The Financial Follies of Professional Athletes
(Bloomberg Opinion) -- Dave Butler, this week's guest on Masters in Business, is an ex-athlete. He's also co-chief executive officer and head of Global Financial Advisor Services for Dimensional Fund Advisors, which manages about $600 billion. So he's in a great position to understand the financial mistakes that too many professional athletes make.
Butler discussed some of the reasons that so many professional athletes who make huge salaries end up broke or even bankrupt. The mindset of many elite young athletes is that the good times will never stop. It is always a surprise when they learn that they are not invincible and that their money will not last forever. He suggests that leagues like the National Basketball Association establish trusts for athletes that are held for them until they are 25 years old.
Butler was a star college basketball player for University of California, Berkeley, before being drafted by the Boston Celtics. (His brother played for the New York Knicks as well). He expected to be a pro player before an injury ended his career. He went back to Berkeley to finish his MBA, and started a career in finance.
Next week, we chat with John Carreyrou, two-time Pulitzer Prize winner, and author of "Bad Blood: Secrets and Lies in a Silicon Valley Startup" about blood-testing company Theranos Inc.
Barry Ritholtz is a Bloomberg Opinion columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He is the author of “Bailout Nation.”
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