Being a teenage sports millionaire is not all fun and games

Trent Clark wasn’t 10 minutes removed from being the 15th overall pick of the Milwaukee Brewers in Major League Baseball’s first-year amateur draft in June when a friend asked if he was “coming to JJ’s tonight?”

The Richland High School standout slipped into his boyish smile with a slight laugh and said, “No, I need to stay on top of this and see what happens.”

Clark’s answer points to his all-business and grown-up approach to life after high school, a life now centered on professional baseball.

Being a teen millionaire is not unique in sports.

In baseball alone, there are plenty of high school players signing for million dollar bonuses each season.

Last month, 30 of the first 61 major-league baseball draftees had just graduated high school.

The first 61 players in this year’s first-year draft commanded at least $1 million signing bonuses according to the compensation agreement negotiated in the collective bargaining agreement between MLB and the player’s union.

And there’s more money to be had.

According to Baseball America, some 80 percent of first-round draft choices reach the major leagues at some point in their careers. After that, the number drops to around 50 percent with sharp decreases throughout the remaining picks.

For the 18-year-old Clark, money matters are just beginning as he gave up a scholarship at Texas Tech to sign a minor-league deal that pays him about $1,100 per month.

But the deal had a bonus sweetener of about $2.7 million added to it.

Gymnast Gabby Douglas parlayed her 2012 London Olympics gold medal into almost $3 million in endorsement contracts at age 16.

Former Arlington Grace Prep and Prime Prep star Emmanuel Mudiay signed a multi-million dollar deal with Under Armor as well as a $1.2 million contract to play professionally in China last fall after forgoing a scholarship at SMU.

On June 25, the 19-year-old Mudiay became the seventh overall pick of the Denver Nuggets in the NBA Draft which means he’ll get another $5.2 million guaranteed over his first two seasons.

The same applies for former Euless Trinity and University of Texas star Myles Turner, who was a lottery pick at age 19, 11th overall, by Indiana in the NBA Draft.

Turner, who played one season at Texas, is guaranteed around $4 million over his first two NBA seasons.

All NBA rookie contracts signed with first-round picks have two guaranteed years with two separate one-year team options for seasons three and four.

For Jennifer Capriati, the then 13-year-old New Yorker reached the semifinals of a 1990 women’s tennis event in Boca Raton, while going on to make the semis at the French Open as well.

By 1993, Capriati had won six singles titles and the gold medal at the ’92 Barcelona Olympics.

Mike Tyson failed to make the Olympics, but ended up earning millions while ascending to the heavyweight title throne.

He later sued various managers and promoter Don King after his finances were squandered.

LeBron James is in another stratosphere on the subject.

The Cleveland Cavaliers made the Ohio native the first overall selection in the 2003 NBA draft, fresh off his team’s third Ohio state title in four high school seasons.

His first contract was worth almost $13 million dollars over three seasons and the Cavaliers held the option on a fourth year at nearly $6 million.

While all three of these examples are different in almost every facet, the underlying common denominator is that all of them were instant millionaires.

Money management

Clark’s ascension to professional baseball isn’t by accident.

Despite telling his mother in the last year that he didn’t have a backup plan, the outfielder has achieved at every stage and has approached the game from a professional level for some time now.

“He’s the most grounded player I think I’ve ever coached,” Richland coach Chuck Wells said. “When he came back from international play with USA baseball last summer, the first thing we did was sit down and talk about the things we needed him to do for his team.

“Not surprisingly, I never had to ask for him to get on board. He wanted to get better and really, it was a not matter of if, it was simply that he was going to get better, period.”

Clark spent his senior year doing things that typical seniors do.

But recognizing that his ability was creeping him into the conversation as one of baseball’s top prospects didn’t give him any rest or relaxation.

“It just made me want to work harder,” Clark said. “I needed to be a better outfielder, so I needed to work harder on defense and because of the way I was being pitched, I had to start learning how to be more aggressive at the plate.

“To me, that was all business. I mean if you want to be great, how can you take a day off or relax from it. I love this game. In the past year, I’ve become more of a historian of the game as well, but the business aspect and the kind of player I needed to be was important.”

Clark said he knew early on that the reality of collecting the signing bonus wasn’t a blank check to purchase material items.

“It’s money that I will probably never touch,” he said. “It’s money that goes into long-term investments and will be part of my future and part of my family’s future.

“Once I realized that all of this was happening, that’s when I met with and started talking to a financial adviser and started to understand and be a part of managing it.”

Mother’s comfort

Clark’s mother, Michelle Grisham, went with her son to Milwaukee as the Brewers introduced their top pick to fans and the organization shortly after the draft.

Clark went through two days of activities that included contract signings, news conferences and batting practice prior to a Brewers home game.

Then the difficulty of the moment came home for Grisham, an instructor for Carter Blood Care.

“I was coming home to Fort Worth without him and he was headed off to start his life,” she said. “I had kind of banked on the idea that I would have a couple of more years at least with him in college.

“But as a mother, you can only want just one thing and that’s for him to be happy. We said our goodbyes and I took one more look and he had the biggest smile on his face. It was tough for me, but at the same time it was an overwhelming feeling that he was going to be OK.”

Grisham said the goal for her was to prepare Clark for the business world of baseball.

“His ability was something I couldn’t teach and really that was all up to him,” she said. “But for me, I needed him to grasp the understanding of money and business management.”

Early on, that included a shocking revelation to Clark.

