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Jeff Foster, The Buffett of Basketball

Jeff Foster, The Buffett of Basketball

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Published by Kyith

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Published by: Kyith on Dec 03, 2011
Copyright:Attribution Non-commercial


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Investment Moats
Income Investing, Cash, Money and Life
Jeff Foster, the Buffett of Basketball
 Amid the profligate culture of the NBA, the Indiana Pacers veteran did somethingradical with his money: He saved it 
Early in his National Basketball Assn. career, Jeff Foster, a center for theIndiana Pacers, became acquainted with a man he came to think of as a
friend. The man followed the team on road trips and called Foster’s hotel
room to invite him for meals. Then one day the man presented Foster witha business opportunity: For just $2 million, the basketball player could bepart of a surefire venture to open a bed and breakfast in the verdant
Pennsylvania hills. When Foster explained, truthfully, that he didn’t ha
 vethat kind of money 
the Pacers paid him just over $4 million for the firstfour years of his career, about half of which was gobbled up by taxes,
escrow payments, and his agent’s fee—his “friend” was undaunted. He
asked Foster to introduce him to an older teammate who had just signed a
Investment Moats
Income Investing, Cash, Money and Life
much more lucrative contract. Foster declined. “And of course,” Foster says,“I never spoke to him again.”
 Professional athletes are not generally known for shrewd financial judgment. What was former Notre Dame star player
“Rocket” Ismail
thinking when he bankrolled a calligraphy business, for example? Did itmake sense for ex-NBA guard Latrell Sprewell to turn down a $21 millioncontract offer late in his career and then buy a yacht?
 Sports Illustrated 
estimates that 60 percent of NBA players go broke within five years of retirement and 78 percent of National Football League players
“have gone bankrupt or are under financial stress” within two years after
they stop playing. (According to NBA Players Assn. spokesman Dan Wasserman, between 6 percent and 8 percent of players end up broke.)It takes about five seconds to compile a list of once-rich, now-broke sportsluminaries: former Boston Celtics All-Star Antoine Walker (gamblinghabits, huge entourage, multiple luxury cars); New York Jets backupquarterback Mark Brunell (real estate investments in a tanking Floridamarket); and, perhaps most notoriously, ex-Philadelphia Phillies centerfielder Lenny Dykstra (who bought and unsuccessfully tried to flip Wayne
Gretzky’s $17
million home, was indicted for bankruptcy fraud, and facescharges of grand theft auto and indecent exposure; Dykstra denies thecharges).Such recklessness typically earns athletes more ridicule than sympathy.
 And yet for the moment, the ranks of America’s une
mployed include pro basketball players: Because of an owner-led lockout, most NBA players,even those under contract, will stop receiving paychecks by the end of October, when the regular season was scheduled to start. Some players arescrambling for backup jobs, with about 15 percent, including standoutssuch as Deron Williams, signing up to play in overseas leagues in theinterim.
Investment Moats
Income Investing, Cash, Money and Life
For hard-nosed, low-scoring NBA veterans such as Foster, however,
hooking up with a foreign team isn’t a viable option. Foster
is a free agent,
 which means he doesn’t know where he’ll be playing next, if at all. At 34, hehasn’t achieved the fame of the league’s stars. Look him up on
and you find this: “Amare Stoudemire dunks Jeff Foster to theground!” and “Shaquille O’Neal alley 
oop dunk over Jeff Foster.”
Nonetheless, Foster has played in the NBA for 12 years and earned morethan $47
million, and he’s done something extraordinary: He’s saved about
three-quarters of his take-
home pay. “Jeff’s an example of a pro athlete who’s done it right,” says Doug Raetz, co
-founder of True CapitalManagement, a San Francisco-based wealth management firm thatrepresents Foster and about 150 professional basketball, football, and baseball players.Foster, who is six-feet-eleven, entered the league with advantages thatmany of his fellow professional athletes lack. He grew up in an upper-middle-class home
his mother worked as a high school principal in San Antonio, while his father ran a property management company. When he was in 11th grade
the same age as LeBron James when he had hisfirst
 Sports Illustrated 
Foster was playing on the junior varsity squad and thinking about becoming a journalist. That focus on another
career may ultimately have helped him financially. “In our culture, a top
athlete often stops being a student in the seventh grade and the focus is on
sports,” says Peter Dunn, a financial adviser who has worked wit
h severalIndianapolis Colts players. When Foster graduated from high school, his relatives gave him $1,000,
 which he invested in two mutual funds. “I didn’t really need the money for a while,” he said over lunch on Oct.
5 near his home in Carmel, Ind. “I
alwayshad an interest in finance, but actually having my own money in the
markets took it to another level.”
 He enrolled in the first school that offered him an athletic scholarship,Southwest Texas State University (now Texas State University-San Marcos).

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