Blog Entry

Rookies taking loans to survive lockout

Posted on: August 8, 2011 8:54 am
Edited on: August 8, 2011 11:51 am
 
By Matt Moore

You've worked your tail off on the court and in training since high school. You played well enough to be considered a draft prospect. You dealt with the draft workouts. You made it through the nervousness of where you'd go. You were finally drafted, a dream come true. You're an NBA player, and along with that comes the perks, like millions and millions of dollars to change a life of just getting by you've known your whole life. 

Then you're locked out, and you don't get a cent.

While the league's biggest stars work to protect max contracts, and league veterans work to protect their long-term earning stability, the rookies are left hanging out without the stockpiles the other players have. Rookies have few friends in the league, few places to turn, no endorsement deals for the most part, and no paycheck. They're not unemployed, but they're not being paid for what they're employed to do, nor are they able to do what they're employed to do.

So they take loans.

From the Oklahoman comes the tale of Reggie Jackson, a rookie drafted by Oklahoma City out of Boston College, and how he's now among the world's elite in professional basketball players.... and already in debt thanks to a loan.  
While most veteran players have had their paychecks suspended, they at least have, or should have, some kind of coin in reserve. Jackson has yet to receive his first pro check at all. Instead of signing his rookie contract last month, Jackson was forced to take out a loan. He says it's a small amount that only keeps him afloat.

“I'm trying to pay back as little as I can and just get through the times right now,” Jackson said.

“I've grown up not being super wealthy. I went to college being broke and found a way to manage through that. So I'm just getting by. Basketball's never been about money and never will be. I'm living comfortably enough to where I'm satisfied. But I'm also not out there buying a big house and a big car. I'm not trying to do that. I'm OK with settling for less fancy things.”
Most players are going to rely on loans from their agents, which is only going to make their representatives more bloodthirsty to end the lockout. If you're an agent, you may be floating cash to a rookie to keep him afloat during the lockout, only to find later that he busts out, ruining the long-term earning potential for you as his rep. You're essentially taking a bath on a player. Kind of weird to think about a bust actually costing an agent money, but maybe it'll be a humbling experience. 

OK, probably not.

The lockout is an ongoing affair and it affects more than just the guys who already own four cars, it affects kids who have waited years for this moment only to find that there's nothing to celebrate. Instead they're just trying to get by, but at least they're still able to do that. That's more than a lot of the workforce in this country can do right now.

Interesting side effect that rookies are seeing the real effects of the lockout immediately while many players are paid through November. You wonder if that will affect them and what the rookies of 1998-1999 think about what they're going through.
Comments

Since: Jan 1, 2007
Posted on: August 15, 2011 7:40 am
 

Rookies taking loans to survive lockout

Besides, you mean to tell me that an owner of a company during these economic times is going to hire someone with a Masters degree and little experience over a person with a Bachelors degree and some experience? No brainer here, hire the Bachelor degree because you can pay them less. So, it's the professionals that are actually having the rougher time right now, imo, money-money-money....MONEY!
...do what? So you assume that all people who have a bachelor's degree have MORE experience than someone with a master's? Yea, if anything, it's the other way around. Most people I know intern or do co-ops during the master's. They've had more on-the-job experience than someone who just came out of undergrad who worked part time in the campus library. Or did you miss the whole "Master's is the new bachelor's" theory that has been around for awhile now. Quite a few jobs require a master's before they'll even look at you, unless you've had substantial work experience, and we aren't talking a summer like you are presuming. We are talking a decade or more... and guess what, with experience comes higher wages. So money is right, but you got it wrong.



Since: Sep 30, 2008
Posted on: August 9, 2011 6:42 pm
 

Rookies taking loans to survive lockout

Brainwashed...no....not our country!! Seriously, not that great of a comment. College means you have the ability to learn a specific job, most graduates don't get that.



Since: Sep 30, 2008
Posted on: August 9, 2011 6:39 pm
 

Rookies taking loans to survive lockout

It's those with associates and bachelor's degrees or less that are more likely to miss out on jobs. Those with professional degrees have no problem unless they are dead set on a specific field in a specific location.
Whoever said that is a freaking idiot. Any college degree is pretty darn good considering only 40% (generous percentage) of Americans actually get through college with any degree. All the people who skipped college are seeing the biggest turmoil.

Besides, you mean to tell me that an owner of a company during these economic times is going to hire someone with a Masters degree and little experience over a person with a Bachelors degree and some experience? No brainer here, hire the Bachelor degree because you can pay them less. So, it's the professionals that are actually having the rougher time right now, imo, money-money-money....MONEY!

Loans aren't the end of the world. Full ride in college and having to borrow money now because of lock-out stinks. The interest rates are much higher for bank loans than school loans. School Loan average fixed APR? 3% and the interest paid every year is a tax write-off. What does this rookie get for a bank loan? Flexible APR of like 8-10% and doesn't get a tax break. I feel for them sure, but once lockout ends and they sign their 4-year, 24M, 13M guaranteed contract; all sympathy goes bye-bye.



Since: Feb 10, 2007
Posted on: August 9, 2011 3:24 pm
 

Rookies taking loans to survive lockout

so maybe he gets $270,000

************

$270K AFTER TAXES  ....  like I said, pays off the $100K + Interest  IN ONE YEAR .. and STILL has $165K ... how will he ever survive.  Not to mention, most of these guys got full scholarships to play B-Ball in college and DON'T have education loans to pay for like everyone else.


