At the risk of going out on the proverbial limb, I’m going to make a bold statement:  We have a serious issue emerging in sports world, and it’s called retirement preparedness.   Statistics show that 60% of NBA players are broke five years after their playing days are over.  So, why are athletes so unprepared?  Of course, the recent market downturn is playing an enormous role.  But the truth is, players could be more prepared had they a better understanding of today’s changing retirement landscape and the unprecedented challenges it poses.

With the future solvency of Social Security uncertain and traditional pensions becoming a luxury of the past, the burden of financing retirement shifts squarely to the shoulders of individuals.  Adding to this burden are three financial risks that make retiring today more challenging than ever.

Challenge #1: We’re Living Longer

An athlete must realize life doesn’t end at 40, 45, or 50 years old.  This means that they could be preparing for retirement that lasts at least 30 years or more.  Somehow, one needs to fund this “newly extended” retirement.   They’ll need an income source that can help reconcile the notion of longer life with quality of life.

Challenge #2: Rising Costs

When referring to costs of living, the old adage, “what goes up, must goes down,” is generally not a good rule of thumb.  Expenses in retirement will tend to keep rising, which means an athlete will need a well-conceived retirement income plan to help account for these increases.  Even at a relatively modest rate of 3%, inflation can diminish one’s purchasing power considerably over time.

Challenge #3: Market Uncertainty

The last few years have been a sobering reminder of how short-term volatility can affect retirement portfolios.  Volatility poses one of the biggest threats to one’s retirement savings because a downturn just before or after retirement can be devastating to one’s portfolio.  It can literally takes years to recover from losses; precious time one may not have.

It’s important to find a licensed financial professional who will work with the athlete to create an income plan that meets their needs and goals.  Armed with knowledge, foresight and the guidance of a reputable advisor, the athlete can address today’s retirement challenges and work toward securing a more comfortable and rewarding future.

Disclosures.  The information contained herein is neither an offer to sell nor a solicitation of an offer to buy any security.  Past performance is not a guarantee of future results.  Further, the information herein is intended solely to provide general information and does not constitute a promotion of any offerings or products.  Donald J. Kushner is an independent financial advisor with Arque Capital, Ltd., and does business as DK Sports Financial.  Arque Capital, Ltd., and DK Sports Financial are unrelated entities.  Securities offered through Arque Capital, Ltd.  7501 E. McCormick Parkway, Suite 111 North Court, Scottsdale, AZ 85258.  (602) 971-9000.  Member FINRA/SIPC.  Any unauthorized reproduction of this information is strictly prohibited.

The Biggest Challenge For Athletes Retiring: Being Unaware Of The Challenges from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

When: July 10-13, 2011

Where: Georgia Tech-Bill Moore Student Success Center (219 Uncle Heine Way) in Atlanta, GA

The Franchise Summit is an educational event built to introduce the professional athlete to the basic architecture that supports the franchise industry.  The two-day classroom curriculum is crafted by the best and brightest in the franchise industry to guide students through the ins and outs of franchising. The Summit is supported by the involvement of  franchisors, sports agents, associations and business advisors with a clear understanding of the Professional Athlete Franchise Initiative’s (PAFI) mission of tooling the professional athlete for transition.  Overall, the PAFI Franchise Summit is a chance for the professional athlete to learn about, build relationships within and position him or herself for second career success in the trillion dollar franchise industry.

Topics:

• Why should I consider Franchising?
• How do I Evaluate a Franchise Opportunity?
• How do I avoid Common Pitfalls?

Cost: Free to professional athletes (register here).

Contact Info: Interested parties, including agents wanting to partner with the program as a second career resource, can call 404.287.0192 or email admin@thepafi.org.

Professional Athlete Franchise Summit 2011 from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Raymond Lee Savage Jr.

Savage had once plead not guilty to both charges for which he was accused: 1) Not registering as an athlete-agent in Alabama (felony); and 2) Initiating contact with a student-athlete (misdemeanor).  The state of Alabama dropped the misdemeanor charge, but the felony charge remained.

When Savage failed to appear in court for a reduced charge on the felony count, a judge issued a writ of arrest.  In response, Savage explained could not leave his home in Virginia due to health problems.  The judge did not buy it, and Alabama’s Assistant Attorney General Don Valeska was very displeased.  Valeska is not one to mess with.  In the past, he has said,

“At the appropriate time, one of these agents is going to go to jail because of a felony, but this one [Savage Jr.] we didn’t feel was the case based on the facts,” Valeska said. “We want the message to go out that nobody comes to Alabama without following the law and talks to college athletes about going pro.”

