Jack Johnson of the Columbus Blue Jackets had to declare bankruptcy last month, despite the fact he’s made almost $21 million during his NHL career, with more to come. It appears Johnson’s implicit trust was one of the main factors in his troubles.
Stephane Robidas has made $25 million during the course of his NHL career, with another $5 million coming to him within the next two years. That’s enough money to set himself, his children and probably his children’s children up for life if he’s responsible with it.
That’s the best part of being a professional athlete. You’re among the best in the world at what you do and you get paid wildly enormous amounts of money to do it. The downside is that in working so hard to become that hockey player, you often become so singularly focused that other areas of your life, like money management, take a back seat. And that opens you up to having others manage your money, which can lead to situations such as the one involving Jack Johnson of the Columbus Blue Jackets. Despite career earnings of almost $21 million, Johnson filed for bankruptcy last month after firing his agent and leaving his finances to his parents.
Given the circumstances, perhaps it’s surprising it doesn’t happen more often.
“I find whenever you start making money, you have lots of friends,” Robidas said. “It’s tough to earn money, but it’s really easy to burn money.”
And the more money you have, the easier it is to watch it burn, or at least have it burn without you knowing about it. According to the excellent report on the Johnson situation by Aaron Portzline of the Columbus Dispatch, Johnson allowed his parents complete access to his finances without any accountability checks. And when he did ask questions about where his money was going, he took the answers at face value.
And that’s what makes this situation so sad is that if you can’t trust the people closest to you, who can you trust? It’s a lesson Johnson appears to have had to learn the hard way. A player such as Eric Lindros did just fine trusting his parents with his affairs. And after so many years of so much sacrifice on the part of parents, it’s easy to see why their children would trust them implicitly with their money. Ray Ferraro can certainly see why.
“If my parents would have asked me for a power of attorney, I would have signed it over in a second,” Ferraro said. “To my mom and dad? I can’t imagine why they would have ever needed one, but I wouldn’t even have thought about it.”
And therein lies the problem for a lot of hockey players, according to Stew Gavin, who played 800 NHL games and is the president of Gavin Management Group. A certified financial planner who entered the world of finance after his career, Gavin does financial planning, tax management and insurance for a number of NHL players. When Dany Heatley lost $10 million and sued his former agent almost three years ago, he turned to Gavin for help.
Gavin said the biggest problem with athletes is they don’t ask the right questions of the right people. Some of them think that all they have to do is concentrate on being the best hockey player they can be. If they do that, they’ll have a long, lucrative career where so much money will be made that losing a little here and there will be inconsequential. As Ferraro said, when you’re a young player in your 20s, you simply assume you’re going to play until you’re 35. It’s amazing how few actually do.
“A lot of the guys I played with, and I include myself in that, we’re way too trusting,” Gavin said. “We often give away that trust blindly. Players are so diligent about their nutrition and their training and if they put even half of the effort of what they need to do to be a great athlete and channel that into the financial side, then they’d be much better off.”
All of this is compounded by the fact that the more money you have, the more you become a target for people who either want to take that money or think they can help you become even richer by investing it in ventures. Almost always, these people stand to gain financially. Some of them are legitimate and others aren’t. And sifting through which are and which aren’t is often beyond the scope of an athlete who has to devote almost all his energies to staying among the best in the world.
“I think that’s why a lot of guys have a hard time trusting people,” said Tampa Bay Lightning defenseman Jason Garrison. “There’s always somebody wanting to meet with you.”
Maple Leafs coach Randy Carlyle didn’t make anywhere near the money today’s players make when he played, but he is in their snack bracket as a coach. The way Carlyle sees it, if you’re making millions of dollars it doesn’t make a lot of sense to put that money into risky ventures.
“I’ve been with TD Bank since 1971 because that’s where the junior hockey club deposited my $50 or $35 a week or whatever it was then,” Carlyle said. “And you build a relationship with them. That’s how I felt.”