Summer in the NHL is all about money. The headlines are about new contracts for free agents, arbitration awards, cap space, and bids for the Phoenix Coyotes. There have also been some headlines about players losing money. Several current and former players are suing a golf course developer for a combined $25 million, and Sergei Federov has filed suit against his financial manager for $43 million. Think Madoff meets the NHL.
The first thought I had when I read about these cases, was probably the same thought you had, how do guys let this happen? That’s the easy conclusion to come to. But in reality, it’s not that simple. Individuals with high net worth have access to investments and opportunities that most of us do not. It’s the old sayings “the rich get richer” or “money goes where money is”, and that’s the way it is. You can see how these things happen. Somebody knows a developer or financial guy that made him or his buddy a lot of money. The biggest gains are made on the ground floor, so you need to get in early. Plans, brochures, and other evidence are likely given and the investment is made. Then things don’t add up.
In the suit against golf course developer Ken Jowdy, 19 hockey players allege that he took $25 million dollars that was earmarked for a golf resort in Mexico to entertain Major League Baseball players in Vegas. The list of players in the suit include former Sabres Michael Peca, Jay McKee, Jason Woolley, and Vladimir Tsyplakov. Seeing those familiar names makes you more sympathetic to the victims. Out of the four, I know McKee the best, and he does not and never struck me as foolish. I am also sure these guys didn’t pluck down the investments without some other counsel, either from a financial advisor or accountant. It will probably not bankrupt any of these players, but it still must sting, a lot.
Sergei Federov’s case is a little more shocking. $43 million by one player to one man. OUCH! The man is question is Joseph Zada of Michigan, who according to reports says that the money was a loan and that he intends to repay Federov. It could very well be the case, but you think at some point Federov heard the term diversify from a teammate. I hope he gets his money back, because it makes me sick to even fathom anyone losing $43 million dollars in a scam.
These two cases were sandwiched around a speech I witnessed Portland Pirates Head Coach Kevin Dineen give the Sabres prospects weeks ago at development camp. Dineen gave some great perspective to these kids about what it takes to be a professional. Part of speech was about money and how you have to watch it. He mentioned an investment that was “hot” around the league back in the 80’s and that many players lost a lot of money when the stock went south quickly. Then he brought up the golf course developer and the current players involved. Dineen’s point was there would always be “great” opportunities to make even more money, but to keep an eye on your money. The players were really paying attention. Hopefully, they will take his words and the misfortune of their predecessors as lesson to not fall victim in an investment scam. Good advice for all of us.
I guess I’ll delete that email from the British Lottery.