Mike Trope, author of Necessary Roughness and former NFLPA agent has a quote that I always think about whenever I write about Alabama, and he happened to say it in reference to the Savage case – “[Don't] ever represent any player that is a resident or goes to school in the state of Alabama. I am not an agent anymore, but I wouldn’t do it.”  Anyone who is not licensed as an athlete agent in Alabama and is currently recruiting student-athletes based in that state needs to remind themselves that they are putting their freedom at risk based on their actions.

Raymond Savage Jr. Is Going To Jail In Tuscaloosa County, Alabama from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Tomorrow, February 4th, many people in Dallas, TX will attend the Dallas Superbash 2011 Super Bowl Party hosted by Pamela Anderson.  The party is presented by NFL agency, Willis & Woy Sports Group, LLC.  While there will be plenty of partying and celebrating on site, when the event is over, Jordan Woy and Chad Willis will go back to negotiating contracts and securing sponsorships for their clients.  They will also focus on building their program titled, Life Beyond Football.

Life Beyond Football is a program that was developed to help football players make a successful transition from playing professionally to performing well in business off of the field.  A large component of Life Beyond Football is networking retreats, which allows football players to meet successful business professionals in a relaxed environment.

It is great to see an agency take an active role in the future success of its clients.  Many agents could care less about their clients after they retire from the sports they play, as the agents are not likely to earn any commissions at that point in time.  It is a very selfish attitude that unfortunately persists amongst many in the business.  We all know about the 80% of NFL players who are divorced, bankrupt, or out of work within 2 years of hanging up their cleats.  Agencies should follow the lead of Willis & Woy and do their best to aid their clients for life.

Willis & Woy Care About Life Beyond Football from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Real Madrid Sign Referee from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

I like my clients to know that I will be there for them now, when they are professionals in their most learned and skilled trade, and later in life, when they venture into new business opportunities.  It seems like Doug Glanville would have benefited from having someone like me upon his retirement.  His Op-Ed piece in the New York Times linked above tells the story of a millionaire (most baseball players never even make it out of the Minors to make anywhere near that kind of money), who still struggled after retiring from baseball.  He writes:

Many of my former teammates and opponents were shaken to their core by [Steve] McNair’s death; it hit home for every one of them. There’s nothing to fill that void of competing every single day at the highest level.

According to [Eddie] George, McNair was lost, floating around trying to define himself without the pads, seeking solace in relationships outside his marriage. George remarked, “What people fail to realize is that when you make a transition away from the game — emotionally, physically, mentally, spiritually — you go through something. You change, and you’re constantly searching for something.” Who will understand that a transitioning athlete needs help? There are few soft landings when you’ve been flying high.

Not many people can understand.  His teammates can, but they are busy playing or are going through the same thing.  His family can, but many players have stressful familial relationships because they are always on the road away from home.  What about the agent that the player has relied on throughout his professional baseball career?

This should also serve as a lesson to baseball players: Don’t go through 10 different agents before you decide to call it quits.  Develop a strong relationship with one agent, and try to stick with him.  He will go to bat for you after retirement.  If you keep switching agents throughout your career, which one of the many will actually care about you afterward?  Probably none of them.

It would seem that it is in everyone’s best interest to do a better job of supporting these players after their careers. They still have a place in the memories of a generation of fans and can be powerful mentoring influences.

Are enough agents recognizing this?

Transitioning Athletes Need Help from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Players that are accepted to the program partake in a three-month, paid internship gaining experience in areas like communications, membership services, legal, and information systems.  Sports marketing internships are also available through the union’s marketing and licensing arm, NFL PLAYERS.  The pros must go through the same application process that students normally go through to get internships, by submitting an application, resume, cover letter, getting recommendations, submitting a writing sample, and a providing a transcript.  The only qualification…candidates must have played at least one full season in the NFL and/or AFL.  Tom DePaso, current Associate General Counsel and a Regional Director at the NFLPA and former NFL linebacker, participated in the internship back in 1984.  Being his first off-the-field work experience, DePaso said that “I would not be where I am today without having had that experience.”

