Whether at a horse race or in the stock market, there is no such thing as a sure thing. Investments are always risky; in some cases, that is what makes them so potentially lucrative. Everyone has a hot tip for someone who came into a large or unexpected amount of money, but those tips can cool entire careers.
Professional athletes are particularly susceptible to bad investments or outright fraud, as many on this path to wealth do not initially have the preparation to manage it. A financial strategy firm estimated that over the 13 years up to 2017, U.S. athletes in all sports were relieved of a total of $500 million by fraudsters.
A professional basketball player accused his financial manager or embezzling more than $17 million. A retired basketball star lost $77 million and sued his former advisers for it. An advisor who worked with several players went to federal prison for 10 years over a $6 million fraud.
When fraud is not the issue, ineptitude may be. Investors and entrepreneurs with access to millions from athletes may reap the benefits of a deal without knowing if they are correct or while actively ignoring drawbacks. Sports players may have lost billions on deals that would not have passed a due diligence review.
This is why attorneys are very important when planning large and long-term investments. Legal representation adds an extra layer of protection before investors are committed. The review of a lawyer may save businesspeople from debt and heartache down the road because they leaped too soon at a flawed proposal.
