OT: Woodson, a Financial All-Star
Woodson held up as an example as a financial all-star.
Consider Green Bay cornerback Charles Woodson. Not only is he a Heisman Trophy winner and an NFL defensive player of the year, he is also a financial all-star.
Woodson is an entrepreneurial athlete who has planned for his retirement from the day he started playing football. Woodson owns and develops real estate, and he has his own clothing line and wine brand. He has become smart in the ways of investment and has surrounded himself with ethical and competent people.
September 24th, 2012 at 12:32 AM ^
John L Smith agrees that real estate = $$$$$
September 24th, 2012 at 1:11 AM ^
real estate isn't a bad investment. every once in a while you take it up the tail pipe though. everyone has lost money in real estate in the last 5 years.
September 24th, 2012 at 10:51 AM ^
I'm just glad that the the government is doing well. Hell, that's what it is all about, expanding the bureaucracy to meet the needs of the expanding bureaucracy.
Glad to hear Woodson is doing well, at least trying to invest his money in a smart way. While we can't see the actual results, it is certainly better than going out and spending thousands of dollars a day to have "fun". I can spend $20 and have a perfectly fine night out. There are dollar movie theatres that shows movies which are only a few months old, happy hour specials at most eateries and pubs, as well as numerous other things to do which are completely free.
~Herm
September 24th, 2012 at 9:42 AM ^
JLS is a negative version of the typical disclaimer: "these are not typical results, etc." I think he is a bit too small a sample to use when judging an entire investment platform.
If his performance in both football and public speaking are any indication, his mouintain of debt is more a reflection of JLS than real estate.
September 24th, 2012 at 12:34 AM ^
Considering that Woodson has been such an incredibly generous donor to UM, he's been a exemplary role model for giving back, but that doesn't mean that investing in real estate and wineries are sound business decisions. People inside and outside of athletics lose their shirts every year in real estate (John L), and anybody who thinks that merely owning a winery means you're automatically raking in the dough is delusional. We'd need to see the balance sheets to make that judgement.
September 24th, 2012 at 12:50 AM ^
I agree, but I think there's another positive angle to take with this. Woodson is doing things now that should make his life after football meaningful and busy. I'd imagine that it's a real challenge to feel like you have any direction or passion in your life if you're just coming off of a long NFL career and suddenly staring at 50 years of other jobs / retirement.
September 24th, 2012 at 1:05 AM ^
agreed. i think the main point is that Woodson unlike so many other pro athletes actually has a plan. #MIchigan education
September 24th, 2012 at 1:29 AM ^
Agreed, and in that respect Woodson is far better prepared for post-football life than most of his playing contemporaries.
September 24th, 2012 at 11:13 AM ^
...a horticulturalist and an oenologist, I assure you that those that most of those making money in the wine industry are not investors. For most, investing in a vineyard is a high culture version of buying a time share - you will not get out what you put in.
September 24th, 2012 at 11:40 AM ^
There's an old saying in the wine business that the quickest way to end up with a million dollars is to invest two million.
September 24th, 2012 at 1:27 AM ^
Not necessarily— it depends on when you bought whatever property you currently own, and what you bought. I bought my house in 2000, and even though its value dipped like everybody else's during the recession, it has still increased substantially in value since I bought it twelve years ago. Luckily for me, I didn't buy it to flip it, but to live in.
The people who lose their shirts in real estate are generally those speculators who buy late with borrowed money in a price runup when values are inflated, and then hold on too long when prices start plummeting. They still owe payment on the note but the price they can get is nowhere near what their whole plan was based on. I suspect this is what brought JLS to grief.
September 24th, 2012 at 9:52 AM ^
While I agree with your sentiment, there were a lot of people who just got hosed through bad timing. Many of my friends from college who graduated after me, worked for a few years to save for a downpayment, got married in their late 20's and then bought their house around 2007 got completely hosed just because of the timing of things whereas I dodged a bullet because I was three years older and bought in 2004.
September 24th, 2012 at 2:09 AM ^
The article states:
It has been reported by Sports Illustrated that within two years of retirement, 78% of NFL players have gone bankrupt or are under financial stress...
I mean it just doesnt make any sense. How could that happen... oh wait what's that? Oh, we have video?:
Doesn't that count as a charitable contribution since he's helping those ladies put themselves through college...at least that what they tell me.
September 24th, 2012 at 7:09 AM ^
That's correct -- they're all studying to be nurses.
September 24th, 2012 at 6:42 AM ^
Charles Woodson has done it right here, and it is a little sad that more professional athletes do not see the bigger picture as Charles apparently does. As someone said, he is setting himself up for a meaningful life post-football, and I wonder if, in the present, this helps him enjoy the game just that much more.
When you consider that, even with the pension credits and the annuity plan, a ten year career (i.e., ten qualifying seasons, meaning you played at least three games that season) in the NFL, if you retired today, would set you up for an income that is not even 10% of the average contract per the article, the intelligence of choosing the entrepeneurial route and setting yourself up for a smooth transition to your post-NFL life is actually underscored, in my opinion. There have been all too many stories about players who retire and then scrape to find things to do to fill the void, so it is nice to see stories about people who are attempting to ensure that no such void exists in their life.