The internship program isn’t the only way that the NFLPA helps out retired players.  The union holds a career opportunity expo as part of the NFLPA Retired Players Convention in Palm Springs.  The most recent one had eight employers in attendance, including New York Life Insurance Company, Prudential, and The Corporate Playbook.  Retired players can network and find out about employment opportunities from the companies in attendance, as well as have on-site interviews in private areas the expo has provided.  This year’s expo marks the fifth year that this aspect of the convention has been held.

In addition to setting up conferences like the career opportunity expo, the union set up a NFL Player Job Board in 2008 as a resource for retired players to find jobs with employers specifically interested in hiring former professional football players.  New Executive Director DeMaurice Smith has taken a proactive role in aiding former players find jobs.  He recently sent a letter to over 1,000 retired players who own their own companies or work for corporations in Florida, Texas, and California asking for help in finding employment opportunities for other retired players by listing their companies on the job board.  According to the NFLPA website, over 50 retired players have already found jobs using the job board.

While other unions like the MLBPA and NBPA help retired players find post-playing employment, the NFLPA’s efforts are even more necessary as the average career length is about two years shorter.  Retired football players have several options and resources to explore.  Agencies like Darren’s Dynasty Athlete Representation offer post-career guidance for their clients, and players often turn to their agents for help and advice when it comes to finding a new job because they have hopefully formed a trusting relationship over the years.  But the NFLPA’s continuous effort to aid athletes after their playing days are over is a noteworthy action for its players.

Athletes Intern Too from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Agents seem to be doing their jobs, keeping player salaries increasing at similar rates in most sports, but many markets are still taking serious hits. The financial burden placed on some people in many industries has shined the spotlight on “cheaters” in athletics and everywhere else. Steroids and performance enhancing drugs are a huge issue of concern in almost every sport now. The most recent financial meltdown has leaked even further into the sports industry, as athletes are a large portion of the clients who have invested their earnings into larger financial institutions.

And after that grand introduction, I would like to bring to attention the connection and pandemonium that has been kept moderately under wraps between Athletic Resource Management (ARM) and Morgan Keegan Investments.

The facts sounds similar to the troubles Scott Boras and his clients had with Stanford Financial. Boras and his investment relationship with Stanford Financials was a big story that made national news after the Madoff scandal was brought to light. The connection here between Morgan Keegan and one of the greatest sports agents, Jimmie Sexton and his agency ARM, is just as relevant. However, the story has not made national headlines like Boras’s incident and seems to have been given the silent treatment, as Sexton and ARM have done a great job of keeping their names disconnected with Morgan Keegan’s financial plunders. The ability of ARM to shield the public from Sexton’s bad investment decisions is one of the underlying reasons people do not believe that athletes and agents are really taking a hit in this economy. From hiding links connecting agents and financial institutions, to loaning multimillion dollars of client’s money, agents like Boras and Sexton just do a great job of handling the tough situations in the current economy.

Athletic Resource Management was founded in 1985 by Kyle Rote Jr. A Professional soccer player who was once named “Greatest All Around Athlete” of all time by ESPN the magazine. The firm was based in Memphis but had offices, agents and much of its operations and contacts located in Dallas, Texas. ARM represents professional basketball, football, baseball players, and has a broad range of coaches as clients as well. The firm represented athletes such as Scottie Pippen, Clarence Weatherspoon, and Reggie White and currently has a list including Frank Beamer, George Sherril, Matt Cain, Lane Kiffin, Rex Ryan, Jason Witten, Nick Saban, Phillip Rives, and recent draftee Michael Oher. ARM had established a great reputation and was recognized by the Chicago Sun Times as one of the top 12 sports agencies in the country.

On June 1 of 1995 Morgan Keegan Financials Inc. officially announced an agreement purchasing Athletic Resource Management, Inc. Under the agreement, Morgan Keegan purchased the stock shares of ARM, while ARM continued to operate under the Athletic Resource Management name acting as a fully owned subsidiary of Morgan Keegan, Inc. From that day forward, ARM chief executive officer, Kyle Rote Jr., and President James Sexton II joined Morgan Keegan along with five other Memphis-based employees and four employees from their Dallas office, all moving to Memphis, Tennessee.

