Josh Smith: I'm Going To Struggle With $6.9 Million

I'm sure he's made $$ on endorsements and I'm also sure his agent took 20% at least along the way.

Most of these guys do end up broke a few years after they play unfortunately. It's a disease in America everywhere not just in the NBA. 7 out of 10 people in the entire country making over 190K a year have a negative net worth.

 

Where's Patrick Ewing to teach these guys a little about public relations and how better to phrase their money concerns?

 

i just tweeted him to sign up for Groupon

 

Though no one with half a brain would financially plan their budget beyond their current contracts length. Josh's last big deal ended when he was 29 and like most stars you figure you are going to get your last big payday at that age. But if you have any smarts, you don't live like that. You don't spend 10 mil a year. Unfortunately for Josh he's an overrated malcontent non-team player and that cost him his last big contract. If he didn't plan for those circumstances that's on him. he'll have made 100mil on NBA contracts after this year (who knows what else on endorsements etc) if he didn't save and/or invest some of that don't go asking for pity through the media.

 

NBA Agents, even the best, generally get less than 5%

 

Nope. They typically get between 10 and 15% of the first contract and a sliding scale from there IF they are assured they will get the entire career of a a player. They typically broker insurance that nets them some residual coin too. They arrange investments either directly or indirectly and take "Fees" that are not % of salary for introductions to opportunities to make endorsements. A lot of agents have "partners" that are "financial planners" and arrange all the players money for a "fee" or %. All in all the typical pro sports athlete pays about 20% over his/her career to "services" rendered by or through their agent.

I'll dig up the study done by the public law institute. It's 10 years old but I'm sure the facts are still relevant. For what it's worth it was a lot worse back in the 90's.

The average 1%er not in sports pays about 12 to 15% gross for their financial well being overall between lawyers, accounting, tax professionals, investments, real Estate, protection etc. Being rich is one thing. Staying rich takes money too.

 

^ You said "agent took 20%" I'm saying that's wrong and there is nothing to support that. Just because an agent hooks up a player with insurance agents, lawyers, real estate agents, other financial advisors etc doesn't mean the sports agent makes that, so you're wrong. The agent makes what he makes period, not what others make also. How much NBA agents make is easily verifiable by checking around the net. Per forbes NBA players association limits the max commission of an agent to 4% of their negotiated contract. They can get similar % off endorsements but saying 20% of JS's entire income is just off. This is all over the net by sports sites, and finance sites. And there is no such thing as % based on assurance of an entire career in writing either.

 

The Public Law institutes statistical research on this subject was performed by the company I work for. No need for me to go to the "internet".

I think you need to understand Fees and Commissions. There is a significant difference if you have every worked with or needed a lawyer. Commissions may be capped but that's a small part of the fee structure for a typical agent/client relationship. "Commissions" for the Tobacco class action law suit were capped at 2% by the government. Fees were not and amounted to 9.8% of a multi billion dollar settlement. Nearly 12% and that was just the lead counsel. There were a couple hundred groups under them that got similar "fees" on the pass through settlements.

If you don't think wealthy individuals pay fees for investment advice, real estate advice, business development advice, endorsement advice, tax advice and insurance advice then how to the people that provide those services make their living? The best advice/counsel in each category isn't "capped".. that's for sure. Sports agent companies specialize in being a "turn key" for all of these services for their clients in this as well.

As I said, there are a number of very well done statistical studies that show the 1%ers in this country pay between 12 and 15% overall to stay that way and typically they have a single source to arrange it all for them. The same "clearinghouse" approach (and a lot of the same people) are involved in Sports representation.

Most of these "broke" former players got that way by not understanding how this works. Read up on Iverson's and Walker's post career "investments" and see who made what. Iverson was "investing" for years and paying "fees" upwards of 25% to get into exclusive investments. His agent's company was the one who had the "investment subsidiary" that arranged it. Sometimes the "investments" are in crony groups with the Agents and they get kickbacks as well for getting capital for a very risky project development. Donald Sterling's inner city development that flopped in LA in the mid 90's had a lot of NBA and NFL money in them through the agents that he worked with. Most of these players have no idea what's going on either until the checks bounce. It's Pro Sports dirty secret.

 

I dunno, I'm really iffy on the concept of outsourcing the management of my money to other people. That seems like a recipe for getting hustled.

 

Bernie Madoff.

He took half of Hollywood with him. Will Farrell was said to have lost over 20 Million alone. For a lot of rich people being rich isn't what they do. They get others to take care of that and you are exactly right... I'm iffy on it too and was a mid-level quant analyst for Numeric Investors in the 90's.

There is no system that can stop someone from being stupid with their money. Quite the opposite, there are entire industries based on separating you from your money. The more you have the more susceptible you are to them.

 

J.R. Smith: Josh, what do you think I should do?
Josh Smith: J.R., you're pretty much effed. Hope you don't have a family.

 

http://www.theplayerstribune.com/josh-smith-clippers/

 

Average household is about 50K. 67% below that number. 10% is about $150,000 and top 1% of households starts at about $520,000 or so if memory serves.

So.... yeah. He's actually more than 10 times the "low threshold" of the top 1%.

How can anyone be asked to play a game for that?