The best paid athlete on this green and warming planet of ours is a boxer by the name of Floyd Mayweather and he’ll be bankrupt within five years of retiring.
I want to be wrong, I really do want to be wrong, unfortunately that is highly unlikely as the bankrupt former top athlete is a cliché and the bankrupt world champion boxer is pretty much a rule set in stone.
First let’s just get a grip on how much Floyd “Money” Mayweather is earning so you can fully comprehend the downfall when you eventually do read about it. Oh and by the way, that nickname “Money”, I didn’t invent that one, it’s what he likes to call himself.
Charming fellow that he is, he does not hide his money, he flaunts it, lavishly and constantly. His whole image is based on showing large stacks of cash and all the trappings of wealth he spends it on; Houses, cars, jets, jewellery and so on and so forth (see video below at end of article)
For his last two fights he earned a combined $ 72 million, not bad for a year’s work. On top of that, with assorted sales of “The Money Team” knick-knacks and what-nots it is reported that his overall earnings for that year were over $100 million. Compare that to the likes of top tennis pro Novak Djokovic for example who earned a measly $ 33 million in comparison.
As for Mayweather’s career earnings, they are reported to be in excess of $350 million. Not bad for an illiterate kid who dropped out of high school to pursue a career in the Sweet Science. Make no mistake Mayweather is a phenomenally talented and hard working fighter, he's earned every dollar, but you're not interested in his pugilistic prowess are you? What you really want to know is how is he going to lose all that moolah.
It's pretty simple, the main reasons for any major sports star losing their money is:
- Business incompetence
Since I'm not writing a book on this subject let's just concentrate on the big one, numero uno:
Nothing drains an account like bad investments and poor money management, which is exactly where Mayweather has some previous form.
What follows is probably the most important tidbit of information regarding the myth around Money Mayweather and his business skills. It was widely reported in the boxing press at the time, but since it was the sporting media, no one really paid any attention to the financial details of it. So you’ll be the first to read about this. Here goes:
In February of 2007, according to ESPN, Mayweather bought a Maybach car for $528 000 (he likes cars, a lot! He has fleets of them) and he borrowed around $ 415 000 for this particular car at 16% annual interest from JP Morgan.
Nothing wrong with taking a loan, often it can be a prudent business move, even for the wealthy, but why is a man who has just earned $8 million dollars three months prior having to pay a ridiculously high annual interest rate of 16%? (As a comparison the prevailing Libor rate at the time was about 5.1%)
This tells you one of two things A) His business acumen and negotiating skills are non-existent or B) JP Morgan knew that he was a risky client and therefore it warranted the massive interest rate of 16% pa.
So what happened to the loan? “Money” Mayweather stopped paying the $9 000 monthly instalments for the car a year later and JP Morgan had to repossess the car, sell it for $196 000 and sue Mayweather.
Does this sound like a prudent and capable money man to you?
Wait, there's more. You'll like this.
In 2007 Mayweather retired from boxing, only to return 21 months later. Was it the draw of the ring and the accolades of the crowds that drew him back to the squared circle? Could be, but immediately after his very short retirement he started having money problems with the taxman. Big surprise that, eh? Puuuuuuuuure coincidence, right? Nothing to do with the IRS you understand. He was just coming out of retirement because of his love for the sport of boxing.
In June of 2007 Mayweather announced his retirement, in October of 2008 the IRS put a tax lien of $ 6.1 million on Floyd Mayweather for unpaid taxes in 2007. In May of 2009 it was announced that Mayweather would fight again (7 months after being slapped by the IRS lien). Nothing to do with the IRS you understand. He was just coming out of retirement because of his love for the sport of boxing.
Mayweather ended up forking over to the IRS over half of the $10 million that he made from his comeback fight which had nothing to do with the IRS you understand. He was just coming out of retirement because of his love for the sport of boxing.
Inflows and outflows in the sports world can be irregular, so a one off issue with the taxman is easy enough to understand, but prior to the $6 million tax ticket Mayweather received for 2007 he had failed to pay taxes on time in 2001, 2003, 2005 and 2006. If that wasn’t enough there have been rumours that he didn’t pay his 2009 taxes and was left owing $3.4 million.
I guess what I’m trying to ascertain is, does anyone else see a pattern here, or is it just me? The Money Team's money management skills appear to be rather sub par.
There is one thing about Mayweather, you can't fault him for is his ability to enjoy his money (while he still has some). This little video puts it all in perspective.