George Foreman, bald, smiling and gigantic, is propped atop a stool in Gleason’s Gym, the venerable boxing haunt in Brooklyn, watching a videotape of his heavyweight championship bout in 1994 with Michael Moorer.
Foreman once devastated opponents with brutal, staccato punches short on artistry and long on force. He dropped the undefeated 26-year-old Moorer in the 10th round with a right to the jaw.
Foreman was 45 at the time of the Moorer fight, a roly-poly 113kg who had just reclaimed the heavyweight mantle that Ali had snatched from him 20 years earlier. By knocking out Moorer, Foreman became the oldest heavyweight champion in history and he hailed his victory at the time as one “for all my buddies in the nursing home and all the guys in the jail.”
The knockout was the culmination of an unlikely return to the ring that Foreman staged in his later years, well after he had retired. He has often said that he ended his retirement to prove that nobody is too old for a comeback.
But Foreman confides in an interview that something else actually drove him back into boxing in the late 1980s. Having blown about US$5 million, made mostly, he says, during his salad days as a young champion, he desperately needed the money he could earn by fighting again.
A former street thug from Houston, accustomed to dispassionately cutting down the most ferocious of men, Foreman was on the verge of bankruptcy in the 1980s — and it terrified him.
“It was frightening, the most horrible thing that can happen to a man, as far as I am concerned,” he says. “Scary. Frightening. Nervous. I had a family, people to take care of... . I haven’t gotten over that yet.”
Pondering his glimpse into the abyss a moment longer, Foreman’s eyes tighten: “It was that scary because you hear about people being homeless and I was only fractions, fractions from being homeless.”
JUST A FLIRTATION
Unlike many others with lush bankrolls who somehow manage to lose it all, Big George rebounded handsomely from his flirtation with bankruptcy. He earned multimillion-US dollar purses boxing in the 1990s and made tens of millions more by reinventing himself as a gentle entrepreneur.
Even so, the trajectory of Foreman’s finances once had him headed into a gilded pantheon of big buckaroos who have squandered often-unimaginable sums of money, come perilously close to personal bankruptcy or completely lost their shirts. The ranks of well-heeled debtors include Thomas Jefferson, Buffalo Bill Cody, Mark Twain, Ulysses S. Grant, Debbie Reynolds, Michael Jackson, Dorothy Hamill, Robert Maxwell, Mike Tyson, Jack Abramoff and a long and pitiful cast of lottery winners.
Each of these grandees had distinct encounters with errant money management. Some of them were undone by rampant spending, others by injudicious deal-making, still others by various shades of greed, fraud or spectacularly poor investments. All of which gives rise to the same old set of questions: Why can’t those who are already wealthy restrain themselves from spending more than they have? Why do some of them end up broke?
Foreman, street-smart and now mindful of his wallet, has his own perceptive answers to those questions. For the man who came back from the brink, it’s all a matter of discipline and proper boundaries.
“A lot of people just don’t grow up,” he says. “I mean, 65-year-old men. They just don’t grow up. They don’t understand that money does not grow on a tree and that you’ve got to respect every dollar. Like Rip Van Winkle — the guy who slept — they party, party, party, then they wake up. ‘Oh, my God!’ And they do something desperate trying to recapture what they had. And it doesn’t work like that. You must stay awake.”
David Latko, a money manager and radio host who recently published Everybody Wants Your Money (HarperCollins), a personal finance primer, reduces the mechanics of squandered wealth to handy categories. He says there are five basic ways people become rich: they inherit, marry, steal, win or earn their fortunes. Only those who earn fortunes, says Latko, tend to preserve their wealth. Inhabitants of the other four categories are more prone to be wastrels.
“The first thing you’ve got to look at, always, is where is the money coming from,” he says. “People who’ve made money themselves protect it. People who’ve inherited it spend it.”
Profiles of wealthy debtors may not be quite as tidy as Latko’s list suggests; self-made gazillionaires can wind up insolvent, too. But by and large, Latko’s list rings true and reinforces one of Foreman’s points: America’s rich, it would seem, sometimes do believe that money grows on trees.
Over the last three decades, personal bankruptcy rates in the US have soared. But in a nod to the notion that going belly-up still carries a whiff of disrepute, Congress tightened bankruptcy laws last year to circumvent what US Senator Orrin Hatch decried as “a way to avoid personal responsibility.”
It may be, however, that for most people, a bankruptcy filing simply marks an inability to stay afloat — not an attempt to dodge creditors — because most of those who lose their shirts typically are not rich.
According to a study by the St. Louis Federal Reserve last fall, most bankruptcy filers are blue-collar, lower-middle-class high school graduates who are already overloaded with debt when they get sideswiped by unforeseen miseries like a job loss or overwhelming medical expenses. Rarely do the rich have to ponder the consequences of layoffs or insurmountable hospital bills, yet the social ledger is chock-full of examples of landed gentry who still dissipate their wealth and run the risk of ignominy.
