Friday, November 7, 2014

Why the worst financial advisers get on top of the game

Ultimately it's thanks to an oversupply of gullible journalists who re-write the press releases the NCAA hands out. The latest being from Julie Steinberg in the Wall Street Journal, whose headline says it all;

Colleges Push to Keep Financial Advisers Away From Athletes

Momentum Is Growing to Narrow a Gap Between Laws That Oversee Sports Agents and Financial Advisers Who Approach College Athletes

The article relates the stories of a few professional athletes who claim to have been cheated by their financial advisers. Which might even be accurate depictions of what happened, but it is a gross non-sequitur to think that these incidents imply that keeping college athletes uninformed about their value to professional teams is a solution (at least for the athletes).

As the author of The Blind Side, Michael Lewis, once put it;
 "If you're a college star, your job is to play football, at least pretend to go to school, assume all the risk, generate millions of dollars for your university, and stay poor," Lewis said. "When you get near to a market where you can sell your services, they're going to make it as difficult as possible. I'm amazed there's not more outrage."
That was seven years (and a Best Actress Academy Award for Sandra Bullock) ago. Yet the NCAA manages to continue to dupe journalists as easily as ever. We note the unintended irony in Ms. Steinberg's piece;
The double standard between financial advisers and sports agents has long bothered some college athletic officials, regulators and even players. Agents were reined in after the Uniform Law Commission, a nationwide group of lawyers, judges, legislators and law professors, drafted the Uniform Athlete Agents Act in 2000.
There's a double standard that ought to bother everyone, but it's not that one. It's that the coaches, athletic directors, NCAA personnel, referees, broadcasters, and even the popcorn vendors make money off the student athletes. You know, the employees who put the fans in the stands and the eyeballs in front of the televised games; they not only get nothing, it's illegal for them to be in contact with people who might be able to help them. So, that leaves the unscrupulous as the only gamesters in town;
[Tom] Osborne, who won 255 games and three national championships in 25 seasons as Nebraska’s head football coach, recalls hearing [now imprisoned former financial adviser Mary] Wong’s name while he was athletic director but says he knew nothing specific about her.
[Former football player Steve] Octavien says he was struggling financially when he met Ms. Wong in 2005. His scholarship didn’t cover all of his living expenses, and juggling football, his classes and study left no time to get a job. During one off-season, he worked at a lumberyard.
“So what do they think will happen when relief swings our way in the form of a financial adviser?” he says now. Ms. Wong, then in her 40s, “took care of us like her own children.”
[Daniel] Bullocks’s twin brother Josh, who played free safety at Nebraska, adds: “Mary was a best friend to all of us.”
Which had to be kept secret from the NCAA. Making the players vulnerable to fraud.

The answer to all this is precisely the opposite of what Julie Steinberg has written. Make it legal for financial advisers and other agents to meet openly with the athletes. Encourage them to do so, to learn something about the business world they might be lucky enough to enter after leaving college.

Of course, that might be dangerous for the NCAA. The kids might start to wonder why they're the only ones not profiting from the games they play in.

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