While the cancellation of live sporting events would not make it into a top 20 list of coronavirus-related hardships, it has nonetheless removed what would have been a major source of distraction for these shelter-at-home times. More than half of all scheduled sporting events have been or will be cancelled this year, by some estimates, and more cancellations are likely on the way. Major League Baseball, the Masters, the NCAA basketball tournament, all gone or pushed into an indeterminate future.
This is a big hole to fill. According to Nielsen, over the past 10 years more than half of the 199 most-watched primetime programs were sports telecasts. NFL games alone accounted for a full third of list, 67 telecasts in all.
Nature may abhor a vacuum but for financial scammers it looks more like an opportunity. Professional athletes are especially attractive targets. They have assets and are suddenly left with a lot of time on their hands. Like the rest of us, they are alarmed by the market volatility and concerned about the direction of the economy.
More than most, they recognize that they have a finite working life, with sometimes only a few years to achieve financial security. They have families, dependents, and staff that depend on them to provide. Their careers have taught them they are in control of things and their split-second decision at the right moment will determine their ultimate success or failure.
Entertainers have the same obligations away from the stage, and face similar professional challenges caused by social distancing rules that force new productions of movies and television shows to be postponed or cancelled outright. But, while athletes may have long-term contracts, entertainers are often more like members of the gig economy—they’re only paid when they work.
These specialized individuals are unique when it comes to talent, but are like everyone else in most other aspects of life. They’re susceptible to the stress of isolation and the uncertainty about what comes next, two prominent ramifications of the current pandemic. They worry about their immediate future. They stress over their friends and family who are struggling with them. But unlike many of us, they are public figures, and their stories often play out for all to see and judge. Their employment contracts are often the source of headlines. Their missteps are ridiculed by all manner of media. And their insecurities are ridiculed as weakness or immaturity. Outside the relevance of this being fair or reasonably expected, fully understanding a life in the spotlight can make anyone appreciate the benefits of a more traditional existence.
Away from the glitz and glamour, in their financial lives, celebrities may also have a history of participating in private investments. They may own shares of restaurants, car dealerships, or other businesses that leverage their status and notoriety. All this can make them more susceptible to new pitches. The truth is that it’s hard to say “no,” especially during times of crisis when typical means do not provide their usual safe-haven. Scammers know this, too, and pitch their deals accordingly.
In considering how to advise a client who finds himself or herself in this situation, it’s worth keeping in mind the words of Warren Buffett’s long-time business partner, Charlie Munger. Referring to Berkshire Hathaway, he recently told the Wall Street Journal, “We’re like the captain of a ship when the worst typhoon that’s ever happened comes. We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity.”
There are a few best practices to keep in mind for periods like this. First, sometimes doing nothing is the best action you can take. That can be hard for an athlete and entertainers to hear. These are people used to taking charge of their situations on set, on the field or in the arena. They are generally highly self-motivated people, but sometimes taking control can specifically mean self-control or sitting still.
Second, the numbers still matter. Valuations may be down for everything from real estate to boat dealerships, and assets may appear cheap, but sometimes they’re cheap for a reason. Run the numbers and rely on experienced due diligence. Deals that include unrealistic assumptions about the pace of an economic recovery should get particularly close scrutiny to verify their validity.