Why most boxers go bankrupt?

If you give a young man with a limited education or a person who wasn't very smart, to begin with, a lot of money, he'll likely spend it quickly, not understanding the concept of putting some money away for retirements, or how to win with conservative investments.

I think its a bit better these days, but that could be due to the champions themselves being better educated.

 

Let's be real, the majority of athletes aren't very bright. The dumb jock stereotype exists for a reason.

 

A young guy who is good at a sport, is fit and has the young ladies seeking his attention, is not going to be thinking too much about his life away from the sport, living for the moment.

Regrettably also even if the fighter started to ask the right questions, they were often deflected by their managers and handlers by statements along lines of, "You do the training and fighting and we will deal with everything else".

As long as the active fighter had money to live their exciting lifestyle, they were happy pugilists.

Rocky Marciano liked the dollar, was a poor business man but did not die bankrupt, just he did not trust banks so allegedly he squirrelled away money in 'hidey holes', regrettably he did not inform his family where before his early demise, so there might not be "Gold in them thar hills" but there might be rolls of dollar bills.

 

The thing that boxers can avoid doing which will halve their wealth at the drop of a hat, is to avoid marriage.
You will lose at least half of everything you own once the wife chooses to cash out on a no fault divorce.

The other thing to do is wrap up. If you are like Holyfield and you are paying child support on 12 kids by 10 different baby mommas you will end up broke. Because the courts will not cut you some slack.

Those 2 above are the two most common reasons boxers end up broke despite amassing lots of career earnings.

 

they don't seem to realize that the money will eventually dry up..

 

Leonard says he received the best advice from Ali, who told him, "Get yourself a Jewish lawyer" Leonard did, learned how to keep close tabs on what he earned, and the rest worked itself out.

Foreman has always said the best advice he ever received was being told you can always make a living as a salesman; if you know how to sell, it doesn't matter what the product is and you can apply the skills in a variety of situations. In his case, the grill opened up the doors boxing never could, and gave him greater exposure to the general public; more products/sales opportunities followed. In a sense, he used that sales approach to his fights - reinventing himself as a Gentle Ben kind of guy, vs the scowling monster he was known as during his first run towards the title.

Without knowing more, I'd guess the rest somehow managed to luck into having just the right people around them, giving them support and knowledge without exploiting them. A sadly rare thing -

 

It's certainly possible - like most things, it boils down to the character of the athlete. Ali had a need to be admired, loved, etc, so he spent and gave lavishly to dozens of hangers-on who were only too happy to empty his pockets. Tyson had no need to be loved, but filled whatever void he had in his life/heart with extravagances (how many damn Rolls-Royces does one man ever need?). Holmes, on the other hand, was secure in himself and who he was. His biggest concern was providing a secure future for himself and his family; so he invested wisely, and lives comfortably.

 

I am a trustee for a charity, that holds assets of several million pounds, and I review the accounts regularly. The charity's assets are managed by an accountancy firm, who invests them in low risk gilts. The returns on those gilts are around 13-14% per annum. That is probably what would be possible for a boxer using low risk investments, provided that his assets were sufficient to pay the accountancy firm out of his returns, and still return a net gain.

 

The biggest problem for boxers is that they don’t get a salary. They are self employed. When you are self employed you get nothing when your not working and you have to sort your own tax.

So it works out great when they are on a deal whereby the manager puts them on a Salary that is deducted from a purse. And it works great when somebody reliable is putting away the tax. But even if that is so, those deductions that pay the salary will take up all of the purse or more than the purses until the fighter makes big enough purses. Most fighters are not lucky enough to get beyond this point. Many rated fighters are lucky to clear national minimum wage after tax from boxing. They rely on sponsors or other employment.

When it comes to the champions who do score for huge paydays you have to wonder what is really going on. I wonder if they know what they have to spend. If they understand what net and gross really means. A lot of people outside boxing really don’t. Most people tell you what they earn and include the total before tax. Nobody gets to spend that on anything but tax so you can’t count that as yours. But people do.

I never understood why rich people just don’t buy stuff outright. When somebody gets a windfall they will generally only “put money down” on something and spread the money too far. Once you own something outright it leaves you with less money but it’s yours. You can’t lose it. If the money stops you still have an asset rather than a fraction of a lot of seperate depreciating liabilities.

A rich man once told me he divides everything in his life as either an asset or a liability. An asset makes money and a liability obviously dosnt. If you have too many liabilities and no assets you are in the crapper no matter how much you have coming in. To him it was as simple as that. A house is an asset. A car isn’t. A wife is. An ex wife isn’t. That sort of thing.

I read about some fighters that made fantastic investments and still ended up broke. Freddie Mills owned a street of houses, a good family home and a restaurant. He wound up so broke he committed suicide.

Randy Turpin bought a huge holiday resort. He wound up living with his family in two rooms. Shot himself in the head himself above a transport cafe he rented.

Jake Lamotta at one time owned an apartment building freehold, a boxing arena and a carpark opposite Yankee Stadium with license to sell street food. Yet he wound up with nothing until Scorsese made that film on him.