Saturday, 12 November 2016

Lowest-Paid NHL Player

It was a little heart-breaking to hear of Jack Johnson's legal and money problems. There were a ton of stories surrounding what happened to his money when he claimed bankruptcy, but none of them seemed to flesh out why he was in so much red ink. The man had signed massive contracts in the NHL that should have him living comfortably, but it seemed that he made some rather poor decision and unsavory deals that landed him in hot water. Thankfully, it appears that the majority of those he owed money to are willing to settle based on reports today.

According to Aaron Portzline of The Columbus Dispatch, Johnson will give up most of the next two years of his NHL pay in the settlement, making him "the lowest-paid player in the NHL for the next two seasons". Johnson, as it stands, makes about $5 million per year, and the settlement will allow him to keep a small amount from each year's pay. According to Portzline, "Johnson will keep $246,000 for 'living expenses' each of the next two seasons. In the following three seasons, he'll get to keep $277,050.50 per season until all his creditors are satisfied."


According to Portzline,
Johnson, 29, has liquidated two homes — one in Ann Arbor, Michigan, the other in Manhattan Beach, California — as well as a Ferrari valued at $125,000, and he will be, according to one creditor, "the lowest-paid player in the NHL for the next two seasons."
The good news is that six of the eight creditors Johnson owes have accepted this settlement that sees the money from the above sales plus some $10 million going to that settlement. The bad news is that two creditors have yet to reach an agreement with Johnson, so his financial woes may not be over just yet.

According to Portzline's report,
Four of the creditors — Capital Holdings Enterprises, Capital Financial Holdings, CapStar Bank and Rodney Blum, a Republican congressman from Iowa — settled for a deal in which Johnson will pay them collectively $2.8 million, or 35 percent of the $8 million-plus debt, according to the court documents.

In addition, the four creditors will get 10 percent of Johnson's future earnings if he signs a new NHL contract in 2018 that exceeds $4.5 million total over a three-year term, a virtual certainty given his age and status in the game. The defenseman's current deal with the Blue Jackets ends after the 2017-18 season.
In other words, Johnson won't be rid of this financial burden for quite some time. The loans that his parents took out in his name will now haunt the 29 year-old for what appears to the majority of his NHL career, and he has absolutely no power to solve this problem unless he takes significantly less money than he's worth or he lives on a meagre salary for the next five years. It seems the latter is easier than the former.

As per Portzline,
Two other creditors, Pro Player Funding and Cobalt Sports, did not agree to the initial agreement but later reached their own settlements with Johnson. Pro Player Funding will get $1.65 million from Johnson, and Cobalt will get $775,000, or 58 percent of the roughly $4.1 million they were owed.

Two other lenders — RFF Family Partnership, which is owed $1.6 million, and EOT Advisors, which is owed $400,000 — have not agreed to a settlement.
Yikes. What a tangled web he's weaved. For a guy who came out of college looking like the next great offensive defenceman, he may need to pick up a second job in the off-season like the players of yesteryear had to do. I'm not saying that bagging groceries or painting houses are his only choices, but Johnson might have to do what a number of minor-league players do in terms of supplementing his $250,000 annual salary if he can't find a way to downsize his way of life in a hurry.

Johnson may not have made the bad deals, but he is required to pay for them after his name appeared on the contracts. After having worked in the financial industry, I know it takes about seven years to erase a bankruptcy from a credit report. In Johnson's case, it's going to take him seven years just to erase the money owing to the various creditors he owes.

His next contract? It's already spoken for.

Until next time, keep your sticks on the ice!

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