Buffalo Bill hauled in the equivalent of about US$30 million in today’s money overseeing his Wild West show at Chicago’s Columbian Exposition in 1893, according to Erik Larson’s book The Devil in the White City. A financial panic in 1907 ruined him and his show; when he died in 1917 there wasn’t enough money in his till to pay for his burial.
Mark Twain, who had a lifelong penchant for dodgy investments and gimmicky inventions, lost about US$4 million in today’s dollars betting on a newfangled but unwanted typesetting machine in the 1890s. He subsequently had to take to the lecture circuit to stave off bankruptcy.
Michael Jackson, who began churning out Top 10 songs and albums as the lead singer of the Jackson 5 before reaching puberty, found it necessary to pledge a stake in his lucrative songbook of Beatles hits to secure a US$270 million bank loan to forestall a slide into bankruptcy.
Mike Tyson is entangled in his own financial woes despite once having the marquee power to draw US$30 million purses for a single fight. When Tyson filed for bankruptcy in 2004, he listed debts of US$27 million, including about US$13 million in unpaid federal taxes and about US$174,000 for a diamond-studded gold chain.
Buffalo Bill, Michael Jackson, Mike Tyson, Wayne Newton, Elton John and other public examples of spending run amok were, or are, all entertainers, and entertainers offer ready fodder for tsk-tsking — largely because gossip columns make it easy for the rest of us homely paupers to take quiet satisfaction in their plight. Entertainers, for the most part, are also peculiarly vulnerable when it comes to personal finance.
“You have people who are struggling for a long time and then overnight, boom, they hit it,” says Shelley Finkel, Mike Tyson’s manager. “If they don’t have someone watching out for them ... it will be very hard for them to be grounded financially.”
Finkel, a genial, elfin 62-year-old New Yorker who began his own career promoting a A-list rock stars like Jimi Hendrix, said he had always advised musicians and athletes to protect their wealth by socking away a chunk of their earnings into annuities or pensions. Few of them have heeded that advice, he said, including Tyson, who Finkel believes earned and lost more than US$400 million in his boxing career.
“It’s very hard to tell them ‘Don’t!’ because they love the instant gratification,” Finkel says.
Foreman, unlike most entertainers and athletes, had homegrown financial antennae, and his budgetary acumen surfaced at a relatively early age. He slugged his way into prominence by winning a gold medal at the 1968 Olympics, and a year later, when he was 20, he turned pro. Schooled, he said, in the perils of errant spending by the financial predicament of the boxing legend Joe Louis, he decided to form the George Foreman Development Corporation in 1971.
“I had so much time alone,” he recalls. “Not many people thought I would be champ of the world. Didn’t have any friends at all. And what I would do is walk to the bookstore, and I’d buy books. And they were books on taxes, accrual taxes, estimated taxes, and you better make a corporation.”
Foreman says his homework persuaded him to put about 25 percent of what he earned at every bout into a pension and profit-sharing plan controlled by his corporation. “I had all this time dreaming of this, so that when money came upon me I was already prepared,” he says.
Despite how closely Foreman tended his nest egg, most of his assets remained exposed. He describes the way he invested his unencumbered cash, about US$5 million, as a series of blunders: “Oil wells, gas wells, banks, flop, flop, flop.”
Entertainers aren’t the only rich people with holes in their pockets. Business people, seemingly prepared to have a better handle on their balance sheets than celebrities, have wound up as big debtors as well. William Randolph Hearst, of the publishing empire, the San Simeon estate and a 70m yacht, stood at the edge of insolvency in the late 1930s. John DeLorean, Motor City dream weaver and inventor of a streamlined sports car that bore his name, filed for bankruptcy in 1999 after financial and legal problems.
Questioned in 1991 about the reasons rich people hit the skids, the multibillionaire investor Warren Buffett told an audience at Notre Dame that debt and alcohol were ever-present culprits in financial demise. “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money,” he said, according to a transcript of his comments.
“I’ve never borrowed a significant amount of money in my life. Never,” he added. “Never will. I’ve got no interest in it. The other reason is I never thought I would be way happier when I had 2X instead of X.”
Yet even the most well-to-do sometimes still rely on debt. Over the years, Lawrence Ellison, founder and chief executive of Oracle, has preferred to hold onto, rather than sell, his shares in the database provider, giving him a stake currently valued about US$17.6 billion.
Oracle shares represent almost the entirety of Ellison’s fortune, and to finance one of the country’s splashiest spending sprees (138m megayacht, mansions, expensive hobbies and more) he has occasionally taken on sizable bank loans rather than sell his shares — all on the presumption that the value of his shares will remain lofty enough to allow him to pay back the loans.
