Of contracts and conflicts: basic business in the move from the bush league to the pros

Black Enterprise, July, 1995 by Gracian Mack

Pro scouts are casting you as the gridiron's next Galloping Ghost or the hardwood's Hoop Star du Jour. Everyone you meet these days is an agent with the mystical power of getting you the "best dealt contract known to the sportin' life."

Well, hold it right there bucko! Christopher Franklin, a registered investment advisor, warns: "The No. 1 mistake athletes make in moving from amateur to pro is that many don't read and understand the agent/player agreement and, subsequently, the player contract."

The agent interview process is not a game. "It's business," says Franklin from his office at Titan Financial Services in Arlington, Va.

According to Franklin, players who have made it to the "look-see" level can expect an aggressive attack from agents who understand the business as well as from those who don't.

"They are going to wake up in the morning and find a white guy sitting on their mother's front porch. Then they'll go to parties or other social functions and black guys will come up to them with business cards in hand," says Franklin. White or black doesn't matter. "What matters most is respect and finding the most qualified person to represent you," Franklin advises.

Franklin cites four primary areas to consider when you're interviewing agents: Can they get a solid contract? What is their track record (Have they done it before, how long and for whom)? What do you have to pay them? And finally, what do you have in common?

"If you don't address these things at the first step, you're going to come up short at the end of the road," he says.

Okay. You've found your agent and talked to team management and inked the deal. Now you're getting paid more than you ever dreamed. But without the same careful planning and effective execution that you apply to your game, you could lose it all.

Octavius "Ted" Reid III, associate vice president of investments at Dean Witter Reynolds, says financial mistakes commonly made by newly affluent athletes include spending money on depreciating assets, such as cars, or putting all their money in illiquid investments, such as real estate.

The best way to educate a client, says Reid, is to point out the mistakes of others. Among the horror stories is J.R. Richard, one of baseball's dominant pitchers of the '70s, who was found homeless under a freeway in 1993. Heavyweight boxer Joe Louis who, along with track and field great Jesse Owens gave a stunning blow to Adolf Hitler's perception of the superiority of the Aryan race, became an official greeter (doorman) at Caesar's Palace in Las Vegas. And former L.A. Rams cornerback Leroy Irvin, who in 1980 had a contract worth $45,000 a year. Married with three children, he found that 84% of this total went to taxes, his agent and a new car for his mother. After injury ended his football career, he unsuccessfully tried his hand at a myriad of enterprises, including a failed Los Angeles gas station.

"Typically, people go to college and decide on a career that they are going to have for the next 40 to 45 years," says Reid. But as a 23-year-old athlete, your career and earning power could be over at 24. In your 20s, you should plan as if retirement were right around the corner, he advises. "It's difficult, but at 23 you have to think about where you're going to be at 33 and where the money is going to come from."

"The best way to come out on top is to stay away from the risky stuff and go for safety and growth," says Franklin.

After all, you've beaten the odds and made it to the show. You take a risk every time you do what you do. Intelligent financial planning will make sure you get paid.