Grisham said he looked bewildered when the idea was broached that money was a vehicle or tool to earning more and that proper investments would yield dividends over both short-term and long-term periods.

When shown the power of seven-figure investments, which is known in the Wall Street world as accredited investing, Clark was perplexed.

“How do athletes ever go broke,” Grisham said he asked? “And that’s when we started talking about athletes that buy houses and cars or get greedy.

“We also talked about people that come out of the woodwork, just showing up and laying out these sob stories or trying to pass themselves off as family. I wanted Trent to know that it wasn’t his job to take care of anyone and to be aware of people trying to guilt him into things.”

Clark said once he had a better understanding of the investment world, he decided this past spring that he would pursue a degree in finance if he wasn’t selected high enough in the draft.

“Up until that point, he had no clue about money management and there’s more for him to learn, but at least he has a base to work from now.”

The woodwork

NFL agent Jordan Woy, who used to represent baseball players coming out of high school, said once some of his athletes start cashing big checks, distant relatives emerge out of the shadows with all kinds of requests and stories.

“When athletes lose a bunch of money or go broke, sometime it’s not all on them,” he said. “Everyone wants to help someone with a problem and the story is always about buying a house, a car or starting a new business.

“And really, as a child, it’s very hard to tell a parent, an aunt or an uncle, no. When the trouble starts to surface, it’s mostly because they’ve helped out a lot of people and when you’re doing that or you have enough of those people, you can go through $2 million or $3 million in a blink of an eye.”

Woy said one of the first questions he asks every prospective client is what is it they want him to do for them.

Inevitably, the answer is always to get to the top.

“That’s when I remind them that getting to the top, or scaling Everest, is up to them,” he said. “What I’m here to do is act like a guide for them, to get them maximized all the way to the top and then, as most people die on the way down, to help them manage the descent.”

Woy said he uses the example of a running back, close to stardom, that for one reason or another has to retire at the age of 29.

“All of the sudden, the checks just stop coming,” Woy said. “He’s been drawing average checks of a couple of million for about six seasons and that can be dangerous because all of the sudden, if an athlete isn’t prepared, the income isn’t there.”

Personal money

Once the net total of income checks reaches beyond seven figures in an individual’s holdings, the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) classifies those persons or entities as accredited investors.

That means someone such as Clark gains access to additional investment products that might otherwise be safeguarded by the SEC from smaller investors.

That doesn’t make the risk any less simple, but calls for the need to be on top of your business while also having the pressure of performance on the field.

For Grisham, the plan included getting her son in front of a financial adviser.

Finding someone to trust was a big step.

“Baseball is one of the toughest sports to make it in,” Grisham said. “The only thing guaranteed was the signing bonus. When you factor in injuries or maybe ability that doesn’t catch up with you, you have to prepare for a future without the game.

“No one has a million dollars at 18 years old, so you can’t go and blow it. We found a trusted financial adviser, someone reputable that will let Trent’s money work for him. If baseball doesn’t work out, he has a great start to life and that’s been my plan from day one.”

That’s an incredibly prophetic statement considering Clark was already hurt in his second professional Arizona League game last month, chasing a fly ball head-first into an outfield wall.

Clark was tended to for 15 minutes before being taken off the field by stretcher and hospitalized overnight.

He’s come back from that to hit for the cycle in one game and is among the Arizona League leaders in slugging percentage and on-base plus slugging.

And while there’s risk on the field to consider, investment vehicles of any kind, all have one common fundamental: none of them are risk-free, no matter the level of standard deviation for them.

Basically, spending is the top problem among today’s athletes, particularly young millionaires.

For Grisham, she said her son are already cognizant of that and Woy said depending on an athlete’s background, a player can fire through some cash quickly.

“One key thing is whether they’re NFL or baseball, either you get the signing bonus or you don’t and then how you deal with it,” Woy said. “If someone in the family, father, mother or someone else that was good with family money, if you have someone like that that’s played that role and taught you those traits, guys can do really well.

“It kind of just depends if they have that gene so to speak, to be very careful with it. If they avoid buying Ferrari’s, Bentleys, watches, diamonds and things like that, they can do very well.”

Being the big shot is also troublesome.

“This whole being up at the club and in the VIP and getting bottle service and paying for stuff like that, you can end up with a $2K or $3K bill at the end of the night,” Woy said.

Uncle Sam’s take

One thing that Grisham said blind-sided Clark was Uncle Sam’s take with the tax bill.

“I don’t understand how they can do that, that’s my money,” Grisham said of Clark’s reaction. “It was funny because he just didn’t see that coming.”

In the case of Clark, had he taken his $2.7 million bonus in a lump sum, his immediate tax hit could be 39.6 percent, due immediately to the Internal Revenue Service.

Clark said he was asked not to disclose the terms of his deal, but said the bonus publicized with his accompanying draft position was on target.

Grisham wouldn’t discuss the terms as well, but indicated Major League Baseball has various programs for signees to break up their bonuses in varying stages of income over several years.

If Clark was to break his bonus out over three years, it’s conceivable that his annual tax hit would be closer to 25 percent.

Whichever the case, Clark didn’t have $2.7 million immediately to spend on a shiny new Ferrari, not that he wanted one.

“No, in fact, he talked about putting some money into his old truck to keep it running for a few years,” Grisham said. “And that’s why I know Trent’s going to be OK.”

This story was originally published July 28, 2015 at 2:04 PM with the headline "Being a teenage sports millionaire is not all fun and games."