“I’m not a predatory lender”: Derek Fisher moves from NBA to player loans | NBA
reerek Fisher started the month defending his credentials as the newly appointed WNBA Los Angeles Sparks head coach. Fisher’s December month continued with the former basketball star denying he was a legal loan shark.
It was revealed last week that the five-time NBA champion and former New York Knicks coach is joining Luxury Asset Capital, a chic boutique lender and pawnshop for loaded but not liquid clients. The company is launching a sports and entertainment division that seeks to appeal to athletes, offering short-term loans of around $ 50,000 to $ 5 million using assets such as contracts, pensions, cars, watches, fine art and jewelry as collateral.
Another former NBA player, Baron Davis, scorned Fisher’s decision to become the company’s executive vice president. “Athletes who go bankrupt… let’s make money with this,” he wrote on Twitter.
With NBA average salary approaches $ 7.5 million and the MLB minimum of $ 545,000 this year, it seems unlikely that leading sportsmen will turn to an industry that usually makes the headlines for the negative effects of predatory lenders offering loans to low-income people at frowning interest rates.
But a 2009 Sports Illustrated article cited some striking statistics: “By the time they retired for two years, 78% of former NFL players have gone bankrupt or are in financial difficulty due to unemployment or divorce. Within five years of retirement, an estimated 60% of former NBA players are broke. Many retired MLB players have similarly been ruined. “
Some cash-strapped players contracted high interest rate loans during the 2011 NFL work stoppage, the Daily reported. Even some of the world’s best known and highest paid athletes have seen ruin, from Mike Tyson to Boris Becker. Fisher, who went through a costly divorce in 2016, said that, like lottery winners, high net worth doesn’t always protect athletes from financial problems. And, he added, the extravagant spending isn’t necessarily to blame.
“A lot of athletes have gone bankrupt because athletes trusted their advisers to manage their money because we’re not experts in it, and a lot of guys have been taken advantage of by their advisers,” Fisher told the Guardian.
“We make that assumption, and for me especially as a man of color, we make this assumption that it’s always related to athletes making bad decisions, driving in Bentleys and jewelry and cars and sometimes assets. and the money disappear for other reasons: the counselor was embezzling money; in a divorce, half of his property, his marital property, is gone. And now life is different and he has to find out how navigate all these moving parts. ”
Premium pawn shops and alternative lenders have grown in popularity in recent years, reaching out to affluent people who find themselves strapped for cash, whether the goal is to make ends meet or fund a business quickly. .
Unsurprisingly, given the ever-increasing wealth and wages in American sports, Luxury Asset Capital is not the only financial company targeting athletes. One of the most important, Of course sport, a Florida-based company founded in 2009, says it offers low-interest unsecured loans to NFL, MLB, NBA, NHL and MLS players, with a loan minimum of $ 25,000 and a maximum of 30% of a player’s guarantee Contract.
Luxury Asset Capital is headquartered in Denver. Its chairman and CEO, Dewey Burke, has denied that its business model is to tackle financially struggling, desperate or naive players. “Our rates are between the low and mid teens. So some of the things that have been reported that we are akin to a payday lender is nonsense. These guys charge 200, 300% APR, ”he said.
“Our clients are high net worth people who by nature always close deals at some point, whether it’s investing in a new business or putting money into their own business or looking for a real estate deal. “, he added.
“We made a deal a few weeks ago for a former NBA player who was looking for a real estate opportunity and also needed cash to help his mom with something she was working on and he’s going to borrow money from us for four months A contract for $ 200,000 It was just between two liquidity events.
Fisher said he had “no interest in being a predatory lender.” He described the outfit as a faster and more flexible alternative to traditional lenders such as banks in certain situations, such as when a player has suddenly been transferred to a team in a new city and must make urgent arrangements for a living.
Top athletes, he said, are no different from “a lot of business people, they don’t even necessarily use their own money, they use other people’s money to activate deals, opportunities, take advantage of certain things, make that money grow… There are very wealthy individuals who, on paper, are extremely rich and have no cash flow because their assets are linked to real estate, to property and jewelry and they might not have the cash flow they need.
Young players are often tempted to emulate the opulent lifestyles of more experienced teammates with higher salaries and more job security, Amobi Okugo said. The 27-year-old defenseman and midfielder, most recently with the Portland Timbers, runs A frugal athlete, a website that promotes financial literacy. “Whether you are a rookie or a sophomore player, the competitive nature of the dressing room makes you want to compete and the only place you should compete is on the pitch,” he said. In terms of expenses, he added, “It doesn’t make sense for me, as a rookie on my first contract, to compete with the star of the team who is on his third contract and has signed a big contract. “
Okugo believes colleges and clubs should do more to teach up-and-coming athletes long-term money management strategies. He is skeptical of the merits of high interest loans that use property and pensions as collateral. “Whenever you have to borrow money, nothing good comes out of it,” he said. “The quick fix. I think that’s why there was a bit of a backlash from the other athletes.