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This is what it's really like to lose a fortune

From hero to zero

This is what it's really like to lose a fortune
08 March 2018

In January, it emerged that Boris Becker had misplaced a few items. These items were five tennis Grand Slam trophies. To be precise, five of his six Grand Slam trophies: two Australian Open and three Wimbledon. He hadn’t sold them or donated them; he simply didn’t know where they were.

Presumably, this wasn’t previously a concern. Now, though, it was. That’s because in June 2017, Becker was declared bankrupt and became a man in need of saleable assets. So he put out a call to the world: wo sind meine Trophäen?

But the trophies’ whereabouts is not the biggest mystery. Nor is it how a man who made more than $25 million in career prize money finds himself flapping around in a steaming financial dung heap. The biggest mystery is how that dung heap is so crowded.

The list of men that have waved farewell to fortunes is long and varied. You have your bankrupt entertainers, such as rocker Meat Loaf, director Francis Ford Coppola and three-quarters of the boyband Blue (congratulations Lee Ryan). There are sportsmen like boxer Mike Tyson and footballer David James. Entrepreneurial maestros including Simon Cowell and Donald ‘President’ Trump have all had businesses go to the wall. And then there’s your lottery windfall: 70% of American winners are bankrupt within 20 years. So why, in the name of Scrooge McDuck, does it happen?

“If people don’t grow up with wealth it takes time to learn to deal with it,” says Dr Tian Dayton, psychologist and author of Emotional Sobriety. ”They don’t understand how easily it can be lost. Spending habits change, they don’t think of the future, and they believe it will last forever. Their world changes and they get used to it. In many cases there’s an addiction of some kind involved, to drugs or drink or gambling. Some people get addicted to wealth. They can be on high – the rich and famous don’t take advice well, because they see you as a spoilsport.“

Former Premier League footballer – an occupation synonymous with opulence – Keith Gillespie ticks several profligate boxes. His career took in, among others, Manchester United, Newcastle United and Blackburn Rovers, where his earnings reached a peak of £14k a week in the early 2000s. With signing-on fees and win bonuses, he was earning around £1 million a year. And yet in 2010, he was declared bankrupt.

“I had nice cars,” says Gillespie, who wrote an aptly-titled book, How Not to be a Football Millionaire. “Astons, Jags. My wife would have a Range Rover or X5. We spent money on clothes, too. When I was at Blackburn, we’d think nothing of going to the Trafford Centre and spending five or six grand on clothes. Neither of us were fans of trying things on, so I found all these unworn clothes around the house, with the labels still on.

“But the main thing was gambling. I’m a social drinker and have never touched drugs, but from the first time I stepped into a bookies, I was hooked. I have an addictive personality. At Manchester United, I wasn’t on a lot of money, so I bet smaller amounts. At Newcastle, my wages increased and so did the stakes. When I was 20, I lost £47k in one day, and £15k the next. The press found out and I had to explain it to my mum. That was tough.”

Gillespie rode the first wave of big Premier League bucks, but with an old-school football mentality. Only in this game do multimillion-pound salaries get calculated by the week, and Gillespie thought that way. “I always bet within my means, because I knew I’d get another pay packet at the end of the week.”

“Not planning ahead is a common factor,” says Dan Weldon, a financial adviser at the Wilcox Young Partnership, whose high net-worth clients include footballers. “If someone comes into a lot of money and they’re not used to it, we would first encourage them to look at their long-term needs. They should also look at how much they need to spend on a regular basis, and make sure this is easily covered. Then we look at medium-term money, tax structure, pension contributions and so on.

“Some people are simply financially illiterate. The heart rules the head. We find that men are generally much more inclined to take risks and women are more cautious and sensible, though, of course, there are exceptions.”

Is being male a factor in all this? That wouldn’t be a first when it comes to making a pig’s ear of a situation. Yes, men are more likely to lose a fortune because men are hugely privileged and are therefore more likely to earn a fortune. But Dayton believes there could be more to it than that.

“I don’t know of any research,” she says, “but men are often still seen, or see themselves, as the breadwinner, so their ego might be more invested. They’re fulfilling a role. It’s quite interesting that microloans to developing countries are now nearly always given by charities to women, because they’re more likely to invest. Men tend to spend the money on womanising and drinking.”

Keith Gillespie, appearing for Sheffield United during his playing career

Not all factors are internal, though; there’s also the company people keep. Rich people, particularly suddenly rich people who don’t know what to do with their money, are the financial equivalent of the goat in Jurassic Park: vulnerable and delicious to predators, whether less-than-sage ‘trusted advisers’, friends and family with their caps in hand, or out-and-out charlatans. It was this that finally did it for Gillespie, ironically scoring his biggest financial own goals when he tried to invest for the future.

“A friend, who’d become my financial adviser, told me to invest in his brother-in-law’s property company. I gave the brother-in-law £500k and he ran off with every penny. I also invested in a film scheme that ended up stinging a lot of footballers. I’m not sure exactly how it was supposed to work, but I ended up with a huge tax bill, and that’s what bankrupted me.”

Elements of Gillespie’s story would resonate with Paul Cattermole. As part of the S Club 7 collective, turn-of-the-century funsters were puppets at his command. He was pop royalty, a nobleman at the court of CD:UK. And yet, earlier this year, it came to light that he was auctioning his 2000 Best Newcomer Brit award. It brought unwanted attention to his financial plight.

