ASHBURN — Chris Paul is trying not to get ahead of himself. As a rookie for the Washington Commanders, the offensive lineman understands he has to make the team first and foremost. But standing on a hot field after practice, Paul dreams bigger. The 23-year-old knows the opportunities the NFL can provide, like how he can leverage his platform to fuel his keen interest in music.
Already the investor in a friend’s label, Paul has toyed with the idea of partnering with audio interface or speaker companies down the line. Or he could look to produce more songs under his own R&B-influenced project, The Seventh.
“This allows you to do whatever you want,” he said with a grin.
For whatever off-the-field interests Paul has, he realizes he can’t invest too fast. Paul was drafted in the seventh round, and only $104,448 of his four-year, $3.8 million contract is guaranteed. The average NFL player’s career lasts less than four years, and the lack of financial certainty underscores the harsh truth about professional sports: Money can disappear quickly, and a number of athletes have ended up broke.
In the NFL, players have more to learn than the playbook. That’s why the league mandates financial literacy courses each year as part of an overall player development program. As a result, Paul and other young players are learning the ins and outs of budgeting, building credit, investing and relying on financial advisers. The program takes place in the offseason and over the course of a season.
It can be a lot to take in.
“It’s definitely challenging,” Paul said, “but luckily, so far, it’s really — if you think about it — not something you do on your own.”
Being smart
Malcolm Blacken hates new cars.
To be precise, Mr. Blacken, the Commanders’ senior director of player development, can’t stand the sight of freshly bought luxury vehicles in the team’s parking lot: the Porsches, the Mercedes. The purchases represent everything a young player is not supposed to do. The vehicles, he said, are depreciating assets and athletes often get tired of them in a year or two.
“If there is one thing that makes me crazy,” Mr. Blacken said, “it’s a young guy buying a too-expensive car.”
From April’s draft until June, and at the start of the season in September until late November, Mr. Blacken meets with the Commanders’ younger players once a week to help them adjust to life in the NFL and beyond. Part of that is teaching financial literacy, which involves four classes for rookies and two for second- and third-year players. The executive said he likes to hammer home one point in particular: “You never know how long you play this league, so let’s try to save some money.”
The general rule of thumb, Mr. Blacken said, is for NFL players to have two budgets: one in season and one out of season, when the cash doesn’t come in as steadily. Players are recommended to save 30% to 35% of their income as a baseline, but Mr. Blacken acknowledges that plenty of variables exist. Late-rounders like Paul, for instance, are told to “save every penny” until their futures in the league become more clear. Nearly all first-rounders, by comparison, get fully guaranteed contracts.
The members of a player’s financial team matter.
Athletes now often come into the NFL with their own financial advisers. Like agents, advisers recruit players coming out of college. In other instances, a player’s agent will make a recommendation if their client still needs a financial adviser.
Agent Leigh Steinberg, who represents star quarterback Patrick Mahomes and others, said his firm often provides a list of questions to ask potential advisers. Mr. Steinberg said players should talk with one another about the adviser’s clients, find out how many players the adviser represents and get details about the adviser’s overall plan for handling money.
“The structure, especially in football, is that a guaranteed signing bonus comes in at the beginning of a player’s contract, [and] that check in the case of a high first-rounder can be $24 million,” Mr. Steinberg said. “It puts more pressure on that athlete at an earlier age to get it right.”
Research is required because trusting the wrong person can end poorly.
Schemes, schemes, schemes
Quin Ngoc Rudin and his firm had a plan. Representing nine professional athletes from 2019 to 2020, the Los Angeles-based group filed new and amended tax returns for its clients to score millions of dollars in refunds and for the firm to rake in a 30% fee.
It all worked — until they got caught.
Rudin, now among three from the scheme awaiting sentencing after pleading guilty to wire fraud and conspiracy, is one of the latest cautionary tales of how shady financial advisers try to take advantage of athletes.
The Department of Justice said Rudin lured in players by telling them his firm “could obtain large refunds for the athletes and that he had specialized knowledge that their prior CPAs and tax professionals did not have.” Court documents show at least one of the athletes played for the Commanders. Rudin flew to Leesburg to meet the player, who then “spoke to other professional athletes at their practice facility in the Eastern District of Virginia” about Rudin’s company, Mana Tax Services.
The list of athletes swindled by people who are supposed to protect them is long. In 2018, Peggy Ann Fulford, who falsely represented herself as a Harvard-educated money manager, was sentenced to prison after defrauding former athletes such as Dennis Rodman and Ricky Williams out of millions of dollars. The previous year, former financial adviser Brian Ourand was sentenced for embezzling $1 million from four athletes, including former boxer Mike Tyson and basketball star Glen Rice.
A 2019 study from Ernst & Young shows that professional athletes claimed almost $600 million in fraud-related losses from 2004 to 2018. Given the difficulty in detecting fraud and the reluctance of victims to acknowledge it, “that’s likely not the half of it,” the study found.
Picking a financial adviser is a delicate process. Months before he entered the draft, Paul said, advisers approached him at events like the Senior Bowl and the NFL scouting combine. Paul’s direct messages on social media were flooded with similar inquiries.
What should players stay away from? For one, Mr. Steinberg said, urging a player to sign over power of attorney is an immediate red flag. Mr. Blacken said others try to lure athletes with promises of quick returns, such as turning $10,000 into $20,000.
Mr. Blacken and Mr. Steinberg said players are often approached by people looking for money.
“Everywhere an athlete goes, whether it’s the locker room or the local pub, someone is coming up to them and giving them advice,” Mr. Steinberg said, “and generally telling them that they can do better financially than what they’re doing. Most of that advice is based on fallacies.”
Mr. Blacken said, “You’re dealing with an [athlete] who hasn’t been exposed to a lot of high-level financial gains at this point of his life, and now that he has some means, that’s going to attract certain people.”
Endless opportunities
Although he was recruited, Paul picked an adviser introduced through a family friend.
To feel comfortable with the selection, Paul did his research. The 6-foot-4-inch lineman met the adviser and put her through a background check. As part of the league’s player development program, the NFL Players Association recommends two websites for researching advisers, investors and others for any reports or disclosures.
“Clear reviews,” Paul said. “Obviously.”
Mr. Blacken said he can’t tell players which financial advisers to hire or not hire. The ultimate decisions are left up to the players. Jaguars quarterback Trevor Lawrence and former Rams wide receiver Odell Beckham have ventured into cryptocurrency.
One of his biggest points of emphasis, Mr. Blaken said, is “learning how to say no.” It’s important to have a buffer in place, he said, and a player should always know what his banking account looks like and understand how many people have access to the funds.
“You shouldn’t have to call anybody to know how much money is in the bank,” Mr. Blacken said.
Some have taken the message in stride. Washington tackle Sam Cosmi pays attention to financial summaries and updates from his financial group. The 2021 second-rounder generally notices whenever restaurants and gas stations raise prices. He got mad the other day, he said, when he found out from a friend that chain Raising Cane’s fried chicken now costs $1 more. “Inflation sucks,” he said.
Paul is still learning the ropes. The preseason finale against the Baltimore Ravens on Saturday marks a key chance to solidify his spot on Washington’s 53-man roster. If Paul makes it and goes the entire season without being cut, he will earn $705,000 in Year One.
Paul said a player’s financial approach comes down to personal preferences. So, he is asked: What are those preferences? Does he plan to delegate the financial responsibilities to his adviser? Or will he take a more active role in handling his finances?
“Let’s make the team first,” Paul said, “and then I’ll have some things to tell you.”
• Matthew Paras can be reached at mparas@washingtontimes.com.
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