One of the world’s most successful investors, Warren Buffett of Berkshire Hathaway, sent baseball legend Alex Rodriguez a gift via the media. Warren Buffett lauded Alex Rodriguez’s business sense . That could mean great things for A-Rod.
It’s also highly unusual for an athlete to have great business instincts.
While professional athletes make tens of millions of dollars, one would think they would have a staff of wealth managers watching out for them. Careers are short in pro sports, so all that money needs to last a lifetime.
Instead, Alex Rodriguez is an exception to a sad rule: most athletes end up in really poor financial condition.
In fact, 60 percent of NBA players go belly-up within just five years after retirement. It’s worse in the NFL, where a heartbreaking 78 percent of players end up in financial distress a mere two years after hanging up the cleats.
Warren Buffett knows this and told Sports Illustrated why it happens:
“Most athletes get gamed. They’re pigeons, basically. They don’t have a nose for smelling out the people that are promoters rather than true friends. I don’t know if the term is used anymore, but we used to call them jock-sniffers. They promote partnerships, the young kid is getting checks like he never dreamt of before. Sometimes even their agents may be in cahoots. That has not happened to Alex, and it wouldn’t happen to Alex. He’s got a bull—- detector that’s pretty d— good.”
That has to come as high praise for Alex Rodriguez. He started A-Rod Corp in 2003, which has holdings in real estate, sports and wellness, media and – most importantly – a limited number of private equity investments.
When managed responsibly, athletes can not only live a life of luxury but invest money wisely into a long-term diversified portfolio and live on it forever. That includes avoiding foolish investments like bitcoin, and not investing in shoe companies like Shaquille O’Neal.
Wealth manager extraordinaire Ed Butowsky has made it his mission to help athletes stay rolling in the dough, holding financial boot camps and inviting former pro athletes to speak.
Butowsky said :
“I had someone about three years ago, he called me, and said, ‘I want to come in and talk about my portfolio’. This man had made about $70 million in his baseball career. He walked in. I saw he had nothing in his hands. I said, ‘You told me you wanted to bring in your portfolio for me to look at’. He said, ‘I have. I have nothing’.
A-Rod reportedly earned $600 million during his time in the major leagues.