Money, fortune, fame: These are three typical guarantees generally when someone signs a contract as an NBA player. But Josh Childress recently shared what really happens when one starts a career as a professional baller and how to maintain that immense wealth.
Let’s just say it’s not all in the wrist.
Signing a four-year, $11.7 million contract was only the beginning for Childress. When he was chosen in the 2004 NBA draft as the sixth pick, he knew he would need more money.
“The first mistake is, people say, ‘Okay, I’ve got $11 million,’ ” Childress told Business Insider. “You’ve got five [million dollars after taxes] over four years. So that million-dollar house that you thought you had $11 million, that you had $10 million more, that house then becomes more expensive. Most guys buy their mother a house or a car or something. They buy themselves a car. You’ve got a 2 to 4 percent agent fee. You got the NBA escrow. So that check gets eaten up.”
So how did Children make a $60 million empire?
Building Lasting Wealth
The Stanford graduate who grew up in Compton, California, was determined to avoid the typical financial pitfalls of NBA stars, and paid close attention to taxes and agent fees. He quickly learned that his $11.7 million came out to about $5 million after taxes through his four years in the league. Childress didn’t overestimate the luxuries he could afford and spread his money evenly, according to Business Insider.
Children also did not model his financial expectation after veteran players, who typically made significantly more. As a younger player, Childress consciously acknowledged that his pockets were not that deep and that seeking advice from older and exponentially more affluent players was a setup for failure.
“Some of my veterans spent a little more than others,” Childress said. “If those are the guys taking you under their wing, that’s what you get used to. So that’s how you think it has to be, and that’s how you think the life is, and you get caught up in that, and you end up spending way more than you should.”
Childress made a conscious effort to put a cap on his spending and temptations during his career as a baller. Excessive luxuries and falling under peer pressure to keep up with the other players was the key to financial insecurity.
Childress added to his wealth by becoming CEO of a real estate development and investment company called the Landspire Group. In addition to having skills on the court, Childress also developed more than 12 years of venture capitalist and real estate investing experience. He’s had to deal with transactions worth well over $300 million. He also founded the Josh Childress Foundation, which is a mentorship program dedicated to providing resources to high school and collegiate athletes. Childress has been able to use his accumulated wealth to also fund the Josh Childress Athletic Scholarship, the first Summer Studies scholarship at Stanford University.
Using his entrepreneurial skills, he built and maintained his wealth, created a legacy, and provided for his community.
“I just envisioned myself as not having limits,” Childress said last year at the “Athletes in Business” panel at the LA Sports Innovation Conference. “I thought that having the ability to go from Compton to Stanford to everywhere else, I was able to do things that I couldn’t have dreamed of as a kid, and so when I put my mind to something and set my sights on something, it’s almost like a why not mentality. Why not me? Why can’t I? I’m not going to limit myself based on preconceived notions.”