Further, as the average career is only 3.5 years, and there is some uncertainty in even achieving that (3 qualifying years is the minimum to receive pension credit) for some players, the career planning really should start from day one, and although the league offers planning and management services, it shows quite a bit of maturity and foresight to take on the challenge (and succeed, as Woodson has) by yourself.
September 24th, 2012 at 8:59 AM ^
I attended one of the Summer Tailgate for Mott Childrens Hospital event last summer that was hosted by Charles. My expectation was that he would show up sometime after the event started, sign some autographs, and leave. He was there from the beginning and stayed until the end. He gave a passionate talk about the work done at Mott, and without notes, mentioned the doctors and administrators by name, and thanked the hosts for their help in putting the event together. My wife (a Buckeye) was truly impressed with Charles and his legend grew in my eyes. To have the intimate details and to know the people so well you can give a 15 minute talk, without notes, is the sign of someone who not only cares, but is totally invested and passionate.
September 24th, 2012 at 1:00 PM ^
Thanks for sharing it.
September 24th, 2012 at 9:50 AM ^
September 24th, 2012 at 10:28 AM ^
I have no idea how much money he sunk into TwentyFour Wines, or how much cash flow he can expect, but it seems like he at least won't lose money on it. There's high demand for his product and it's selling at premium prices; it also seems like he took the time to learn a bit about the business and found a suitable partner before writing a check.
Again, I don't know if he could live off the revenue of a niche winery (especially considering he probably lives a pretty luxurious life), but I don't think this is akin to some of the bad F&B investments made by a lot of other star athletes.
September 24th, 2012 at 10:55 AM ^
Nice to hear a story about an athlete succeeding outside of football and not being bankrupt either before he leaves the game or soon after. Good on you Mr. Woodson.
September 24th, 2012 at 11:15 AM ^
and this confirms it.
September 24th, 2012 at 11:29 AM ^
You hear so often about people making colossally bad real estate and product investments that it sours the notion that a lot of other people are making a lot of money off of those types of investments. Real estate development in particular has been the headline of wealthy people losing rather insane amounts of money. However, development has shown to be one of the more consistent investment returns even throughout some of the more tumultuous recent times. Like any investment, it's about balancing risk and more often than not people who invest large sums in "too good to be true" development projects lose it all. I don't have the numbers, but IIRC, real estate investments aggregated, on average, tend to yield a higher return over the past couple of decades, and if you make sound decisions, you mitigate a lot of that higher risk. I hope he is making the right decisions.
September 24th, 2012 at 12:21 PM ^
He knows he has a gift to play football. He also knows football will give him all the opportunities he ever dreamed about. He is smart enough to know he needs to take advantage of that.
September 24th, 2012 at 12:34 PM ^
"Real Estate Development" is totally different than just "investing in real estate". Real Estate Development entails a more speculative bet - for example, typical Real Estate Devopments are "greenfield" developments, i.e., building an entirely new structure/property on empty land or "brownfield" developments, i.e., renovating existing structures/properties. Real Estate Developments typically require a large amount of capital investment and more importantly, it IS NOT LIQUID.
If I were an NFL player (which I'm not), I wouldn't invest in an ILLIQUID asset that requires me to hold it (typically 5 to 7 years) for longer than my NFL career (on average, 3.5 years as stated above). Selling an ILLIQUID asset typically requires selling at huge discounts since there is no open market.
As a general rule, NFL players (or pretty much any average investor) should invest in liquid assets, i.e., if they have a taste for real estate, they should buy REIT funds or ETF's... you'll get similar exposure, plus the benefits of diversification and dividends.
These are just my two cents... I'm sure there are stories of someone making a killing off buying some abandoned warehouse and turning it into an awesome yuppie loft that rents out for 20x the initial equity investment, etc. etc., but whatever, there are plenty of stories where someone wrote a check and it was worse than dropping cash on a roulette table (i.e., 5% expected loss) or a bet on "banker" on the bacarat table (i.e., 1.5% expected loss).
September 24th, 2012 at 1:18 PM ^
grad school project
I did this presentation in grad school on athletes who blew their money
and how athletes should take advantage of tax strategies and so on
if anybody would like to see the presentation i have it on powerpoint
September 24th, 2012 at 2:00 PM ^
I remember reading that he lived in a crappy apartment near Oaklands stadium as a rookie.
September 24th, 2012 at 6:42 PM ^
Normally a divorce in your 30s would still leave your prime years of earning potential. A professional athlete in his 30s who gets divorced is going to lose half of almost everything he will earn in his lifetime (see Michael Strahan or TIki Barber). Even Tiger Woods took a serious hit after his divorce. He will never earn anywhere near the income he earned before divorcing Elin Nordgren. Depending on the outcome of reconciliation with his wife, Kobe Bryant could lose his 3 mansions and $75 million to his wife in a divorce.
And this is not even including alimony and child support. To make matters worse, most divorce proceedings occur during the player’s peak earnings period with the settlements calculated accordingly. Once a player retires and his earnings become significantly lower, he has a hard time making the massive monthly child-support payments.
Consider this stat: Some articles cite the divorce rate among pro athletes to be as high as 60-80%, and half of the divorces among NFL players occur in their first year after leaving the game. Woodson has fortunately avoided this common pitfall for many athletes so far and hope he never has to face it after retirement.