Lou Williams made an estimated $85.6 million in 17 years in the NBA. He has seen and experienced everything himself, including how NBA players handle their finances.
The three-time Sixth Man of the Year awardee explained why his peers go broke on the Underground Lounge podcast with Spank Horton. Williams got refreshingly real and honest about the matter.
“I do it like this, you earn $5 million, two and a half for that gone. You got agent fees, probably 50 (thousand) of that gone. You got your dues. A lot of people don’t know we got dues for the NBPA. So everybody put their money into the pot, so you figured you got 450 NBA players, I think the dues is 15 to 20 grand a year.
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Then, you got your personal staff. Financial adviser, so that’s probably 1 percent. Agents at a high number gets 4 percent, but you can negotiate from 1 to 4 (per cent). So before you look up, you probably have $1.5 million… And these mansions that we keep talking about, these mansions and s—, these girlfriends, and these Chanel bags, before you know it, you’re not a millionaire no more.
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I had a week I bought a Ferrari and a Lamborghini in the same week. I rationalized with my financial advisor and he said I can’t legally tell you what to do with your money, but I think that’s not a good decision. And I said, it’s cool, I make a bunch of these s—.
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But, nah, you wanna enjoy some of these stuff, too… That’s how athletes go broke. A lot of people think that you just got a reckless spending habit, it’s not that we got a reckless spending habit, we just got crazy overhead. And once the checks stop, it gets completely different.“
NBA veteran Lou Williams on how athletes go broke
An overhead cost, according to Investopedia, “refers to the ongoing business expenses not directly attributed to creating a product or service.” As Williams explained, the NBPA dues, agent fees, houses, cars, and girlfriends are a part of an NBA player’s lifestyle. He also noted that players with wives simply allowed them to shop without limits while they’re gone on the road to keep them happy.
These are all part of a player’s “overhead” expense. After five years, players will have spent the $8 million they made over four years.
Player Salaries: Now and Then
JJ Redick also spoke along these lines recently. Redick made over $115 million in his career and said it usually takes a second contract for an NBA player to be set for life, especially with how teams pay now.
For instance, the New York Knicks pay Josh Hart an average of $19 million over the next three years. Hart is a solid, but replaceable rotation piece, but hardly a superstar. In comparison, Tracy McGrady’s six-year contract with the Orlando Magic from 2000 to 2006 was only at an average of $13 million. McGrady was the NBA’s scoring champion in 2003 and 2004.
If you earn that much money and still go broke, that’s on you. If you earn less, it’s your job to stretch your finances to fit your situation. After all, not everyone earns millions.
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