How Mike Tyson blew his $685 Million boxing fortune!

Ask Bulldog24 when he returns.
His dad flushed 24million down the drain.

 

Financial illiteracy, giving your poverty born entourage an extravagant lifestyle and having the inability to say no to family and friends.

 

WTF ??????

 

Not surprised, most boxers grew up in poverty and have no way of learning too much about handling money, especially getting such large amounts in such a short amount of time, combine that with getting hit on the head for a living and you’ll likely get someone that’s gonna completely blow it all away without even realizing it

 

Yeah IIRC his original management team (Jim Jacobs and Bill Cayton) had set up an annuity that would pay him $500k per year for life (after interest accrued) starting at age 50 or something. The minute he signed with Don King, he cashed in the annuity and I think bought a bunch of jewelry and a sports car.

 

Uh, cocaine, hookers, lawsuits and handouts to hangers-on.

Old story that we've heard before.

 

I'd be happy just to have all the hush money and out of court settlements he threw out.

 

Also don’t take the $685M number at face value. It’s one of the most misunderstood things in boxing.

Say a guy gets a $1M purse.

First, right off the top, he’s losing about 40 percent of that to taxes (federal and, depending on where the bout takes place, state).

Now he’s down to $600K.

Oh, and his management gets generally a third of that (sometimes capped for top earners once they make it to that tier, so let’s say a quarter) — and that is a percentage of the purse (pre-tax), so $250K.

Now we’re at $350K.

Trainer probably gets 5-10 percent, depending on arrangement — again, percentage of the purse (pre-tax), so let’s split the difference and say $75K.

He’s down to $275K but the general public things he netted $1M.

And if he brings an entourage, he’s probably paying for their rooms and food and transportation ... not unreasonable to figure he walks away with 25 percent.

 

It’s sickening

 

That's totally false. There's always a way to learn about handling money, especially if you have a lot of it.

 

I don't think you calculated this correctly.

The purse is 1 million. He pays out 250+75k or 325. 1 million minus 325 is 675. If he pays 40 percent on 675, which is very high end but possible, thats 270.

1 million minus 325 minus 270 is about half a million taken home.

There would be other possible deductions to lower the taxable income even more.

 

I stand corrected on the math but not the principle.

It’s why many boxers have run into tax problems for years. The way they figure it, they owe taxes on their share of the purse. Not the whole, because the manager and trainer get a cut, so they never really see that money to pass it on.

The way Uncle Sam figures it, the payout of the purse to the boxer is a taxable transaction — the IRS wants its cut off the top. The transaction of paying the manger and trainer their cuts are also transactions that are taxed: those people have to pay their share to the IRS out of what they made.

So a boxer with a 33 1/2 percent contract with a manager and a 10 percent contract with a trainer is giving away 43 1/2 percent and keeping 66 1/2, for which he figures he owes taxes off the part he keeps.

You’d think it could be avoided by the promoter paying the boxer his share only and paying the manager and trainer separately, but the promoter doesn’t employ the services of the manager or trainer — they work for the boxer. For legal reasons they don’t want to/can’t get involved in that because what if the boxer changes managers and/or trainers after signing for the fight — then the promoter would be obligated to pay each pair.

There are ways for boxers to set themselves up as corporations and other ‘tax shelters/dodges’ but in most cases the manager and trainer are boxing people and they aren’t any more sophisticated in these things than the boxer is. (An exception would be Mike Trainer, who repped Sugar Ray Leonard while Angelo Dundee was titled as manager, Trainer did the management functions of negotiating and setting up deals using his expertise as an attorney. But that’s fairly rare.)

Now some boxers hire an accountant to handle this, and in many cases we know the accountant is crooked (maybe he was a friend of a friend or something) and gets power of attorney and one day the boxer finds out his accounts have been drained and the accountant ran off with it. You can sue to try to recover, of course, or file criminal charges, but if the accountant took the money he probably either spent it or parked it in an offshore account at a bank in a country like Switzerland or the Cayman Islands that don’t cooperate with such things and have laws that allow them to say ‘sorry, you cannot see those bank records nor touch the money in those accounts.’ (Which is why drug kingpins use those banks, so their cash stash is protected no matter what.)

TL/DL: It’s complicated.

 

I'm basically paid the same way. The boxer only pays taxes on the 66 percent, if that. Training, manager, travel, hotels and a lot of other stuff lower the taxable income. Nevada has no state income tax as far as I know.

But that's beside the point. If you spend all of the money before paying the taxes, you have the same problem no matter how good your accounting is.

 

Eubank.