How former sport stars invest their money? - August 28, 2016

How former sport stars invest their money?

Wall Street Journal broke the news about the recently retired Kobe Bryant and his $100 million venture capital fund. Other retired superstars are also cautious with their money so they can continue their high life after stopping their sports career. Others are not so good with their wealth…

Kobe Bryant just announced that he will be a part of a “venture-capital fund, a $100 million vehicle for investing in technology and data companies”, wrote WSJ.

The capital firm will be managed by entrepreneur Jeff Stibel. It’s also known that Bryant invested in 13 companies. There are sports websites, several online services and software companies. The most interesting investment might be Alibaba Group Holding’s pre-IPO investment. Alibaba is basically the Amazon of China, making it a huge part of the Asian countries online market.

Not only Kobe Bryant takes care of his finances. His ex-teammate Shaquille O’Neal is himself a successful entrepreneur and investor in several start-ups like Tout Industries a social video service and NRG Esports team. Or as he himself categorized himself on Linkedin in 2014: ‘Owner, A lot of companies’.

The greatest name of them all must be Michael Jordan. Jordan is the first NBA player to reach the mighty $1 billion wealth. He now has major share in the Charlotte Hornets NBA team, and other investments. But he must be most famous for his advertising contracts, and he said to be the one who’s come up with the brand “Air Jordan”. That brand alone generates $1 billion income for Nike.

But not all former stars are good with money - several of them went broke and basically lost hundred millions of dollars with bad decisions. Just to name a few: Scottie Pippen (who was a Jordan teammate at the legendary Chicago Bulls), Allen Iverson, Dennis Rodman (also a former Jordan teammate) all spent their money after retirement. They either did bad investments or didn’t realize that their incomes shrank dramatically after not being a professional anymore. As Sports Illustrated put it in 2009: 78% of former NFL players go bankrupt in 2 years after retirement, and within 5 years the same happens to 60% of NBA players.

If there is one thing we can learn from these examples is that some superstars are talented investors indeed and manage to generate incomes after retirement. But others, even with hundred millions of dollars to spend, can go bankrupt with bad decisions and without proper plans. That is why it’s better to have professional help with our investments and go for safe solutions like diversified investment portfolios no matter how big our wealth is.