Allen Iverson’s Unique Contract with Reebok Saves Him From Himself
Players like Lebron James are renowned for their smart decisions when it comes to their money, whereas others like Allen Iverson serve as a cautionary tale. Over the course of his career, Iverson earned approximately $200 million: $155m from his NBA salary and another $40-$50m in endorsements. His lavish lifestyle during his NBA career foreshadowed the financial woes we would experience during his retirement.
How did Iverson manage to go broke?
Aside from showering his entourage with gifts he couldn’t afford and including them in a lifestyle fit for a king, Iverson apparently had a habit of keeping his money in dozens and dozens of garbage bags around his mansion. Some would occasionally go missing. At one point in his career, Iverson arrived back at an airport and had forgotten where he parked his car. Rather than spend time searching the parking lot for his vehicle, he simply found a ride home and bought a new one.
Allen’s financial situation came to light in 2012 after a judge in the state of Georgia ordered him to pay $900,000 to a jeweler. In a December 2012 court filing, Iverson told the judge that his monthly income was $62,500 and his expenses were $360,000. According to the court filing, Iverson monthly expenses consisted of such notable items as $125,000 going to various creditors and mortgages, $10,000 on clothes, $10,000 on restaurants/entertainment and $10,000 on groceries.
So how has Reebok helped Iverson?
Iverson made a decision in 2001 that would inevitably save him from his future self. He signed a unique endorsement deal with Reebok. In addition to paying $800,000 a year for life, Reebok set aside $32 million in a trust fund that Allen will not be able to access until he turns 55 in the year 2030. The deal came to light when Allen’s ex-wife filed for divorce.
Regardless if it is a challenge for Iverson to live with a budget far less than what he was used to during his playing days, someone had the foresight to protect the man from himself.
Whether an endorsement contract or an M&A transaction, every negotiation is unique and needs to be approached with the proper strategy and insight. Talley LLP is uniquely equipped to provide the technical and managerial expertise to help you plan, negotiate, structure and execute on your buy-side or sell-side strategy.