Early in his National Basketball Assn. career, Jeff Foster, a center for the Indiana Pacers, became acquainted with a man he came to think of as a friend. The man followed the team on road trips and called Foster’s hotel room to invite him for meals. Then one day the man presented Foster with a business opportunity: For just $2 million, the basketball player could be part of a surefire venture to open a bed and breakfast in the verdant Pennsylvania hills. When Foster explained, truthfully, that he didn’t have that kind of money—the Pacers paid him just over $4 million for the first four years of his career, about half of which was gobbled up by taxes, escrow payments, and his agent’s fee—his “friend” was undaunted. He asked Foster to introduce him to an older teammate who had just signed a much more lucrative contract. Foster declined. “And of course,” Foster says, “I never spoke to him again.”
Professional athletes are not generally known for shrewd financial judgment. What was former Notre Dame star player “Rocket” Ismail thinking when he bankrolled a calligraphy business, for example? Did it make sense for ex-NBA guard Latrell Sprewell to turn down a $21 million contract offer late in his career and then buy a yacht? Sports Illustrated estimates that 60 percent of NBA players go broke within five years of retirement and 78 percent of National Football League players “have gone bankrupt or are under financial stress” within two years after they stop playing. (According to NBA Players Assn. spokesman Dan Wasserman, between 6 percent and 8 percent of players end up broke.)
It takes about five seconds to compile a list of once-rich, now-broke sports luminaries: former Boston Celtics All-Star Antoine Walker (gambling habits, huge entourage, multiple luxury cars); New York Jets backup quarterback Mark Brunell (real estate investments in a tanking Florida market); and, perhaps most notoriously, ex-Philadelphia Phillies center fielder Lenny Dykstra (who bought and unsuccessfully tried to flip Wayne Gretzky’s $17 million home, was indicted for bankruptcy fraud, and faces charges of grand theft auto and indecent exposure; Dykstra denies the charges).
Such recklessness typically earns athletes more ridicule than sympathy. And yet for the moment, the ranks of America’s unemployed include pro basketball players: Because of an owner-led lockout, most NBA players, even those under contract, will stop receiving paychecks by the end of October, when the regular season was scheduled to start. Some players are scrambling for backup jobs, with about 15 percent, including standouts such as Deron Williams, signing up to play in overseas leagues in the interim.
For hard-nosed, low-scoring NBA veterans such as Foster, however, hooking up with a foreign team isn’t a viable option. Foster is a free agent, which means he doesn’t know where he’ll be playing next, if at all. At 34, he hasn’t achieved the fame of the league’s stars. Look him up on YouTube (GOOG) and you find this: “Amare Stoudemire dunks Jeff Foster to the ground!” and “Shaquille O’Neal alley-oop dunk over Jeff Foster.” Nonetheless, Foster has played in the NBA for 12 years and earned more than $47 million, and he’s done something extraordinary: He’s saved about three-quarters of his take-home pay. “Jeff’s an example of a pro athlete who’s done it right,” says Doug Raetz, co-founder of True Capital Management, a San Francisco-based wealth management firm that represents Foster and about 150 professional basketball, football, and baseball players.
Foster, who is six-feet-eleven, entered the league with advantages that many of his fellow professional athletes lack. He grew up in an upper-middle-class home—his mother worked as a high school principal in San Antonio, while his father ran a property management company. When he was in 11th grade—the same age as LeBron James when he had his first Sports Illustrated cover—Foster was playing on the junior varsity squad and thinking about becoming a journalist. That focus on another career may ultimately have helped him financially. “In our culture, a top athlete often stops being a student in the seventh grade and the focus is on sports,” says Peter Dunn, a financial adviser who has worked with several Indianapolis Colts players.