Why athletes go broke: Too much spending, little liquidity USA TODAY

Professional athletes make millions thanks to their competitive natures. Many end up losing those millions — thanks to the same competitive natures. Warren Sapp owes creditors $6.7 million.

"They think that maybe somehow they can will their investments to work," says Ed Butowsky, managing partner of Chapwood Capital Investment Management in Dallas. "And it doesn't work that way."

Warren Sapp is the latest prominent athlete to file for bankruptcy. Butowsky calls that "sad, but not surprising."

Sapp, who played defensive tackle for the Tampa Bay Buccaneers and Oakland Raiders in a 13-year NFL career, owes roughly $6.7 million to creditors plus back child support and alimony against assets of $6.45 million, according to a Chapter 7 bankruptcy filing in Fort Lauderdale, Fla.

Other athletes who have run into financial difficulty of late include Allen Iverson, Arantxa Sanchez Vicario andLenny Dykstra.

"These people are going broke for three reasons," Butowsky says. "I'll make it real simple: One, they put too much money in private equity investments. Two, they put too much money in real estate. And three, they spend too much."

Butowsky offers this rule of thumb for athletes: "They should have 70% to 80% of their money — or 80% to 90%, depending on who they are — in public securities, things they can get into, and out of, very easily. They should not have any private equity investments or real estate investments until they have at least $3 million put away after taxes. And even then, they shouldn't put more than 10% of that money in any one investment."

Butowsky says the blame in these cases falls on financial advisers who give bad advice as well as athletes who spend outlandishly: "I don't think the economy plays a role in this. Stupidity plays a role in this."

Chapwood Capital will soon offer athletes an online financial-distress calculator. Some of the categories under expenses offer a hint of why things go wrong: Monthly money to friends and family, monthly child support, agent's salary, discretionary monthly spending.

"Are most athletes having trouble and struggling? Yes," Butowsky says. "You hear about the ones who file for bankruptcy. You don't hear about the ones who feel, 'Hey, life is really tough.' There's no form for that."

Butowsky says he knows none of the particulars in Sapp's case, "but I can almost guarantee you he put too much money in illiquid investments. … Only one out of 30 private investment vehicles actually work. And when they don't work, you usually lose all of your money, not some of your money.

"It's a lack of liquidity that's killing these guys. Don't be surprised if you see it again next week from someone else."

By: Erik Brady

http://www.SportsRelocation.com

www.twitter.com/SportRelocation

http://www.facebook.com/pages/Beverly-Hills-CA/SportsRelocationcom/321572801027

SportsRelocation.com® assists players/coaches of the NBA, WNBA, NFL, MLB, NHL, and Entertainers relocate nationwide by servicing your Real Estate & Relocation needs. SportsRelocation.com is a licensed real estate brokerage in Las Vegas, NV, Marina Del Rey, CA & Beverly Hills, CA.

The Sports Relocation team is waiting to hear from you. Our primary goal is to assist you with all of the challenges related to transitioning into your new home. Visit us at http://www.SportsRelocation.com or call us at 800-783-1421

