By now, you’re probably aware that many professional athletes go broke after their playing days are over. You may assume that this is because they blow all of it on exorbitant purchases and poor money management, and you’d be partially correct in thinking that, but the real killer for these people is poor investments.
Today’s example? John Elway. Darren Rovell at ESPN posted an article yesterday entitled, How John Elway Missed Out On A Fortune, that looked at how the man stupidly passed on a chance to purchase 10% of the Broncos for $15 million. But the deal of a lifetime didn’t end there:
[Pat] Bowlen would also give him the option to buy another 10 percent of the franchise by forgoing the deferred salary Bowlen owed him on the condition Elway would become a special assistant to Bowlen, which would eventually lead to a COO job. That total deferred salary? About $21 million.
So you give up some money you’re owed, get ANOTHER 10% of the team and can eventually become a COO? Yea, sign me up. The deal got better, though.
But there was even more that made the deal a no-lose proposition. If Elway wasn’t happy with his investment, he could sell back his interest, two to five years later, for $5 million more than his original purchase price plus 8 percent interest a year. Since the Broncos weren’t making cash calls, it was essentially free money.
DUDE. Bowlen and company wanted John around BADLY. So badly that Elway would also have right of first refusal to buy any other percentage of the team if the Bowlen’s put it up for sale. Hehehehe, oh John.
Now you might be thinking, “So he passed on an admittedly great deal. It’s not like he then blew that money on dumb shit.” Well, before we get to that, let me tell you that you’re wrong and you should feel bad. Now that that’s out of the way, what DID Elway spend that money on?
- he and his business partner took the $15 MM that could’ve bought 10% of the Broncos and invested in a Ponzi scheme. MONEY=GONE
- he and his coach Mike Shanahan invested in something called Laundromax which was supposed to be the Blockbuster of laundry centers, whatever that means. MONEY=GONE
- he spent $500k investing in a company called Quepasa, their stock soon dropped from $27 to $1 and he sold much of his shares at a loss. MONEY=GONE
- do you remember MVP.com? Lol. MONEY=GONE
Now, Elway would end up testifying in court that he passed on the deal because he didn’t see himself as part of management. Two things about that:
- that 20% stake he could’ve purchased is now worth $388 million. Yea go ahead and read that number again. You can get past not wanting to be a part of-wait what’s that?
- HE’S CURRENTLY A PART OF BRONCOS MANAGEMENT. Dude is currently the Executive VP of Football Operations for the Denver Broncos.
I once saw John Elway at a hotel in Fremont, CA throwing back cocktails with some sports reporters reminiscing about the old days. It was quite a scene, old reporters talking to a former player. They should’ve been talking to a current owner.