A raft of e-mail messages and financial documents introduced in a lawsuit that disgruntled shareholders filed against Ellison and other Oracle executives in 2001, give witness to some of Ellison’s budgeting practices. (The suit was settled last November, and the judge in the matter subsequently unsealed financial documents submitted as exhibits in the case).
The documents also show how far Philip Simon, an adviser who described himself as Ellison’s “financial servant,” went in trying to persuade his boss to pay off about US$1.2 billion in loans. (Neither Ellison nor Simon responded to interview requests for this article).
Ellison’s ledger around the end of 2000 included annual “lifestyle” spending of about US$20 million, the purchase of a Japanese villa for US$25 million, a proposed underwater archeology project earmarked for US$12 million and his new yacht, budgeted at US$194 million (news reports later said that the yacht’s final cost approached US$300 million).
“I know you view me as a pessimist,” Simon wrote Ellison in an e-mail message in 2002, several months after banks began sounding alarms about Ellison’s debt. “Maybe you’re right, though I would disagree. Nonetheless, I think it’s imperative that we start to budget and plan. New purchases should be kept to a minimum. We need to establish and execute on a diversification plan to eliminate (yes, eliminate) all debt.
“I know you don’t like to discuss this,” Simon added. “I know this e-mail may/will depress you. View this as a call to arms.”
Ellison paid down part of his debt by 2002, according to court filings, and his Oracle holdings are vast enough that it was unlikely that his financial well-being was ever in peril. But for lesser financial potentates, the psychological twists behind overspending and bad investing can be more debilitating.
“The rich are different from you and me: they are more egotistical,” says Theodore Aronson, managing principal of Aronson Johnson Ortiz, an investment firm in Philadelphia. “Psychologically, I think the rich, because of their egos, think they know everything. Well, they don’t, and many of them repeatedly make horrible investments — because they can.”
Financial success can breed its own peculiar set of vulnerabilities. “People who are very successful develop elevated sensibilities about their skills, and when things turn on them they won’t admit they’re wrong because their self-confidence has held them up so long,” says Arnold Wood, chief executive of Martingale Asset Management in Boston. “In the face of evidence, even subjective evidence, that suggests that something bad is about to happen to someone, a funny thing happens: They reject the evidence.
“These kinds of people just continue spending because they think the money will keep coming in because they’re so successful,” adds Wood.
When Auntie Su (蘇) was evicted from her apartment last Monday, locals were so overjoyed that they sent thank you wreaths to the Tainan Police Department. “Justice has been served.” “Punish villains and eradicate evil,” read some of the notes. “Thank you, hardworking police for bringing peace and quiet back to Tainan!” a neighbor posted on Facebook. Auntie Su is a notorious “informer demon” (檢舉魔人), someone who is known to excessively report violations either for reward money or — depending which side you’re on — to serve as a justice warrior or a nosy annoyance. Usually they are called “professional”
Home to some 400 galleries and an estimated 8,000 artists, Berlin has long aspired to be what its politicians call the cultural capital of Europe. Yet in the coming year, thousands of works by artists including Joseph Beuys, Louise Bourgeois, Bruce Nauman and Gerhard Richter are set to vanish from its galleries, as the city debates what lengths it should go to protect art collectors from the sharp edge of a property boom. Last month, the Hamburger Bahnhof museum for contemporary art announced that Switzerland-based Friedrich Christian Flick would withdraw his collection of 2,500 modern artworks and take them back to Zurich
In Taiwan’s foothills, suspension bridges — or the remnants of them — are almost as commonplace as temples. “Suspension bridge” is a direct translation of the Chinese-language term (吊橋, diaoqiao), but it’s a little misleading. These spans aren’t huge pieces of infrastructure. The larger ones are just wide enough for the little trucks used by farmers. Others are suitable for two-wheelers and wheelbarrows. If one end is higher than the other, they may incorporate steps, like the recently-inaugurated, pedestrians-only Shuanglong Rainbow Suspension Bridge (雙龍七彩吊橋) in Nantou County. Because torrential rains hammer Taiwan during the hot season, the landscape is scarred by
With his sugarcane juice stall at Monga Nightmarket (艋舺夜市) floundering due to COVID-19, things took a turn for the worse for Lin Chih-hang (林志航) when he was furloughed from a part-time job. The crowds are trickling back to this nightmarket in Taipei’s Wanhua District (萬華), but Lin is now so busy that he has hired a friend to run his stall. As the sole driver of the night market’s delivery service, established on April 12, Lin takes on an average of 20 orders on weeknights and over 60 on weekends, with his father helping out when he is too busy.