Same goes for planes. In only rare cases does a watch grow in value. Ditto for jewelry, especially garish jewelry. The best and safest way to grow money over the long-term is through investing in dividend-paying stocks. Boring? Yeah. Not very "street." But, as a former German girlfriend once told me, "To be radical in your art, you need to be conservative in your life."

As much as I admired Iverson as a player and guiltily enjoyed his inimitable, incorrigible bad boy charm, it is still tragic that someone, anyone, in his expansive network of takers, enablers, handlers, and sycophants did not at some point pull the 11-time All-Star aside and be a genuine financial friend. And I don't mean the lecture that all rookies receive that 60% of NBA players are broke within five years of leaving the game. That lecture is obviously not working. A genuine financial friend would have spoken ongoing, unvarnished, personal truth: lose the lottery mindset, dump the hangers-on, drop the traveling hair stylist, and, instead, start saving and investing wisely. A bona fide financial friend would have done the difficult thing and gotten the league or the players union to hold Iverson's paychecks in escrow.

Moreover, an NBA that cared more about its personnel and brand would have required that Iverson, as well as all players, pass a yearly financial planning and retirement course before they were allowed on the hardwood (including how to read a financial statement, why to run from promises of a "guaranteed" return, and how a rock-solid prenup, living will and family planning can prevent you from getting soaked by a gold-digging ex).

Now, Allen Ezail Iverson is reportedly "broke by all accounts but his own," his wages garnished, his Wells Fargo bank account out of his control. Moreover, those fifty or so "friends" and "family" that lived off, or milked, Iverson's naive generosity are running for cover. As of today, Allen Iverson joins the unholy pantheon of all-time-profligate sports spendthrifts – from Derrick Coleman to John Daly, Sheryl Swoopes to Mike Tyson, Jack Clark to Diego Maradona, Latrell Sprewell to George Best – who each squandered a king's ransom because of a lack of financial education and the desire to pursuit it.

[Hards Alumni]

Bottom line is that the NBA needs to get these guys financial advisors that they must keep around and stay in contact with for at least their rookie contract.

The NFL has been doing this now for years and it has been successful.

[GGGG]

Not just the NBA, but the player's association should require it when they certify agents.

It's really a shame.  Saw him in person his rookie year, and he was the quickest basketball player I have ever seen in person.  Really didn't translate well on television for some reason.

[nyg]

Not just the NBA, but the player's association should require it when they certify agents.

It's really a shame.  Saw him in person his rookie year, and he was the quickest basketball player I have ever seen in person.  Really didn't translate well on television for some reason.

I also saw him at a Georgetown game a few times and without doubt, the fastest basketball player I have ever seen.
He was also the High School football player of the year in Virginia as a QB.

[wyzgy]

come on...he had a family to feed

[JWags85]

come on...he had a family to feed

That was Spreewell

[MarsupialMadness]

$50 million lifetime endorsement contract from Rebook.

And D Rose just signed a 14 year deal with Adidas for $250 mil.  Crazy.

[Hoopaloop]

Bottom line is that the NBA needs to get these guys financial advisors that they must keep around and stay in contact with for at least their rookie contract.

The NFL has been doing this now for years and it has been successful.

Didn't work for Terrell Owens very well.

These athletes do get financial advice.  At the end of the day you can't take the stupid out of some of these people.  Or the hangers-on that bleed them dry.  Financial advisors or not, they often don't care or feel it will never happen to them.  Spend spend spend, knock up women left and right, let it rain, etc, etc

[Goose]

I love happy endings!

[Hards Alumni]

Didn't work for Terrell Owens very well.

These athletes do get financial advice.  At the end of the day you can't take the stupid out of some of these people.  Or the hangers-on that bleed them dry.  Financial advisors or not, they often don't care or feel it will never happen to them.  Spend spend spend, knock up women left and right, let it rain, etc, etc

What a foolish argument.  Of course there will be failures, but I'm sure the amount of people that were helped by the program greatly outnumbers the number of broke morons.

[MU82]

Same exact thing happened to me.

Oh wait ... $200 million?

I only blew half that.

[Hoopaloop]

What a foolish argument.  Of course there will be failures, but I'm sure the amount of people that were helped by the program greatly outnumbers the number of broke morons.

These guys already get the advice you have asked for.  What is foolish about my comments?  Some people sit up and listen to the advice and some are just beyond stupid and do what they want.  It's not like I said don't give them financial advice, I'm all for it. It is already happening, but unfortunately you can't take the stupid out of some of these guys.  That skews more to the NBA then it does other sports.