Ahead of the 2023 NBA draft, veteran Goldman Sachs wealth manager Nicole Pullen Ross says rookies would be wise to build a trustworthy business team to avoid falling victim to financial fraud.
Tall Order: Victor Wembanyama, projected to be picked No. 1 in the 2023 NBA Draft, would be wise to guard his finances.
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n April, ahead of the NFL Draft, Nicole Pullen Ross, head of private wealth management for the New York region at Goldman Sachs, gave the incoming class of rookies a game plan for their careers: “Think like a CEO,” she advised them.
Pullen Ross, a partner at Goldman who advises professional athletes, went on to explain that regardless of which team players join, they have to start building their own team and surround themselves with trustworthy advisors much as a chief executive does.
Now, with the 2023 NBA Draft tipping off on June 22 at the Barclays Center in Brooklyn, Pullen Ross wants NBA rookies to heed the same wisdom. As teams prepare to transform at least 30 players into multimillionaires, including 7-foot-5 French phenom Victor Wembanyama, who is projected to be the No. 1 pick, Pullen Ross is pushing the new rookie class to guard their finances by acting like a top executive.
“A CEO thinks about every decision they make, not just decisions that impact today,” Pullen Ross says. “It’s making decisions with the end in mind.”
A 23-year veteran at Goldman Sachs, Pullen Ross is responsible for helping athletes grow their earnings into generational wealth. She notes that some of the challenges rookies face include reckless spending, failing to account for state-by-state taxes, and not understanding “what you actually have” for income.
A Whole New Game: Goldman Sachs’ Nicole Pullen Ross thinks professional athletes should act and think like CEOs.
Photo provided by Goldman Sachs
This week, Wembanyama is widely expected to be selected first by the San Antonio Spurs in the draft, and according to the NBA’s collective bargaining agreement, top picks make 8.9% of the league’s overall salary cap. Next season the players’ association estimates a record $134 million cap, which means that Wembanyama can expect to make north of $11 million (pre-taxes) in his first season. That money can rapidly disappear, however, especially as expenses rack up.
Pullen Ross believes the CEO comparison is apt for professional athletes because their salaries are comparable. According to Pullen Ross, the average salary of an S&P 500 CEO was around $18 million to $20 million in 2022. By comparison, NBA players will make about $30 million to $40 million over their first four seasons in the league. “But we also understand that for many players, the length of their career will be relatively short,” Pullen Ross says. “They won’t have that 20 years of annual earnings like a CEO might have.” So when they are thinking about their career paths, she advises them: “You should be frugal at the beginning of your career, like anyone should as you’re learning and growing, and have the vision to turn up the risk and growth opportunity over time.” Among the first moves Pullen Ross advises incoming rookies is to rent before buying a home and to live frugally until they have a better understanding of their new wealth.
Another vital aspect of financial preparedness for Pullen Ross is due diligence.
According to a 2021 Ernst & Young study, professional athletes alleged roughly $594 million in fraud losses over the previous 15 years—with NFL players alleging losses of a combined $140 million to fraud and NBA players alleging over $100 million in losses.
Tim Duncan made more than $200 million in earnings throughout his NBA year career.
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In one of the most famous examples of financial malfeasance, Tim Duncan, the Spurs’ last first-overall pick in 1997, fell victim to wine industry businessman and financial manager Charles Banks, who pleaded guilty in 2017 to defrauding the NBA Hall of Famer for $13.5 million. Banks was sentenced to four years in federal prison and agreed to pay Duncan a $7.5 million settlement.
“It was disappointing but not shocking,” Pullen Ross says of the Ernst & Young report. “What happens too often is the people they are relying on to have their best interest in mind don’t always show up that way. And it’s not specific to this [sports] industry, but the numbers are so big when you think about fraud in this case.”
A Columbia University business school alumna, Pullen Ross was the first Black partner at Goldman Sachs’ private wealth division. But she is quick to add, “I wanted to be the first, not the only. For me, it’s really important to make sure I spend a lot of time bringing others below—or around me—up.”
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Source: https://www.forbes.com/sites/jabariyoung/2023/06/20/why-nba-rookies-should-act-like-ceos-to-avoid-losing-the-millions-theyre-about-to-make/