Former fallen-from-grace NHL superstar Derek Sanderson talks about his new-found mission helping fellow athletes manage their wealth.
Sanderson, who dropped out of his Canadian high school to hit the ice in 1965, eventually hit the big time playing for the National Hockey League’s Boston Bruins. He hit the big paycheck with the Philadelphia Blazers of the short-lived upstart World Hockey Association, and then hit bottom with a drinking problem. With help, he sobered up and returned to school at the age of 40 to learn and master a new game: personal finance. As founder of the Athletes Fund and The Sports Group, today Sanderson is committed to helping players spend wisely, avoid debt and retire securely.
CreditCards.com reporter (and novice hockey player) Erica Sandberg faced off with The Turk to get to the root cause of money mismanagement and how to achieve financial salvation.
Derek Sanderson, financial adviser and ‘Crossing the Line’ author
Former NHL pro Derek Sanderson went from rags to riches to rags before reinventing himself as a money manager to fellow athletes. His book, “Crossing the Line,” is in the works to become a movie with Edward Burns slated to direct.
CreditCards.com: So many of us believe that if we only had millions of dollars, our troubles would be over forever. But when you get it in massive amounts, and so young and quickly, how much do you really value it?
Derek Sanderson: You don’t value it. It’s not money, it’s the quality of life around you. You gotta ask yourself, “Why do you squander money, wealth?” It’s because you’ve never been bred to money. The wealthy know how to handle it properly because they are used to it.
CreditCards.com: You didn’t grow up with wealth?
Sanderson: My dad made $26 a week, take home. I had the greatest parents. There was never lack of love and warmth. We had one of those wartime houses in Canada. It was little and we didn’t have central heat. I used to sleep with my pants and coat on and heavy socks.
CreditCards.com: But you did earn a substantial sum. In the mid-1970s, you were the highest paid athlete in the world.
Sanderson: Oh yeah, back then I made $3 to $4 million. That is the equivalent of $17 million today. When you get money like that you don’t understand it. But all I had was money. I was lonely.
CreditCards.com: Tell me about the unique issues that athletes have with money. There’s a long list of luminaries who’ve made a mint, but wiped themselves out. Pete Rose, Lenny Dykstra, Mike Tyson … It’s a cliche by now. I wonder, is there is a deep sense of undeserving?
Sanderson: Oh yeah, think about it. Gambling on the teams, all teams, is epidemic. Because in their heart of hearts they feel they don’t deserve it. It’s everyone, though. A lot of people can’t handle money and success. Athletes are just people. They aren’t special. An athlete who thinks he’s special has a serious problem.
CreditCards.com: You have an incredible new book out, “Crossing the Line,” that is soon to be a movie, and it outlines how you went from extreme riches and jaunts at the Playboy clubs to losing it all and sleeping on park benches. It’s a very candid account. How difficult was it to open up like that?
Sanderson: Not hard. It’s about the light at the end of the tunnel. You can learn to live. It’s part of Alcoholics Anonymous. Don’t lie; learn to say, “I don’t know.” Those are the two bravest things you can learn. Why bluff an answer? We always try to impress. Why try to impress people who don’t like us? Don’t do that! I’m not trying to impress anyone.
CreditCards.com: Your message must be hitting home. When I tried to buy it the first time, it was out of stock.
Sanderson: You know what the book has done? Sold out four times on Amazon. It’s No. 1 in Canada, it’s No. 400 internationally, out of every book put out this year.
The message is that we need each other. What are we without each other? That’s why the book has done well. You have to think about who is reading it! You can’t hold up the bravado. People need to know they aren’t alone.
CreditCards.com: When you descended into drug and alcohol abuse, you lost just about everything. What are you sick of being asked about, when it comes to your past financial troubles?
Sanderson: Yeah, they ask. It’s tiring. They want to know the worst, the bottom, the rock bottom. I’ll talk about it, though.
The truth is when you’re an addict, every day is rock bottom. And they want to know about the stories of you sleeping in Central Park. You’re rolled up in a ball, terrified, and you don’t even know what you’re terrified of. Then you’re in a blackout. You can’t stay focused.
CreditCards.com: With help from friends and AA, you worked your way up and out. Now you help athletes avoid the same financial mistakes you made. Tell me about Baystate Wealth Management and your involvement as managing director for The Sports Group. Did you feel prepared to take on this role? How is it going now?
Sanderson: A dear friend said, “You can’t just tell stories for the rest of your life. You have to go back to school.” I did. Then after I learned everything, he said, “What do you want to do?” I said I wanted to form The Sports Group to protect the player from himself. I did that. Now their paychecks come to us and we give them a budget. We protect them from the Philistines — people who will take advantage of them. Then I started the Athletes Fund. We take care of 21 percent of the players in the NHL.
CreditCards.com: You also keep them on the straight and narrow by teaching money basics, right?
Sanderson: We educate our players on compounding interest so they understand to get in early and then never touch the principal. I say, “You want to buy your brother an $80,000 Escalade? OK. Beautiful. But understand that it’s more expensive than you think.” I tell them, “You want to live on $10,000 a month because you’ll retire when you’re my age with many millions. But if you live on $20,000, you’ll be broke by 45.”
There are a lot of people who think I’m a jerk, but I’ll be the bad guy. I’ll say no so they don’t have to. My job is to protect the player to make sure he doesn’t get hurt.
CreditCards.com: Does it make you crazy to see the players doing dumb things with their money? What do you want to do — reach out and check them? Drag them to the ice and say, “Stop?”
Sanderson: If they aren’t listening, I tell them to go somewhere else. If you do not adhere to our budget, leave. Go. I’m not an idiot, I’m not here to kiss your ass.
I had one player give me $4.8 million and five weeks later he wrote a check for $1.5 million. My secretary walked in and said that he was buying a home. I called him and said, “Take it all. Close the account, all the money” … He said, “No, I like you guys!” I said “no,” though, and the firm went ballistic. But either you’re here and follow the rules or you go somewhere else.
It’s nice when they come back and ask for education. They do. They know I work for them. I’m there for them. Money can go fast. Overnight.
CreditCards.com: Any parting advice, Derek?
Sanderson: Deal with fear. I used alcohol to cope with fear of inadequacy, shyness, getting punched in the mouth. There is a God. You’ve got to have faith. Once you conquer fear, a tranquility enters your life.
You can figure money out: How to make it, how to make more money from it and not lose it. Spend your money properly. Be nice, be kind. We’re all in this together, we need each other. Value the right things. It all boils down to this — if you didn’t lie, cheat or kill that day, you’ll you have a good night’s sleep.