Celebrities are just like us, only richer, right? There’s the glitz and glamor, of course, but there’s also the messiness of real life, only played out on a larger scale and out in the open. That’s always been the conventional wisdom, parroted endlessly by everyone from gossipmongers and publicists to sober-minded accountants.
Now, in the middle of awards season, it may be a good time to go a level deeper—how does being ‘richer’ make things different?
In a recent issue, New York Magazine plumbs the depths of the celebrity economy, and there’s literally a wealth of information of how much they’re not like us. For one thing, it’s astonishing how many things high-profile individuals don’t have to pay for—everything from clothes and accessories worn at media-friendly events to vacations and parties. Then there’s the endless revenue stream from things we all do every day, like send out Twitter messages. And of course, having a lavish (and very expensive) lifestyle is very much part of that brand.
But for us, it’s not always about how much they make, or even spend; it’s about how much they lose. There’s something weirdly satisfying hearing about celebrities accumulating enormous wealth, then losing it all, or at least going the Chapter 11 route just to get things back on track.
One recent addition to this sorry parade is former NBA star Allen Iverson, who used his peerless athletic abilities to rack up more than $154 million from his playing time alone, and quite a bit more through shoe deals and other endorsements, not to mention personal investments and other business dealings. How has that fortune apparently disappeared?
He has plenty of company: Even a partial list of celebrities with severe financial difficulties would have to include A-list actor Nicolas Cage, boxer Mike Tyson, musician Michael Jackson, Brit royal Sarah Ferguson, real estate mogul Donald Trump, TV personality Larry King, tennis ace Bjorn Borg, presidential candidate George McGovern and hip-hop star MC Hammer. And again, there are many, many more names that can be added to that roll call.
In almost all these cases, the woes stem from living considerably beyond considerable means. They make a lot, but they spend more. Their lifestyles are incredibly lavish, and they sometimes make very bad investments. Even if they don’t lose everything, their liabilities so far exceed assets that filing for bankruptcy is the only option available, the one stable way to make a fresh start.
Any thoughts of mean glee aside, here’s the real question: How did they end up like this?
Hubris surely plays a role—when the money is coming in by the truckload, it’s easy to lose sight of the big picture and go for everything that couldn’t be gone for before. And again, livin’ large is essential to the image. And yet. . .
These are presumably not stupid people—look how far they got before the fall. More to the point, their sizeable entourages include teams of accountants, business managers, lawyers, agents, and so on. These are skilled professionals, as good at what they do as the celebrities are in their chosen field. They are paid to give advice, and common sense suggests that there are plenty of warning signs before the real trouble hits. And there’s plenty of evidence that these advisers do exactly what they’re supposed to do—tell clients to pull back. Whether that advice is heeded is another question altogether.
There are lessons in these immorality tales for all of us, consumers and financial services professionals alike. Having money is good, having more money is better. We all believe that if we were in these circumstances—blessed by unbelievable material success—then we’d know how to handle it. We’d listen to our better selves, and to our advisors. We wouldn’t make these kinds of mistakes.