Pro Sports Salariesadmin2012 Spring Training, Anaheim (Los Angeles) Angels, Anaheim Ducks, apartment, Arizona Cardinals, Arizona Diamondbacks, Arizona real estate, Athlete, athlete homes, Athlete Real Estate, Athlete Relocation, Athlete Relocation Services, Athlete's homes, Atlanta Braves, Atlanta Falcons, Atlanta Hawks, Atlanta Thrashers, Baltimore orioels, Baltimore Ravens, baseball player homes, baseball players homes, Best Schools, Beverly Hill, boston, Boston Bruins, Boston Celtics, Boston real estate, Boston Red Sox, Boxing, Buffalo Bills, Buffalo Sabres, Buying, Calgary Flames, California, Carolina Hurricanes, Carolina Panthers, celebrities, celebrity, celebrity homes, celebrity listings, celebrity price cut, Celebrity Real Estate, Celebrity Real Estate Broker, celebrity rentals, celebrity summer homes, Charlotte Bobcats, Chicago Bears, Chicago Blackhawks, Chicago Bulls, Chicago Cubs, Chicago White Sox, Cincinatti Reds, Cincinnati Bengals, Cleveland Browns, Cleveland Cavalier, Cleveland Indians, Co List with SportsRelocation-com, Co-List, Colorado Avalanche, Colorado Rockies, Columbus Blue Jackets, Concierge Service Athletes, Concierge Services, Condo, dallas cowboys, Dallas Mavericks, Dallas Stars, Denver Broncos, Denver Nuggets, Design, Detroit Lions, Detroit Pistons, Detroit Red Wings, Detroit Tigers, Downtown Los Angeles Real Estate, Edmonton Oilers, Florida Marlins, Florida Panthers, Floyd Mayweather, Golden State Warriors, Green Bay Packers, HBO, Hollywood Real Estate, Houses for Professional Athletes, Houston Astros, Houston Rockets, Houston Texans, Ikem Chukumerije, Indiana Pacers, Indianapolis Colts, Jacksonville Jaguars, Kansas City Chiefs, Kansas City Royals, la quinta real estate, landlord, lease, Len Elmore, Lifestyle, Los Angeles, Los Angeles Clippers, Los Angeles Dodgers, Los Angeles Kings, Los Angeles Lakers, Los Angeles Real Estate for sale, Malibu beach house, Malibu rental, Manhanttan, Manny Pacquiao, Marina Del Rey Cove, Memphis Grizzlies, Miami Dolphins, Miami Heat, miami real estate, Milwaukee Brewers, Milwaukee Bucks, Minnesota Timberwolves, Minnesota Twins, Minnesota Vikings, Minnesota Wild, Montreal Canadiens, NASCAR, Nashville Predators, National Hockey League, Nationwide Relocation, NBA, NBA lockout, New England Patriots, New Jersey Devils, New Jersey Nets, New Orleans Hornets, New Orleans Saints, New Rork Islanders, New York, New York Giants, New York Jets, New York Knicks, New York Mets, New York News, New York Rangers, new york real estate, New York Yankees, NFL, NFL Team Los Angeles, NHL, Oakland Athletics, Oakland Raiders, Oklahoma City Thunder, Orlando Magic, Ottawa Senators, payton manning, penthouse for sale, Philadelphia Eagles, Philadelphia Flyers, Philadelphia Phillies, Philadelphia Sixers, Phoenix Coyotes, Phoenix Suns, Pittsburgh Penguins, Pittsburgh Pirates, Pittsburgh Steelers, Portland Trail Blazers, Pro Athlete Home Search, Pro Athlete Lease, Pro Athlete Real Estate, Pro Athletes, Pro Sports Agent, Professional Athlete Relocation, Professional Athletes, Professional Athletes Real Estate, property manager, Relocation Athletes Los Angeles, Relocation Service for Entertainers, Relocation Services, relocation tips, rent, rental, rental deposit, Residences at W Hollywood, ritz Carlton, Rizt-Carlton Residence, Ryan Howard, Sacramento Kings, Saint Louis Blues, San Antonio Spurs, San Diego Chargers, San Diego Padres, San Francisco 49ers, San Francisco Giants, San Jose Sharks, Seattle Mariners, Seattle Seahawks, security deposit, Selling, Services for Pro Athletes, sport star homes, Sports Agent, Sports and Entertainment, sports celebrities, sports celebrity real estate, Sports homes, Sports Relocation, Sports Relocation Company, Sports Relocation Services, Sports Star Homes, Sports Stars, sports stars' homes, SportsRelocation-com, St- Louis Cardinals, St- Louis Rams, Tampa Bay Buccaneers, Tampa Bay Lightning, Tampa Bay Rays, Tennessee Titans, Texas Rangers, Toronto Blue Jays, Toronto Maple Leafs, Toronto Raptors, Trump Towers, Utah Jazz, Vancouver Canucks, Washington Capitals, Washington Nationals, Washington Redskins, Washington Wizards