This happens a lot in sports.
Not as much in basketball as in football, but it still happens to the point, you always cringe a little bit when you see the exorbitant amount of spending some players do on a daily basis.
It isn’t our money, so it isn’t for us to tell them what to do with it, but just another cautionary tale.
Former NBA No. 1 draft pick Joe Smith earned $61 million over his 16-year career. Today, he’s living paycheck-to-paycheck and owes $157,000.
“A lot of people think once you sign that contract, you’re just an automatic millionaire,” Smith tells former MLB star and businessman Alex Rodriguez on CNBC’s “Back in the Game, ” in which Rodriguez helps former pro athletes get back on solid financial footing.
“But it doesn’t work like that. Nobody really explained that and broke that down to me, that Uncle Sam, out of that $3 million, Uncle Sam is going to take probably $1.5 [million] of that. That was just something I had to learn.”
While Smith collected $61 million in total earnings, after taxes, agent fees and management fees, he actually took home about $18 million over the course of his career.
Every time he was traded and moved, he bought a place to live in his new city. “Once I got traded, it was always tough to unload those homes,” he tells Rodriguez. “I was always losing money.”
Plus, his car collection included a Corvette, Bentley and two Range Rovers, among other luxury vehicles.
Thanks to reckless spending, bad investments and a costly divorce, Smith found that his fortune had been completely wiped out. And his salary, which was never less than $1.3 million a year while he was in the NBA, plummeted after he retired in 2011 and switched to coaching 10-to-15 hours a week.
Flip the page for video of Alex Rodriguez helping Smith get out of debt.