By Teresa Ambord
Ex-NFL wide receiver Terrell Owens serves as a cautionary tale his fellow players would do well to heed. He joins a long line of top-earning sports figures who blew through their wealth quickly and ended up broke. Owens once had an impressive record for catching passes, but in private life, he let nearly $70 million dollars slip through his fingers. According to Sports Illustrated (SI), this is part of a "financial pandemic" that plagues a lot of top-earning athletes, especially in the NFL. "By the time they have been retired for two years, 78 percent of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce," said SI reporter Pablo Torres.
For Owens, the problems didn't wait for retirement. Now, with very little income and mind-boggling child support to pay, Owens is also up against another intimidating opponent. In February, the IRS filed a lien against him for more than $438,000, going back several years. Here's a breakdown of what he owes:
- $294,661.71 for 2005
- $46,504.00 for 2007
- $97,747.81 for 2009
What Went Wrong?
It's a long story. Today Owens is a free agent. But in 1996 he played for the San Francisco 49ers, 'till a scuffle with the front office got him traded to the Philadelphia Eagles in 2004. Two years later he became a Dallas Cowboy, and in early 2009, he was given an unconditional release. He played next for the Buffalo Bills and then the Cincinnati Bengals.
In 2011, he told a judge that in spite of earning $68.7 million in the previous eleven years, he was broke. Between child support to four women and mortgage payments on their four homes, he's on the hook for $125,000 a month – before he pays a dime of his own support. Meanwhile, his own Georgia home is in foreclosure. But Owens' problems go deeper than his parental responsibilities. His is a common complaint among sports stars who lose their fortunes: "I trusted the wrong guy."
It's not unusual for a young athlete with a fat paycheck and no financial sophistication to rely on family or friends or to end up hiring an unscrupulous manager. According to the NFL Players Association, between 1999 and 2002, at least seventy-eight NFL players lost a total of more than $42 million because they "trusted money to financial advisors with questionable backgrounds." Owens is among them.
Now he's suing his former advisor, Jeff Rubin, who was once considered this country's most prominent football-specific financial adviser. In January, Owens took Rubin and his firm, Pro Sports Financial (PSF) to court to face a long list of claims of financial mismanagement.
Among other things, Owens points to $2 million that he lost when Rubin advised him and others to invest in an Alabama casino. Not only was the casino already under a debt of $41 million at the time Rubin recommended the investment, it was also operating electronic bingo games that were illegal in Alabama. Ultimately it lost another $43.5 million. Of that, $25 million was NFL player money, including $2 million belonging to Owens.
Owens also asserts that PSF and Florida-based Bank Atlantic opened an account without his knowledge, forged his signature, took "numerous unusual and extraordinary withdrawals" from his account, and made unauthorized loans and transfers with his money.
This isn't Rubin's first brush with authorities over unscrupulous management. Arbitration documents show he's been accused on previous occasions of "shuffling" client money without authorization and falsifying insurance documents, according to Yahoo! Sports. After conducting its own investigation, Yahoo! Sports reported that Rubin had a tight – and troublesome – relationship with NFL agent Drew Rosenhaus. The two men had twenty-six player clients in common, many of whom were part of a group that lost millions in the Alabama casino project.
Jeff Rubin Won't Get Off Easy
On March 8, 2013, Financial Industry Regulatory Authority (FINRA), Wall Street's self-funded overseer, said in a statement that Rubin has been barred by the securities industry because more than thirty NFL players, including Owens, collectively lost tens of millions in an Alabama casino project.
Brad Bennett, head of enforcement for FINRA said, "This case demonstrates how broker misconduct can target high-income, inexperienced, and vulnerable investors. Jeffrey Rubin took advantage of professional athletes who placed their trust in him." Rubin didn't admit to FINRA's charge but agreed to the ban.
What Now for Owens?
After earning tens of millions just a few years ago, last summer Owens played a short preseason stint for the Seahawks, for which he made $4,343. His career has been riddled with contention, making him a bit of a pariah who can't get hired. Detractors say he'll do anything for a buck, because now his bridges are burned and his choices limited.
He told reporters, "Some of this is my fault because I had ultimate responsibility for my finances. As a player without much understanding of the financial realm, we're easy prey. . . . How do you decipher who's good and who's bad? For someone to work as hard for their money as we do, to have it taken away by people we trust, who we find out later had other motives, it's a sick feeling."
What Athletes Need to Know
CPA Robert Raiola – who heads the Sports & Entertainment Group for the New Jersey-based accounting firm of Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC – says a major problem he sees with wealthy athletes like Owens is a lack of planning. He tries to steer his athlete clients to be realistic and live within their means. Often they're "highly competitive, highly confident, and highly compensated, and they almost believe they are invincible." What they fail to realize, said Raiola, is that "sports careers are generally short lived, so athletes must plan for what they want to do after they retire. I often use a cliché: a failure to plan, is a plan to fail."
Another bit of hard truth Raiola wishes wealthy athletes knew is this: It's rarely a good idea for them to trust their assets to the care of family and friends. It's not so much a question of honesty as it is ability. Finances and income tax are complex issues that require professional guidance. The news is full of examples of famous people who made and then quickly lost fortunes, usually due to profligate spending, a lack of planning, and amateur or dishonest management.
Properly managed, the salary of a star athlete can last a lifetime. Or . . . you can put Uncle Harry on the payroll, have a short-lived heyday of riches, and end up flat broke in a few years or less.