“I’ve been warned to stay away…” he says.

“I can’t really talk about the finances of the band. I didn’t earn huge money, but I earned very well for my age. Enough not to think about it. I mucked up by leaving early, though, and missing out on the S Club movie money [Seeing Double, not available on Netflix]. I’ve never been conscientious, I’m bad with money. But I never blew it thinking it would last forever. I spent it on clothes, cars and drinks, but I never went mad. The only time that happened was when I had a birthday party and all these people I didn’t know were drinking vodka and I got a bar tab for £4k.”

In the end, like Gillespie, it was tax that tipped him over the edge, declaring himself bankrupt in 2014, just before the S Club reunion tour.

“The tax built up. I’d pay half or three-quarters, but never the full amount. In the end, I owed HMRC £32k. On top of this, the company dealing with the debt ran up £43k in lawyers’ fees.”

Throughout the interview, Cattermole seems almost frightened to talk about the machine around S Club: the management, the company, the finances (or what he knows of them). His constant position is that “It’s my fault, I was stupid”. Is it? Was he? Aside from those three members of Blue, bankruptcy has also reached Abz from 5ive, Westlife’s Shane Filan, and Cattermole’s bandmate Jo O’Meara. When I suggest that the people around him could have looked after him better, he agrees, before continuing the self-flagellation. “I was financially ignorant, an idiot. I was frivolous.”

Paul Cattermole (front row, middle) during his S Club 7 days

Both Gillespie and Cattermole are from humble, working-class backgrounds, with strong work ethics (Cattermole has recently done stints as a painter and decorator), but neither knew how to manage their money (although Gillespie admits he’d probably still have been a gambler, no matter what). And this leads us to a theory that everyone buys into, and one that Dayton touched on earlier: background is key.

“Much comes from early childhood experiences,” says Adrian Furnham, professor of psychology at University College London. “If you grow up in a family that’s financially chaotic, living hand to mouth, and then suddenly you get the money, it’s very likely that you’ll spend it in an irresponsible way.

“Most people don’t come from a wealthy background, and don’t have experience of money. There’s a concept called ‘impostor syndrome’, where people don’t feel they’ve deserved it, whether it’s fame or money. So some people self-handicap, to prove this point. Lottery winners tend to go on a spending spree. They often quit their jobs, move to a bigger house, buy an expensive car, and they lose all their social networks. They’re cut off. So they get bored and turn to drink or gambling.

“A lot of it is to do with people’s associations with money. There are four associations: security, power, love, freedom. If people associate it with love, they may try to buy friends. If they associate it with security, they’ll probably put it in the bank. Most people can be placed into one of two types: saver or spender. If you’re a spender and financially illiterate, you’re more likely to blow your money.”

There are, you would think, people who disprove this theory. A successful businessman from a working-class background, perhaps. Someone like Lawrence Kenwright, son of a Liverpool docker, whose Signature Living hotel business has a six-figure turnover. Apparently not.

“I was an entrepreneur without guidance,” he says. “I started my first clothing business when I was 23. I didn’t have a background in business and nor did my family, and I left school without any qualifications. By the time I was 28, I had 32 shops, 450 staff, two factories in the UK and one in Sri Lanka. I had a massive house. But I over-traded, I had no collateral, and it spiralled out of control. I went bust. My hair fell out, the skin was flaking from my hands. That was the first time.

“I had drive, so I went again and built another clothing business, which I sold when I was around 40. I was happily semi-retired, so I thought I’d invest in property. But I didn’t know what I was doing. It was also 2007, just before the crash. I lost everything. After that, I didn’t get out of bed for three months, until I got a call from my daughter saying they were going to throw her out of school. So I borrowed some money from a friend, took on board all the lessons I’ve learned, and now I have a business that’s about to make a £15 million profit this year.”

What does he think is the key to fiscal success?

“It’s absolutely about education. It’s about what you learn in business and what you learn as a child, but not from teachers. And not a business degree. They’re useless, because they’re taught by academics. I have a friend, a businessman. When he leaves work each day, before he goes home to his family, he visits his dad and talks to him about how business has been. It’s in his DNA. But it’s not part of wider British culture. I’d like to see schools reach out to local entrepreneurs.”

When people reduce a vast fortune to dust, it’s nearly always down to one thing: being bad with money. Who’d have thought it? But it also turns out that, unless we experience money, or rather money savvy, at an early age, the chances are we will be ‘bad with money’. And it’s not just rich people it affects.

“The phenomenon isn’t limited to this group,” says Dayton. “So many people live on credit, have more than they can afford. Most people are in debt. It’s too easy to borrow. The world is supported by plastic, leaving us in a constant state of anxiety. Like they say, you can either eat well or sleep well.”

We all think we know how we’d deal with vast wealth. We’d all be excellent rich people, balancing wise investment with occasionally hiring Rihanna to sing our children to sleep in their gilded, yacht-shaped cots. We’d make it last forever, we wouldn’t mess it up. But the thing is, all those people above – the popstars and lottery winners, the sportsmen and entrepreneurs, who watched their bank balances slip away like coins in a giant egg-timer – they thought the same. 

(Illustration: R Fresson, images: Rex)