Although the two were technically separate, the close connection between the two companies is where the trouble started. Clearly, ARM was financially intertwined with Morgan Keegan. ARM and its agents would obviously recommend Morgan Keegan Financials expertise to all of their clients. Many agents and financial advisors advocate keeping the two job positions completely separate. Future agents are told to recommend several different financial agencies/advisors to clients in order to avoid potential liability if the recommended financial advisors don’t work out. In this instance it does not sound like ARM remained unbiased or offered its clients many options for investing.

The close relationship between Morgan Keegan and ARM started with the friendship of Sexton and John Wilfong. Wilfong was the financial advisor who handled most of ARM’s client’s and was best friends with Sexton for years. Apparently, they are not even on speaking terms anymore. He was also the one who originally knew of the athletes’ funds crashing. Mr. Wilfong was out the door at Morgan Keegan the very date the Kiplinger article below hit the stands. He now works for UBS and is no longer on the NFLPA registered financial advisors list.

“For years, bond funds run by Morgan Keegan’s Jim Kelsoe soared. Then, like Icarus, Kelsoe strayed too close to the sun and came crashing back to earth with melting wings… The Morgan Keegan disaster is a reminder that investors need to undertake a bit more investigation than usual when they contemplate buying into a bond fund that has delivered abnormally high returns.. That requires some understanding of the assets the fund holds. In general, you shouldn’t invest in what you don’t understand.”

To say it simply, Morgan Keegan lied and told their clients the funds were long term safe retirement funds, when in reality, they were placed in very high risk security funds. Morgan Keegan’s name was taken off ARM’s site immediately. Jimmy Sexton and ARM separated its alliance from Morgan Keegan in the middle of the night, right under a lot of people’s noses. Many people didn’t even realize Morgan Keegan own ARM in the first place.

The situation and transactions that occurred between Morgan Keegan and ARM affected many of ARM’s NFL clients and even caused a hit to future ARM clients. Among those affected by these actions are Donte Stallworth, Gibril Wilson, Jerome Woods and many more.

Woods was Sexton’s first 1st round draft pick and kept Sexton as his agent throughout his ten year NFL career. Mr. Woods and his wife Dana recently won $950,000 in a case against Morgan Keegan for losing nearly all of Wood’s money he placed with Morgan Keegan for retirement funds after his 2007 NFL retirement. This is a big decision, as many more Morgan Keegan cases involving athlete funds are still left on the dockets. Previous litigation against Morgan Keegan has not resulted in much, if any, of investor funds being awarded.

With the stench of Morgan Keegan still lingering around in the ARM offices, the agency has noticeably seen some top athletes chose their competitors. Rashad Johnson of Alabama was one athlete who fired ARM only a few weeks prior to the draft after seeing that ARM had a lot of clients who were unhappy with ARM at this moment.

In conclusion, this story shows how the two businesses should not be connected so closely. The moment Morgan Keegan purchased Athletic Resource Management, the relationship and cooperation between Morgan Keegan and ARM became too much. This clearly led to pretty much all of ARM clients being affected by Morgan Keegan’s bad investing decisions.

This is sadly another circumstance where an agent is involved in an area where he does not belong.

Morgan Keegan Loses An ARM and A Leg from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Former New York Giants superstar, Michael Strahan, is set to co-star alongside Darryl Mitchell in the new comedy series, “Brothers”, which will debut as part of Fox’s new fall lineup.  Strahan will pretty much be playing himself…a former NFL player.  His character will be moving back into his mother’s home after his NFL career ended.  The show also features Carl Weathers, another former NFL player.  This won’t be the former defensive end’s first television experience.  In April he premiered as the new host of Spike TV’s Pros vs. Joes, and joined the team of the FOX NFL Sunday pregame show before last season.  In the past, he has appeared in commercials for Snickers and Right Guard.  He’s also made guest appearances on Mad Money with Jim Cramer, NBC’s Chuck, and Fox News’ Hannity.  Strahan is represented by Maury Gostfrand of Vision Sports Group, LLC.  The sports management and marketing agency specializes in helping athletes and coaches attain jobs in broadcasting, as well as other television and radio opportunities.  Other VSG clients include Kenny Smith, John Kruk and Hubert Davis.

Here is a clip of Strahan on Conan.

Strahan Forming New Career on Small-Screen from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Read the long and very informative SI piece: How (and Why) Athletes Go Broke

Everyone Wants To Be Like Magic Johnson from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules