Wednesday, April 12, 2006

The money they spend

Here's part of an email I received this morning from a friend of mine, a business reporter, in response to today's Darren McCarty story:
I find it truly astounding how pro athletes can burn through so much money. ... I guess that's what happens when guys with limited educations, especially about how finance works, suddenly find themselves millionaires.
That's exactly what it is, and McCarty's far from the first. In fact, I would argue that overspending is endemic to pro athletes, especially those from low-income backgrounds. And, unlike other countries where hockey is played by only the wealthy, many Canadian NHLers fall into that category. It's still, in large part, a working-class group making up this league.

Growing up in British Columbia's Interior, where a lot of players are either from or played their junior hockey, you would often run into examples of this. Many guys spent their summers in the Interior, sitting at the lake and hitting the clubs. Stories got around.

I remember one instance, about five years ago, a friend of mine — a guy who's not a hockey fan — had the chance to party with a young NHL player, a former first-round pick then in his early 20s. One of this guy's 'party tricks' was apparently to bet people on the amount of his paycheque.

Of course, this meant a pay stub was on hand to settle the debate, which apparently said this fellow made $25,000 every two weeks during the season.

Not a bad living, wouldn't you say?

And, at the end of the night, our NHL friend picked up the $10,000 tab.

Many NHLers simply don't know how to deal with their enormous wealth, and McCarty's just the latest to run into financial difficulty. The smart players hire financial advisors early in their career — but even then, they often end up with the wrong help. Recall, Mike Modano's financial difficulties from the 2003-04 season, when he reportedly lost more than $5-million — at the time, a huge portion of his invested savings.

We've also heard of Jaromir Jagr's gambling debts, reported to be more than $2-million in 2004. In 2001, the IRS filed a $3.27-million lien against Jagr for unpaid taxes. (A pro hockey player and near-millionaire since he was an awkward 19-year-old from the Czech Republic, Jagr is a 34-year-old man whose mother still lives with and takes care of him.)

Former Hall of Famer Brian Trottier lost everything in the early 90s and was reportedly $10-million in debt and near suicide when he filed for bankruptcy in 1994.

And on and on the list goes.

But the Modanos and Jagrs are the game's superstars, the guys who can afford to drop a few million and not have it hurt their bottom line. The guys who really have a tough time in this culture are the third-liners like McCarty, who have spent a lifetime trying to 'catch-up' to their wealthier teammates. "If Chris Chelios can afford a $10,000 dinner, well, then, so can I."

Playing in the NHL is a life of excess, at least before these guys retire, and a few guys get left behind. McCarty's just one of them.

I don't think anyone's going to let him pick up the tab any time soon.


At 7:37 p.m., April 12, 2006, Anonymous Mike said...

Jagr still lives with his mother? Pathetic.

At 8:20 p.m., April 12, 2006, Anonymous Lyle Richardson said...

McCarty's learned a painful lesson, but I don't think we'll have to worry about his life spiralling out of control. He's fought back against his alcoholism and he'll come back from this.

He's still playing in the NHL and likely will continue for two or three more seasons, which will help to some degree.

More importantly, he's a popular player, particularly in Detroit where he spent most of his career. As such, he'll have no problem landing work at some level in pro hockey if he wishes and should land on his feet, much like Trottier did, older, less wealthy, but wiser and still able to make a good living.

This story should also serve as a cautionary tale for current and future NHL'ers. It's one thing when it's a superstar like Jagr or Modano having trouble managing their enormous wealth, or for a retired former star like Trottier forced into bankruptcy. It's another when it's an average player earning less than $1 million per.

As an aside, I just hope that the more sensationalistic hockey reporters don't seize on the fact that a small part of his debts were to casinos in an effort to resusitate the "NHL Gambling Scandal" non-story of two months ago.

At 9:16 p.m., April 12, 2006, Anonymous Cat said...

Not only the case of a man with an awful lot of money and little sense of how to deal with it, but the contributing factors struck me as well: a year without work, a new position that pays less than his previous job, and a divorce. Ignore the fact that he is a hockey player and the amounts for everything are higher, and that is a nearly sure-fire recipe for bankruptcy in any profession, even if he had managed his money fairly well.


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