BoxRec

Fortune's Fools: Why the Rich Go Broke

By TIMOTHY L. O’BRIEN
Published: September 17, 2006

GEORGE FOREMAN — bald, smiling and gigantic — is propped atop a stool in Gleason’s Gym, the venerable boxing haunt in Brooklyn, watching a videotape of his heavyweight championship bout in 1994 with Michael Moorer.

Mr. Foreman once devastated opponents with brutal, staccato punches short on artistry and long on force. He disposed of formidable pile drivers like Joe Frazier, traded blows with dangerous magicians like Muhammad Ali, and dropped the undefeated 26-year-old Mr. Moorer in the 10th round with a right to the jaw.

Mr. Foreman was 45 at the time of the Moorer fight, a roly-poly 250-pounder who had just reclaimed the heavyweight mantle that Mr. Ali had snatched from him 20 years earlier. By knocking out Mr. Moorer, Mr. Foreman became the oldest heavyweight champion in history and he hailed his victory at the time as one “for all my buddies in the nursing home and all the guys in the jail.”

As Mr. Foreman watches the tape of Mr. Moorer crumpling to the mat, part of a boxing retrospective that ESPN is shooting at Gleason’s, he beams. “Play that again,” he says to no one in particular, softly chuckling to himself. The knockout was the culmination of an unlikely return to the ring that Mr. Foreman staged in his later years, well after he had retired. He has often said that he ended his retirement to prove that nobody is too old for a comeback.

But Mr. Foreman confides in an interview that something else actually drove him back into boxing in the late 1980’s, and it had nothing to do with proving the meaninglessness of an AARP card. Having blown about $5 million, made mostly, he says, during his salad days as a young champion, he desperately needed the money he could earn by fighting again. A former street thug from Houston, accustomed to dispassionately cutting down the most ferocious of men, Mr. Foreman was on the verge of bankruptcy in the 1980’s — and it terrified him.

“It was frightening, the most horrible thing that can happen to a man, as far as I am concerned,” he says. “Scary. Frightening. Nervous. I had a family, people to take care of — my wife, my children, my mother. I haven’t gotten over that yet.”

Pondering his glimpse into the abyss a moment longer, Mr. Foreman’s eyes tighten: “It was that scary because you hear about people being homeless and I was only fractions, fractions from being homeless.”

UNLIKE many others with lush bankrolls who somehow manage to lose it all, Big George rebounded handsomely from his flirtation with bankruptcy. He earned multimillion-dollar purses boxing in the 1990’s and made tens of millions more by reinventing himself as a gentle entrepreneur, astutely peddling the best-selling hamburger grills that bear his name.

Even so, the trajectory of Mr. Foreman’s finances once had him headed into a gilded pantheon of big buckaroos who have squandered often-unimaginable sums of money, come perilously close to personal bankruptcy or completely lost their shirts. The ranks of well-heeled debtors include Thomas Jefferson, Buffalo Bill Cody, Mark Twain, Ulysses S. Grant, Debbie Reynolds, Michael Jackson, Dorothy Hamill, Robert Maxwell, Mike Tyson, Jack Abramoff and a long and pitiful cast of lottery winners.

Each of these grandees had distinct encounters with errant money management. Some of them were undone by rampant spending, others by injudicious deal-making, still others by various shades of greed, fraud or spectacularly poor investments. All of which gives rise to the same old set of questions: Why can’t those who are already wealthy restrain themselves from spending more than they have? Why do rich people, those who would seem to have all the financial padding one needs, wind up deeply in debt? Even worse, why do some of them end up broke?

Mr. Foreman, street-smart and now mindful of his wallet, has his own perceptive answers to those questions. For the man who came back from the brink, it’s all a matter of discipline and proper boundaries.

“A lot of people just don’t grow up,” he says. “I mean, 65-year-old men. They just don’t grow up. They don’t understand that money does not grow on a tree and that you’ve got to respect every dollar. Like Rip Van Winkle — the guy who slept — they party, party, party, then they wake up. ‘Oh my God!’ And they do something desperate trying to recapture what they had. And it doesn’t work like that. You must stay awake.”

David W. Latko, a money manager and radio host who recently published “Everybody Wants Your Money” (HarperCollins), a personal finance primer, reduces the mechanics of squandered wealth to handy categories. He says there are five basic ways people become rich: they inherit, marry, steal, win or earn their fortunes. Only those who earn fortunes, says Mr. Latko, tend to preserve their wealth. Inhabitants of the other four categories are more prone to be wastrels.

J-C wrote:When asked what happened to all his money Wille Pepp said something like..."It all went on fast women and slow horses."

kick asner wrote: I always wondered how things turned out for Earnie if he was able to keep his home or not?

barry wrote:Terry McGovern, Jack Blackburn, Joe Louis, Henry Armstrong, Kid Gavilan, Beau Jack...unfortunately, the list could go on and on. I would just about bet that a higher percentage of boxers spent they're fortunes than the boxers who didn't! It's a sad, but all too common scenario of a great boxer that hits it big and makes a bundle of money only to squnader it all away! The fighters that I probably feel most sad for were those who had the misfortune of losing everything during the Great Depression, or those who lost everything through no fault of they're own.

It's very, very difficult for me to garner any kind of sympathy for someone like Tyson...his was a case of complete stupidity. A lot of people most certainly took advantage of Tyson, but a lot of it was his own doing...spending up to two million dollars for a single watch...etc. Someone who has upwards of 100+ million dollars and losses it in the manner that Tyson has really deserve no sympathy!

kick asner wrote:With that being the case he may very well be doing alright for himself depending on how big a demand their is for his services. I believe that can be a very lucrative profesion. I know hear in the South Bend area former Notre Dame head football coach {American football} Lou Holtz was making unbelievable sums of money for a single speaking engagement, I want to say somewhere in the area of 100k per engagement but not totally sure. And that was if you could even get him. From my understanding you had to book two years in advance.

Decagon wrote:

Martin Sosa Cameron wrote:Other examples: Tony Canzoneri, Cleveland Williams...; in South America there are much: Vicente Rondón, José Gatica, but there are, fortunately, very good examples, like Luis Firpo ("the retired boxer most rich of the world" was a common phrase in his time), Marcelo Quiñones, Alfredo Prada and Jorge Fernández, and others, all they in a convenient economic and social position

I hear that Firpo had a ton of money. I guess when you put Jack Dempsey down for the 10-count and don't win the match, you never have to worry about paying for a meal again.