Making millions for NBA Stars: the high-powered world of super agents David Falk, Curtis Polk and Mike Higgins.
From the Print Edition:
James Woods, May/Jun 97
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The hiatus did little to diminish FAME's business or Jordan's stature as a celebrity. It might be argued that coming back to win a fourth NBA title may only have enhanced his appeal. If his salary as a player took a temporary dive, his endorsement income never skipped a beat.
Balls. FAME is really about balls. Lots of balls. Walking into the swank suite of offices in Washington's Chevy Chase Pavillion, one sees appliqués of footballs, baseballs and basketballs on the glass wall entrance. Real basketballs signed by FAME clients rest in glass cases shared with Wheaties boxes and huge basketball shoes endorsed by clients. Move back to Curtis Polk's office and there are jerseys from Patrick Ewing and Glen Rice in frames, alongside an animation cel from a Nike commercial. In Hollywood-hip, Curtis Polk is money, baby.
"Take Juwan Howard, for example," says Polk, who handled the second career contract of the Washington Bullets star, who turned out to be 1996's most sought-after and most embattled free agent. "The guy signs for $105 million and obviously he should be very set financially for the rest of his life based upon that. If you didn't do other aspects of work for him, you wouldn't have a lot to interact with him [about] over seven years.
"Where I think we really provide a lot of valuable services is in working with them after the contract and making sure that they don't go through their money, that they don't make bad investments, that they don't fall prey to people who are trying to take advantage of them, that we can insulate them from all the things that are going on around them."
This is the part of the business that fans and many reporters don't appreciate. Unlike a lot of agencies, FAME not only negotiates a player's contract, but also maintains a 25-person team of lawyers, financial planners, investment advisers, schedule makers, publicists and marketers. Financial planning and investment services are provided--for a minimum annual fee of $12,000--by a second company also named FAME, in this case "Financial Advisory Management Enterprises," which manages more than $130 million for about 18 clients.
It is a much-needed service in a world where players must concentrate almost solely on the game to succeed, but are confronted with a recruiting system that appeals to their sense of greed, while attracting parasites that show up as early as junior high school. As a result, many successful NBA candidates are ill-prepared to handle instant millionaire status and the microscopic attention and financial pitfalls that can come with it. As part of the service, Polk sits down with the players in a whirlwind accounting clinic and shows them on a spreadsheet where the money goes.
"Show him how much has to go to taxes. Forty-one percent, roughly, in federal taxes. State? Depends on where you live, but roughly 3 to 9 percent in state taxes. So it gets up to the high 40s, 50 percent. They pay us a few percent of the gross, union dues," Polk says. "Then I work with them on their expenses. Do they have a mortgage? Are they renting? Some of these guys have two places where they live, one in the city that they play in and another place, like their hometown where they grew up, [where they] live in the off-season. Maybe they're sending their parents some money every month. You know, they have certain expenses that are recurring every month, and we'll show them, after all is said and done, 'Here's what you have left.'"
Polk often draws up a budget for players and urges them to save because they will not be playing ball all their lives. The average length of service in the NBA is about five years. Polk says it's hard to tell anyone not to spend money, especially when you're talking about millions and the young player--more than half of the players in last year's draft were underclassmen--thinks that amount of money is going to last forever.
"The average person that we represent, if they can have 30 to 35 percent that they're saving, they're doing well," Polk estimates. "A guy at $100 million, I would hope that it's closer to 40 percent. If they spent a million dollars a year living, that's a great lifestyle. If half went to taxes and fees and whatnot, and they spent 10 percent, 40 percent's left. A guy saves $40 million of $100 million and he bought tax-free bonds and he got 5 percent." (In the beginning, players are generally risk-averse investors. ) "So, he's got two million a year coming in forever, but his $40 million's not gonna grow unless he saves some of that two million that comes in. That's one way to show a guy a very low-risk way of taking your money and using it to support a comfortable lifestyle for the next 30 or 40 years."
Most people hear about agents only when a player signs a one-year, $30 million contract or leaves a city to play for another team for more money. When that happens, agents typically get the blame. Sportswriters such as Tony Kornheiser of The Washington Post refer to them in such endearing terms as "Benedict Arnold," "bird of prey" and "imperious." Who needs that?
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