A $325 Million Deal Still Needs a Plan

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My Sunday Washington Post Business Section column is out. This morning, we look at Giancarlo Stanton’s enormous a 13-year, $325 million contract with the Miami Marlins.

The print version had the full headline A $325 million deal still needs a plan, while the online version was Congratulations! You just signed a $325 million deal. Now what?.

Here’s an excerpt from the column:

“Professional athletes have been going bankrupt with alarming regularity for decades. . . . Shortly after they retire, nearly four of five NFL players are bankrupt or under financial stress, according to Sports Illustrated. . . . It’s marginally better in the National Basketball Association, where after retirement nearly two of three players are broke within five years.”

To avoid that fate, Stanton need only do a few things right and avoid the common errors. Before we get to that, let’s drill into the specifics of his contract. That $10 million a year we discussed was an average across the 13 years. In actuality, the contract is “backloaded” — meaning, the richest payouts are in the latter years. According to ESPN, “Stanton’s salaries over those first three seasons will be “only” $6.5 million in 2015, $9 million in 2016 and $14.5 million in 2017.”

So in actuality, Stanton will likely take home about $2.2 million, $3.1 million and $4.9 million over the next three seasons. Objectively, that is still a lot of income, but it sure is a lot less than the $325 million the headlines are trumpeting.

The differences between the headline and take home number is what gets so many young athletes in a fix.”

The rest of the column follows with some common sense advice for athletes.

I like the table the Post used in the dead tree version of the paper:
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click for ginormous version of print edition

baseball salary

 

 

Source:
Congratulations! You just signed a $325 million deal. Now what?
Barry Ritholtz
Washington Post, November 23, 2015
http://wapo.st/1td6w2u

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