Floyd “Money” Mayweather – Looming Cautionary Tale of our Time?

Is Mayweather A Walking Financial Disaster Waiting to Happen?

Floyd Mayweather is guaranteed to earn $24,130,152.45 for his participation in The One. That is what you get after paying income tax on $41,500,000.00. In light of his well documented issues with the IRS in the not too distant part he’d do well to note that reality.

Leonard Ellerbe insists he has no fear that Mayweather will blow his fortune, the way heavyweight champions Mike Tyson and Evander Holyfield did. The way Sugar Ray Robinson did.

“Never,” Ellerbe said. “Floyd has a tremendous advantage, because he’s seen the pitfalls and the things that have happened to other fighters, going back a long, long time before him. He’s educated himself and surrounded himself with top-flight financial advisors. Floyd has a number of billionaire friends who have helped him and given him sound advice. In this world, it’s all about who you know. There are things that are not available to this segment of people that are available to this other segment of people. And Floyd’s taken advantage of all of that.

In January 2011, Mayweather was hit with a $3,359,279 tax lien. The IRS claimed that Mayweather owed income taxes from 2009. Floyd earned $40 million for his fight with “SugarShane Mosley. In 2008 the FEDs filed a $6,165,735 tax lien against the boxer for unpaid income taxes. He’s reportedly worked out a payment plan with the IRS. Bare in mind it takes the IRS 3-5 years to catch someone at the level of Mayweather’s earnings. Are we to assume he failed to pay income tax on the majority of his pre-De La Hoya fights to the satisfaction of Uncle Sam?

I feel like I’m the last of my breed,” Mayweather said. “I earned it the hard way.

He spends ludicrously, sometimes as much as $200,000.00, for handbags for other people. He never wears his sneakers or boxer shorts more than once. Mayweather forks out for a separate private jet for his bodyguards because he doesn’t like travelling with them. The undefeated Mayweather has revealed that he keeps his money in a single bank account – not something any self-made Billionaire would recommend – diversification of risk being Personal Finance & Investment 101.

On September 5th 2012, Mayweather posted a photo of a betting slip on Twitter, betting $200,000 on the Dallas Cowboys at half-time of their NFL season opener against the New York Giants. The successful bet returned $181,818.20. The next day, Floyd posted another betting slip, this time of $100,000 in a half-time bet on Cincinnati to beat Pittsburgh in an NCAA’s Big East football match.This time, he won $90,909.10.

So $300,000.00 in two days laid down. Gambling is, mathematically a fairly simple expense to compute:

Betting generally provides a predictable long-term advantage to the bookmaker, while offering the player the possibility of a large short-term payout. Sports betting has an element of skill; such forms of gambling are known as “random with a tactical element.”

While it is possible through skilful wagering to minimize the bookmaker’s advantage, it is extremely rare that a gambler has sufficient skill to even completely eliminate his inherent long-term disadvantage (the bookmaker’s edge or house vigorish). Such a skill set would involve years of training, an extraordinary memory and numeracy, and/or acute visual or even aural observation.

Today was a good day. It took 24 minutes to make $40,000 dollars on the Portland Trailblazers,” [March, 2011 on Twitter] is not the musings of a particularly refined economic genius.

Bigger Fish Have Drowned

In 2004, Mikhail Khodorkovsky was the wealthiest person in Russia and the 16th richest person in the world according to the Forbes list. He was arrested on 25 October 2003 & charged with fraud. The Vladimir Putin government froze shares of Yukos on tax charges. The government took formal action against Yukos, leading to a collapse of the share price and the evaporation of Khodorkovsky’s wealth.

Seán Quinn’s began selling gravel to local builders and, over forty, he built up Ireland’s biggest private company. At his peak in 2008, he was estimated to be worth €4.7 billion (£3.7 billion), with interests in cement, glass, plastics, radiators, hospitality, hotels and insurance. The global financial crisis of 2008/09 demolished Quinn’s wealth as the property bubble burst and share prices plunged. In November 2011, Quinn filed for bankruptcy at the High Court in Belfast.

These two men were not “friends of billionaires” – they were billionaires. They had “advisers” the calibre of which Floyd Mayweather could only dream of acquiring.

Other Stars Who Have Fallen 

Wesley Snipes was one of Hollywood’s top action stars, as well as a successful producer. Accused in October 2006 of not filing tax returns from 1999 to 2004 and cheating the Internal Revenue Service (IRS) out of $12 million, Snipes was convicted of three ‘failure to file’ offences and given a three-year prison sentence in February 2008, eventually exhausting appeals, ended up behind bars in December 2010.

MC Hammer once had an estimated net worth of over $33 million according to Forbes Magazine. Concern about Hammer’s solvency first emerged with delays between the albums Too Legit to Quit and The Funky Headhunter, having spent much of his cash on staff and personal luxuries. In addition to excessive spending while supporting friends and family, he ultimately found himself $13 million in debt.

Matt Hamilton

Matt Hamilton: The Media Shake Down Straight Outta Cape Town.