And the article says they might even get the loan from their agent  ... so probably a NO INTEREST loan  .... ohhhh the pain.


This is a joke article ... sorry



Since: May 17, 2008
Posted on: August 9, 2011 3:06 pm
 

Rookies taking loans to survive lockout

 It's those with associates and bachelor's degrees or less that are more likely to miss out on jobs. Those with professional degrees have no problem unless they are dead set on a specific field in a specific location.


Actually, there has been over the last several years a big decrease in jobs overall for attorneys, especially jobs that support paying law school loans from top Law Schools and/or living in major cities like NY or LA.  Law firms have laid off large numbers of attorneys and/or greatly reduced hiring over the last several years (some major law firms, 100s or 1000s of attorneys, have completely folded in fact)...so no, it is not true that "those with professional degrees have no problem" in the job market.  Just sayin.....unexpected problems in getting work can and do occur no matter your chosen profession.



Since: May 17, 2008
Posted on: August 9, 2011 3:01 pm
 

Rookies taking loans to survive lockout

Ohhhh the pain  ... so a rookie has to take out a loan of say $100K, maybe $200K at worst if he's greedy, for about a year  .... SO WHAT!   I don't know what the new league minimum will be after the lockout, if it happens, but it was at $473,604 in the 2010-2011 season.   And most of these newbies ride the bench in the beginning.   CRY ME A RIVER for these poor guys that have to take out loans that they'll be able to pay off EASILY within a year ... and have more than enough left over to put a hefty down payment on a house that they can pay off in a couple of years as well.
Look, I am not going to worry too much about these guys, they picked their career and knew the uncertainties, but I do not think the picture is a rosy as you think it is.  Let's say the player borrows $100K at an unknown interest rate, say 5% (very conservative).  Then lets say the NBA loses a season before he signs a minimum contract for $474,000.  He owes $105,000, with interest continuing t accrue on that amount.  He gets $474,000 in installments -- less 5% to his agent ($23,700) and probably 40% in state and federal income taxes ($180,100) --so maybe he gets $270,000 (again, over a series of installments during the NBA season, not a lump sum) from Net from which he still has to buy clothes, food, utilities, insurance, personal property taxes, a car payment, auto maintenance, gas, etc. 

Yes there will be money that year to pay to the loan (assuming, of course, he has a guaranteed contract, which he may not if he is not a high pick and/or guaranteed contracts are eliminated in the new CBA, and/or makes it through an entire NBA season without getting cut--no guarantee ) but not as much as you might think.



Since: Feb 10, 2007
Posted on: August 9, 2011 2:25 pm
 

Rookies taking loans to survive lockout

Ohhhh the pain  ... so a rookie has to take out a loan of say $100K, maybe $200K at worst if he's greedy, for about a year  .... SO WHAT!   I don't know what the new league minimum will be after the lockout, if it happens, but it was at $473,604 in the 2010-2011 season.   And most of these newbies ride the bench in the beginning.   CRY ME A RIVER for these poor guys that have to take out loans that they'll be able to pay off EASILY within a year ... and have more than enough left over to put a hefty down payment on a house that they can pay off in a couple of years as well.  LOL  .... is this article a joke?



Since: Sep 4, 2007
Posted on: August 9, 2011 2:08 pm
 

Rookies taking loans to survive lockout

I did exactly that over a year ago and don't regret doing it one bit. 
Congrats to you!!  It is amazing how your eyes open up once you get out on your own.  I dont like to knock college and jobs but people do not realize how much we are being brainwashed.  I was presented with a business opportunity and turned it down at first.  The gentleman asked me if my job could guarantee me time freedom and enough money to live my dreams.  Of course I said no.  He then asked me who sold me on getting a job.  I had to think about that one for awhile.  I spent all that time in college, actually paid for it, and still did not have what I wanted.  I made good money but did not have time freedom to use it.  I decided to take the opportunity and it was the best decision I have made to date in my life. 



Since: Sep 4, 2007
Posted on: August 9, 2011 1:52 pm
 

Rookies taking loans to survive lockout

I wasn't making excuses. You even quoted my point: who cares if you can't get a job in what you're trained. Go get a part time job and wait until you can get a job in your profession, or in this case, until the lockout is over. Problem is, every day I see people on the street corner that are too lazy to walk the extra block down to McDonald's and at least fill out an application. Thanks for furthering my point somewhat.


You missed my point entirely.

And on the lawyer point, what do you mean do what's necessary? Everyone does the same thing.


Not true.  Some people actually find a way to use their skills to create income for themselves without getting a job.  Others market themselves so well that they get jobs no matter what.  My cousin is a good example.  Just out of law school last month and landed a great job at sweat shop....I mean a law firm.  



Since: Jun 25, 2009
Posted on: August 9, 2011 9:36 am
 

Rookies taking loans to survive lockout

Has anyone every told you this very valuable piece of advice?  Never do what the masses do.  Why would I want to work for someone else when I can work for myself?  Americans need to loose that "I need security" mindset.  Wake up people!  If you havent noticed no job is secure anymore.  95% of us are living by industrial age advice when it is now the information age.  Develop multiple skills and run your own show. 

I did exactly that over a year ago and don't regret doing it one bit.  Yeah, it was easier working for somebody else and knowing approximately what my next check would be for but in the end there is no security.  Your employer can let you go at any time for just about any reason he or she feels like they are using.  Security in today's world doesn't exist almost anywhere.  If you don't take care of yourself nobody is going to do it for you. 


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