Working-Class Heroes?

I liked it better when our millionaire baseball players could pay their bills. Ken Rosenthal shares the following bit of news about two Yankee outfielders:

Johnny Damon, earning $13 million this season, cannot pay his bills.
Xavier Nady, earning $6.55 million, cannot purchase an apartment in New York.

The Stanford Financial Group scandal extends to Major League Baseball.

The
issues facing Damon and Nady — both New York Yankees outfielders and
both clients of agent Scott Boras — stem from the alleged $8 billion
fraud scheme involving billionaire financier Robert Allen Stanford.

Damon,
35, and Nady, 30, told FOXSports.com on Friday morning that their
finances are frozen because of money they have with a Stanford company.

"I can't pay bills right now," Damon said at the Yankees' spring
training facility in Tampa. "That started on Tuesday. I had to pay a
trainer for working out during the offseason. I told him, 'Just hold on
for a little bit and hopefully all this stuff gets resolved.'"

Nady faces similar concerns.

"I'm
affected in some ways. I have the same (advisor) as Johnny," Nady said.
"He said I didn't have money with Stanford (investments). But all my
credit card accounts are frozen right now because of that situation.
I'm trying to get an apartment in New York. I can't put a credit card
down to hold it."

I'm no economist, and all this talk about financial collapse is confusing to me, but maybe this is an indicator of sorts, even more telling than the Dow Jones Industrial Average. Is that the sky falling?

14 comments… add one

  • Seriously, who that has millions of dollars at their disposal (assuming Johnny didn’t spend it all on hair gel, weights, mirrors, and GRE prep material) puts all their money in one place and doesn’t monitor them, even in cursory fashion? This is textbook investing-for-dummies, even considering Stanford was peddling “safe” CDs. I guess I am unclear on why ALL their accounts are held, why all their money was in one place with one advisor, and not diversified in more places with more than one advisor, just for protection. When you have that much money putting everything with one person seems really misguided.

    SF February 20, 2009, 4:45 pm
  • > Boras said his clients have no reason to worry about losing money.
    Just ask ‘tek.

    attackgerbil February 20, 2009, 4:54 pm
  • > monitor them, even in cursory fashion?
    Is monitoring in a cursory fashion enough? I don’t think it is at all a stretch to imagine that someone who obtains any salary becomes comfortable and complacent with the concept that “he/she/they” are “taking care of things” for their investments, especially since “they” throw around words like “diversification” and “diligence” in the same way that every other person at every level of income does when choosing their IRA/Investment/401k dispersalwhateverthing, only to find the asset evaporated despite repeated assertions by names backed by big certifications backed by big backers that “it’s still a good idea” by the adviser(s) attended to their particular paycheck. Yeah, it bites. “Stuff Your Mattress” is the title for the book that I’m not smart enough to write.

    attackgerbil February 20, 2009, 5:14 pm
  • This is insane. Even one monthly paycheck has to cover the monthly expenses these guys have, not to mention any bank would give guys with these kinds of guaranteed contracts a large cash loan any day of the week.
    Every MLB player should get a copy of “Rich Dad, Poor Dad” because this is absurd.
    It doesn’t add up at all. Freezing accounts, freezing credit cards? Huh?

    LocklandSF February 20, 2009, 5:18 pm
  • > Even one monthly paycheck has to cover the monthly expenses these guys have
    Maybe, maybe not. Being leveraged is a relative thing, not to impugn relatives.

    attackgerbil February 20, 2009, 5:29 pm
  • Fair point AG, but that doesn’t change the fact that it’s absurd and seriously irresponsible.

    LocklandSF February 20, 2009, 5:40 pm
  • Having ONE ADVISER with whom you stow ALL your money, when you have this kind of money, is INSANE.
    My Dad, who no longer pulls in $13M per annum unfortunately (those were the days!), handles part of his retirement money while someone else handles another part. Parceling out your assets is smart, and Scott Boras should have told these guys to do this. This is just hard to believe, even taking into account how stupid Damon might be as a person. Apparently I underestimated even this.

    SF February 20, 2009, 5:49 pm
  • I understand, Lockland. However, it’s not even one percent of these guys are somebody like Mike Mussina who chose to finish their economics degree at Stanford before accepting that first paycheck.

    attackgerbil February 20, 2009, 5:50 pm
  • AG, you don’t have to finish an econ degree, or even have a GED to understand basic money management.

    LocklandSF February 20, 2009, 5:57 pm
  • Well, the economy might be in the tank but I have a few angles with a certain African Prince, and needless to say I am going to be having a good up-coming year!
    By the way:
    Anyone notice that the Yankees were advertising season tickets for the first 9 rows at the new Yankee stadium in the NYTimes this past Saturday?
    Even as a Yankee fan I’m super-psyched about that.

    walein February 20, 2009, 7:03 pm
  • > understand basic money management
    There are plenty of people that have better than “basic money management” skills that are in the weeds right now. It’s awfully easy to throw around admonitions and advice about how other people should handle their money. But hey, it’s just basic money management.

    attackgerbil February 20, 2009, 8:57 pm
  • Too much equivalency there for my taste, Gerb. Damon and Nady had ALL their money with one guy, and didn’t keep tabs, that’s what it sounds like. That’s not macroeconomic and fraudulent circumstance causing them to find themselves in the weeds, that’s just dumbassness. And these guys have Boras as their agent. So either they didn’t listen to Boras, Boras didn’t say anything to them about what they should do with their money, or they are just major-league stupid. It’s not about the bad economy biting these guys, or simply being victims of fraud. It sounds like they had no concept of the idea of risk-management, and when you have that much money even the most basic principles of RM should apply, even if you are rock-dumb.

    SF February 20, 2009, 10:18 pm
  • I suggest that we here at YFSF start some kind of charity fund to help out Damon and Nady pay their bills.
    It will be just like, um, the Jimmy Fund. We can call it the Johnny-and-Xavier-Dumb-Millionaires Fund.
    Let’s pass the hat around and give generously.

    SoxFan February 21, 2009, 12:05 am
  • If Nady doesn’t resolve his situation by April, I have a fold-out couch he can use. He’ll have to catch two trains from Brooklyn to get to the Bronx, but I promise he’ll be late no more than 5 times throughout the season. Maybe 6.

    FenSheaParkway February 21, 2009, 4:43 pm

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