Because the talent that made them rich in the first place lies in something — television hosting, for example, or heavyweight boxing — that doesn’t teach them anything about how to stay rich. Brian Cuban offers further insights.
Last week, Justin Wolfers wondered why Belgium seems to have so few celebrities, and he issued you a challenge to name some. But can you name a famously bankrupt Belgian celebrity?
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I’m not sure if the founders went bankrupt, but I’d suggest Lernout & Hauspie as a “famous” bankrupt Belgian company. At one point they were listed on the NASDAQ with a market cap of USD 10 billion, but went bankrupt in 2001.
http://en.wikipedia.org/wiki/Lernout_&_Hauspie for more details.
I don’t think the issue is a lack of hard work, but the difference between generalist and specialist knowledge. Most talent type professions rely highly on very specialist knowledge and abilities. When the abilities (or the opportunity to employ them) fade away the celebrity is left with nothing to fall back on. However if one looks to what I like to call the “Officer Class” (both corporate, government and military) they are developed with highly generalist knowledge and abilities. If their circumstances change they can more easily adapt and either continue to thrive or bounce back after a setback.
A good example would be someone who is skilled at playing poker based on an intuition for the game, vs someone who plays based on a strong command of game theory and statistics. If playing the game ceases to provide a viable living the intuitive player has few options. However the player with the more general skills can move onto other games of chance, the financial services industry or even writing popular books on how to use statistics to win at poker.
An interesting celebrity example AND counter-example would be Donald Trump. He’s gone bankrupt but his “celebrity talent” consists of making money and having business acumen. As a result he’s been able to bounce back again and again.
Many athletes and celebrities make terrible mistakes with their money, but not Ed McMahon! How perfect! If I were elderly and had some money left, I would borrow against it as much as possible to buy my self a fabulous house to spend the rest of my days in. And if it gets repossessed after i die, who cares?
That said, he needs to work on his timing.
I have a related question. Why do so many celebrities get DUIs? Why are they doing they own driving at all, let alone driving drunk? Is there a shortage of limo drivers in Los Angeles?
JCVD is from Belgium, yes?
I’d also like to know how broke celebrities get. Some celebrities will end up in day jobs, while others appear to get by with a pretty high standard of living. I guess its relative to how successful they were in the first place.
Of course all this is anecdotal, but I faintly remember reading a celebrity say something along the lines of “don’t feel too sorry for me, my broke isn’t your broke” though, of course, many professional athletes can end up very broke with medical problems later in their life.
Dear King:
Does not training matter. I see alot of wealthy people whose training prepared them for wealth at any age that they acquire it. Ever hear of the accumulation of specific advantage. Then there are those who never received such training or whose training prepared them to go broke (take risks) like Christopher Columbus, Donald Trump etc. Corporations that don’t prepare for their future by diversifying like Mobile, Exon, Ford will go broke as well- My guess is, with age we tend to become more conservative (take a few less risks like my mother)i,e., sometimes act against our own best interest. These large companies need to learn a thing or two about card playing. Perhaps even Trump would agree with that- Though curiously, traditional cultures like Italy, are high risk takers when it comes to the arts, architecture. That trait does not appear to have changed much.
Success breeds overconfidence. People confuse outcomes that have a large random component with skill. Seems to me celebs may be prone to think that whatever “innate ability” made them famous will make them successful in other endeavours. Even if they fail at the same rate as everyone else, they’re going to do so on a larger stage and quite likely on a bigger scale.