Are often parted.
Connie Loizos at peHUB on Monday highlighted a compelling piece of reporting by Sports Illustrated on the travails of professional athletes and their finances:
Did you know that by the time they’ve been retired from football for two years, a staggering 78 percent of NFL players are broke or nearing bankruptcy? How about that 60 percent of NBA players find themselves in the same position within five years of leaving the game?
Those stats, and a host of others, are extracted from SI’s 6,000 word paean to sportsmen and women who have made less-than-wise investment decisions - like trusting their money to Sir Allen Stanford, as pitchers Mike Pelfrey of the Mets and Scott Eyre of the Phillies discovered to their cost.
But as the Sports Illustrated story makes clear, Sir Allen wasn’t the only financier offering athletes returns that seemed too good to be true:
In fact, according to the NFL Players Association, at least 78 players lost a total of more than $42 million between 1999 and 2002 because they trusted money to financial advisers with questionable backgrounds. In this rogues’ gallery Robert Allen Stanford looks almost presidential-and shows that even when athletes trust financiers of high repute, things can go disastrously wrong. The dubious advisers included Luigi DiFonzo-a former felon who claimed he was an Italian count and defrauded players such as Hall of Fame running back Eric Dickerson before committing suicide in August 2000-and disgraced agent William (Tank) Black, who built a pyramid scheme that took a total of about $15 million from at least a dozen players, including Patriots running back Fred Taylor.
Just last May, Atlanta hedge fund manager Kirk Wright was convicted on 47 counts of fraud and money laundering in a scheme involving more than $150 million. His client list included at least eight NFL players; former safeties Blaine Bishop (who lost $4 million, according to court documents) and Steve Atwater (who lost $2.7 million) had recruited former Broncos stars Terrell Davis and Rod Smith to Wright’s firm, unwittingly making them victims too.
The story also delves into the background of Triton Financial, an investment firm in Austin which claims, according to an email seen by the magazine, to be “averaging 32 per cent annualised return on its investments within the past five years.”
That claim also pops up in a story on KVUE.com, the website for a major news station in Austin, Texas. The station also aired a two-minute special on ‘alternative investing’ which featured Triton.
According to KVUE,
[Triton] started in 2002 [and] has seen a 20-percent increase in clients in just that past several months, mainly because of the credit crisis. “We feel kind of bad because everybody’s suffering so much out there and this is absolutely the best time for us” said Barton.
Triton Financial specializes in private equity and real estate. They buy properties under market value then they refurbish them.
But as SI points out,
commercial real estate returns across the United States are now at -9.22 percent over the last five years and -32.75 percent so far in 2009, according to the National Association of Real Estate Investment Trusts.
Alongside folksy Texans, Triton aggressively targeted athletes, through high-level sponsorship deals and a designated “athlete services team” fronted by Ty Detmer, who the firm describes as “one of the greatest college quarterbacks of all time” and assisted by former quarterback Jeff Blake.
But while the firm may have a stellar roster of (former) athletes on its payroll, its financial statements are less convincing:
[Triton CEO Kurt] Barton said that the firm had registered with the SEC “roughly six months ago, around October” and now has “about $300 million” in assets under management (or AUM). Likewise, Triton’s Web site claims that the firm is on “an aggressive growth path with a goal of $500 million in assets under management within the next three years.” Barton also said that Triton already had “over $100 million” in AUM two years ago.
But [chif compliance officer David] Tuckfield, who actually files the firm’s government forms, told SI that Triton is, in fact, still registered only with the state of Texas, and not with the SEC, because the firm has not yet reached the necessary threshold of $25 million in AUM, which legally allows them to do so.
Moreover,
[Senior management] all echoed the Triton Web site and said that the company not only invests in real estate but manages the securities portfolios of athletes and other clients.
Yet, on the section titled “Assets Under Management” (Item 5, Part F) of their current registration form with the state of Texas (known as the Form ADV), Triton answered “no” when asked whether it provides “continuous and regular supervisory or management services to securities portfolios” (either discretionary or non-discretionary)
Caveat, er, athlete.
Related links:
Sports Illustrated Swimsuit Issue Archive - SI.com
Stumped: the stars signed to Stanford - The Sydney Morning Herald
Madoff’s latest victims: Kevin Bacon and Kyra Sedgwick - NYmag.com
Investing for kicks - The Economist
