The five-time NBA champion is now an executive at Luxury Asset Capital. But is he helping athletes or exploiting them?

Derek Fisher began the month defending his credentials as the newly appointed head coach of the WNBA’s Los Angeles Sparks. Fisher’s December continued with the former basketball star denying he is a legal loan shark.

It was revealed last week that the five-time NBA champion and former coach of the New York Knicks is joining Luxury Asset Capital, a boutique lender and posh pawnbroker for clients who are loaded but not liquid. The company is launching a sports and entertainment division that seeks to woo athletes, offering short-term loans of about $50,000 to $5m using assets such as contracts, pensions, cars, watches, fine art and jewelry as collateral.

Another former NBA player, Baron Davis, scorned Fisher’s decision to become an executive vice-president at the firm. “Athletes going broke… let’s make money off of that,” he wrote on Twitter.

Baron Davis (@BaronDavis) Derek Fisher sold us out in the CBA now he selling us out again. Athletes going broke .. let’s make money off of that. #Slapyourself #buster #sellout #BANsyndrome https://t.co/twVJDGBoN7



With the average NBA salary approaching $7.5m and MLB’s minimum at $545,000 this year, it seems implausible that leading sportspeople would turn to an industry that typically makes headlines for the negative effects of predatory lenders offering credit to low-income individuals at wince-inducing interest rates.

But a 2009 Sports Illustrated article cited some striking statistics: “By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce. Within five years of retirement, an estimated 60% of former NBA players are broke. Numerous retired MLB players have been similarly ruined.”

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Some cash-strapped players took out high-interest loans during the NFL’s work stoppage in 2011, the Daily reported. Even some of the world’s best-known and highest-earning athletes have faced ruin, from Mike Tyson to Boris Becker. Fisher, who went through a costly divorce in 2016, said that, as with lottery winners, a high net worth does not always insulate athletes from financial troubles. Nor, he added, is profligate spending necessarily to blame.

“A lot of athletes have gone broke because athletes have trusted their advisors to manage their money because we’re not experts in it, and a lot of guys have been taken advantage of by their advisors,” Fisher told the Guardian.

“We’re making this assumption, and for me in particular as a man of color, we’re making this assumption that it’s always related to athletes making poor decisions, driving around in Bentleys and jewelry and cars and sometimes the assets and the money disappear for other reasons: advisor was embezzling money; there was a divorce event that half of his assets, marital property, are gone. And now life looks different and he has to figure out how to navigate all these moving parts.”

High-end pawn shops and alternative lenders have grown in popularity in recent years, catering to affluent people who find themselves short of cash, whether the goal is to make ends meet or to fund a venture quickly.

Unsurprisingly, given the wealth and ever-spiralling salaries in American sports, Luxury Asset Capital is not the only financial company aiming at athletes. One of the most prominent, Sure Sports, a Florida-based business founded in 2009, says it offers low-interest unsecured loans to players in the NFL, MLB, NBA, NHL and MLS, with a minimum loan of $25,000 and a maximum of up to 30% of a player’s guaranteed contract.

Luxury Asset Capital is headquartered in Denver. Its president and CEO, Dewey Burke, denied that its business model involves preying on financially stricken, desperate or naive players. “Our rates are in the low- to mid-teens. So some of the stuff that’s been reported, that we’re akin to a payday lender, is preposterous. Those guys are charging 200, 300% APR,” he said.

“Our clients are high net worths that inherently are always doing deals at any given time, whether it’s investing in a new business or putting money into their own business or looking at a real estate deal,” he added.

“We did a deal a couple of weeks ago for an ex-NBA player who was looking at a real estate opportunity and also needed some cash flow to help his mom with something she was working on and he’s going to borrow the money from us for four months. A $200,000 deal. He was just in between liquidity events.”

Fisher said he has “no interest in being a predatory lender”. He depicted the outfit as a faster and more flexible alternative to traditional lenders such as banks in certain situations, for example when a player has suddenly been traded to a team in a new city and needs to make urgent living arrangements.

Leading athletes, he said, are no different to “a lot of business folks, they don’t necessarily use even their own cash, they use other people’s money to activate deals, opportunities, take advantage of certain things, grow that money… There are very high net worth individuals that on paper are extremely wealthy and have zero cash flow because their assets are tied up in real estate and property and fine jewelry and they don’t have maybe the cash flow that they need.”

Young players are often tempted to emulate the opulent lifestyles of more experienced teammates with bigger paychecks and more job security, said Amobi Okugo. The 27-year-old defender and midfielder, most recently with the Portland Timbers, runs A Frugal Athlete, a website that advocates financial literacy. “Whether you’re a rookie or second-year player, the competitive nature of the locker room makes you want to compete and the only place you should compete is on the field,” he said. Spending wise, he added, “It doesn’t make sense for me as a rookie on my first contract to compete with the star of the team who’s on his third contract and signed a big deal.”

Okugo believes that colleges and clubs should make a greater effort to teach long-term money management strategies to up-and-coming athletes. He is skeptical about the merits of high-interest loans that use property and pensions as collateral. “Whenever you have to borrow money, nothing good comes from it,” he said. “The quick fix. I think that’s why there’s been a little bit of pushback from fellow athletes.”