STEVE INSKEEP, host:
Now let's turn to some young people who don't have to worry about pinching pennies - high-profile professional athletes. Many become overnight millionaires but they have no experience or training in how to handle the money. Expensive tastes and unwise investments can quickly make those millions disappear. NPR's Mike Pesca has our report.
MIKE PESCA: It kind of seems impossible that an athlete making five, 10 or in one case 90 million dollars over a career could lose all his money. Well, you know who else thinks it's impossible? The athletes themselves.
Mr. SCOTT BERCU (Accountant): They see this like, like infinite, like it doesn't end and you can't spend it all. But if you get $5 million a year, by the time you're done paying your agent and taxes, you have $2 million left to spend. That goes very quickly.
PESCA: Scott Bercu has handled the finances of professional baseball and basketball players - most famously Kenny Anderson, the former point guard who earned over $60 million during his 14 years in the NBA, yet declared bankruptcy the year his career ended. Bercu says that Anderson realized his spending couldn't be sustained, and player and accountant planned for the inevitable.
Mr. BERCU: I personally took some steps to protect him by setting up some trusts. For example, he owned a house, so I put it into a trust so that escaped bankruptcy because it was done probably three or four years before he was going through a bankruptcy.
PESCA: Some people just can't help spending. Usually this trait prevents them from acquiring fortunes in the first place. In general, the people in our society who make a lot of money need to know something about money. Not athletes and entertainers, however.
The leagues are aware of this. They conduct financial seminars for all rookies, which often come during days of lectures on sexual harassment, drug policy and a lot of other topics which may not prompt newly minted 20-year-old millionaires to take careful notes.
Mr. ED BUTOWSKY (Chapwood Capital Investment Management): It's an issue that they don't understand and it's not communicated right.
PESCA: Ed Butowsky is the managing partner of Chapwood Capital Investment Management. He advises NBA all-star Kevin Durant, 15-year baseball veteran Torii Hunter, and many others. Everyone tells the athletes: Be smart, don't overspend and invest. But what happens, Butowsky says, is that the stars of the sporting world model their behavior on the stars of the business world.
Mr. BUTOWSKY: So what these athletes do is they look around at the front row and they say I want to be like the front-row guys.
PESCA: A terrible choice, says Butowsky. The guys with front-row seats, even owners of NBA teams, have often made their money through concentration in a single field. So athletes say I want to own car washes, I want a clothing line, or some other kind of private, hard-to-liquidate business, which Butowsky says should make up no more than 5 percent of an athlete's portfolio after $3 million is in the bank. In fact, Butowsky says everyone's prime example of an athlete turned successful businessman is all wrong.
Mr. BUTOWSKY: Magic Johnson is always brought up as somebody who did it right, and quite frankly, Magic Johnson didn't do it right. Magic Johnson caught lightning in a bottle.
PESCA: Butowsky conducts boot camps for any player who wants to attend. He gives them special calculators, which demonstrate when a free-spending athlete will run out of money - and he does it all for free. He won't even accept gifts of tickets. Ed Butowsky is the Mother Teresa meets Susie Orman for some of the richest, most envied people on the planet. They need it, he says, and he's happy to give - with one exception, says the New York-born financial advisor.
Mr. BUTOWSKY: The team that I despise the most are the Red Sox and I will not work with anyone who plays for them.
PESCA: Kevin Youkilis, be so advised.
Mike Pesca, NPR News, New York.