Group Writing Project: The Bankruptcy of an American Icon

by Kevin on August 13, 2008

This is the second edition of the PFBloggers Group Writing Project. We’re opening up the discussion to other bloggers with the Extended Group Writing Project.

The goal for this month was to find a famous person that one might remember as having it all… and then lost it all to bankruptcy.

Winning It All

She always wanted to be an Olympian. And she got what she wished for.

At age 14, she dropped out of high school to focus more intently on skating. Her family made large financial sacrifices, moving from city to city following her coach around the country. She won two consecutive U.S. titles.

Even with those wins under her belt, she was not favored headed into the 1976 Olympics in Austria. She had claimed second in the two world championships leading up to the Olympics. She was known, but not expected to take the gold medal.

The skeptics were wrong. She took the gold in a surprising fashion, easily ahead of the two opponents that had finished ahead of her in the two world championships leading up to the Olympics.

Olympic Gold turns to Fame and Fortune

This is the story of Dorothy Hamill. The girl America fell in love with. What ever happened to her?

We celebrate with them as they claim their medals. We usually forget them after the TV turns off. It turns out Dorothy’s story has your typical ups and downs.

After winning the Gold in 1976, she went professional and signed a multi-year contract with the Ice Capades. She earned a lot of money during her eight year stint with the Ice Capades. How much? That multi-year contract was for $1 million per year. Remember, this is the late 70s and early 80s. That’s a lot of money.

All is not well

Hamill married twice; the first marriage last a little more than two years. Hamill had gone on to admit that she battled depression her entire life. In 1993, Ice Capades was strapped for cash and failing. Hamill and her 2nd husband bought the company in a multi-million dollar deal. Even after revamping the entire show (and skating in some of the performances herself) the company continued to struggle. The couple had also started a new Arizona skating arena that ended up going bankrupt. The bank that loaned them the money sued for repayment. A month later they filed for bankruptcy. They later divorced.

Everyone wants a cut

I found several interesting articles researching Dorothy. One that is on the Dallas News website as an AP report from Connecticut had these interesting mentions:

An Olympic champion at 19, Hamill needed only two years to learn the cruel lessons of fortune and fame. Agents, promoters and public relations advisers swarmed like flies to honey. Most gave her bad advice or led her to poor investments.

“Money is very evil,” Hamill said two years after she won in Innsbruck. “You find out anyone and everyone tries to take it away from you. It doesn’t make happiness. It creates a lot of problems, you know.”

What we can learn from Dorothy Hamill

  • There are wolves in sheep’s clothing. When you find true success, especially at a young age, all the crooked folks in your industry or going to come to you to try and mooch money off of you. This can happen to “ordinary” folks like you and I. Think of insurance agents selling investment products or annuities. Poor financial decisions, and they make a ton of money off of you.
  • Have a trusted group. Having a trusted advisor or group of advisors that you can go to for advice on a variety of issues is key. If agents and promoters are coming to you with bad deals your advisory board should be able to catch most of it and steer you away from it.
  • It’s easy to blow it. This young woman earned $8 million very quickly (plus sponsorships, etc.). Yet due to some of the poor decisions and investments she made, she had to claim bankruptcy shortly thereafter.
  • Most athletes have no idea what to do with money. That’s a harsh stereotype, but think of all the guys who go straight to the NBA from high school, or have had an agent running their entire lives from high school to college to their mid-30’s while playing professional ball. I would bet good money that some athletes wouldn’t know how to start a load of laundry or book a hotel room without their agent. That’s a sad reflection on sports and agents. If you find yourself in a situation where a big pile of money lands in your lap such as an inheritance, go back to that board of advisors and ask them what to do.

Dorothy Hamill is now living a relativey normal life. She still skates in the “Champions on Ice” tours when they come around. I’m sure she had money in the bank, but not nearly as much as she could have if she had made better decisions throughout her life. I hope you take the lessons outlined above to heart and avoid the same mistakes she made.

{ 1 comment }

[email protected] August 17, 2008 at 9:09 pm

These stories always interest me. It seems baffling that somebody could be so fortunate and somehow blow it all. It’s maddening really, how much we work to slowly build and maintain our wealth while these people have absolutely no idea what that entails.

I guess it would be really hard to try to learn the basics of wealth management in such a stressful position. It’d be impossible to know who to trust, especially when they know you’re rich and naive- not a good combination!

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