What can we learn from Michael Vick:
1) Your
loved ones love you for you not for your money.
2) Keep to acceptable hobbies to preserve reputation and financial wellbeing.
3) Have
checks and balances in financial management including background checks for
advisors and regular and independent third party reviews of financial performance.
Michael Vick’s quote from his 60 minutes interview in 2009
when he was asked about his feelings regarding running a dog fighting
ring. There is a psychological
phenomenon called the impostor syndrome.
It causes many talented and successful people to think that their
extraordinary performance is accidental and that they are really a fake. This fuels irrational behavior such as never
washing one’s lucky pair of pants because they are “lucky”. For others it might be procrastinating until
the night before the deadline before beginning the work.
A behavior that might be detrimental to an athlete’s long
term lifestyle would be letting their finances be mismanaged. In Michael Vick’s case it was delegating his
financial affairs to unscrupulous or perhaps simply naïve family and
friends. In addition to allowing them
access to his assets he also maintained multiple homes for them.
There is a breakdown of how his money was spent during his stay
in prison in ESPN’s Magazine article titled “Mike Vick went bankrupt sitting in
prison. How did that happen?” by Rick Reilly. Some of the items were:
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Amount jailed star
quarterback Michael Vick spent from July '06 to July '08, according to recent
bankruptcy papers: $17.7 million.
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Amount he donated to his Mom's church: $327,900.
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Amount Vick was sentenced to pay to house and care for the
47 pit bulls: $928,073.
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Sticker price of the '07 Infiniti Vick bought for his
fiancée to keep in
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Amount Charles Reamon, Jr., a friend Vick put in charge of
his finances while in prison (8 months), went through: over $3 million (unaccounted for)
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Amount
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Amount mysteriously categorized as
"miscellaneous" over two years: $3.5 million.
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Amount Vick took as "cash out": $1,112,664 (there were no ATMs in
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Vick's ongoing cost to support his fiancée, their two
daughters, his brother, his mother, a former girlfriend and his son with her,
per month: $20,000.
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Unfortunate name of the investment firm Vick sunk $245,000 into: Leake.
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Amount Vick still owes banks in
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Total amount listed as "loan payment" over two
years: $33,523.
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Amount of judgment Vick owed his former agent Andrew Joel:
$4.5 million.
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Amount Vick still owed the Atlanta Falcons from his
signing bonus: $3.75 million.
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Amount the NFL attempted to recoup from Vick's bonus
money: $16.25 million.
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Mike Vick sued his former financial advisor, Mary Wong; he
alleged misconduct by her with respect to his bank and retirement
accounts. But acknowledged that he
signed a power of attorney (he claimed he was convinced by her to do so). She was later found guilty and sentenced to
pay back $3 million dollars to her clients and to 63 months in prison. Prosecutors say Wong worked out of her Omaha
It is interesting to note that Mr. Vick only had about $2
million with this investment advisor despite his highly lucrative
career prior to his arrest. And no other
financial professionals were mentioned in the articles about his financial
misadventures. It would be a sad
discovery, if this was Mr. Vick's only savings from the first part of his career.
In 2010 Mr. Vick signed a six year $100 million contract
with the Philadelphia Eagles. He had to
repay his obligations, which were tiered to help the player maintain a
lifestyle during repayment. This contract was restructured in 2013, where now
the maximum Mr. Vick can make is $10 million.
It is critical for him to start planning his long term retirement now.
What can Michael Vick take away from his experiences:
1) Letting
friends manage one's money is not a good idea. See $3.5 million and another $1+ million
withdrawal towards miscellaneous expenses during his stay in prison
2) Questionable
hobbies can end one’s professional career due and damage to their reputation, not
to mention increase legal costs.
3) Mr. Vick does not need to sign a power of attorney, instead an have full
control of his money and chose to agree with investment suggestions of
financial pros he hires. It will also help to have a regular independent review
by unrelated audit professionals.
Reference:
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