With the National Football League draft coming up next month, a slew of young players will experience “sudden wealth syndrome.”

While that might sound spectacular to most people, going from a working-class college student to a millionaire overnight can have some cringeworthy consequences.

“I’ve heard stories from agents of guys literally going to the bank, pulling out $50,000 to $100,000, putting it in a bag and going to (Las) Vegas, blowing through money,” said Evan Rothstein, a senior financial adviser with Merrill Lynch’s private banking and investment group in Beverly Hills.

Rothstein, 33, who said he has Southern California clients in the NFL, National Basketball Association, and Major League Baseball, has also seen newly flush players ready to run out and buy a home for their parents or a truck for their brother.

Before these athletes can dip into their suddenly deep pockets, Rothstein makes them a budget that tallies rent, car payments, professional dues, and monthly variable costs. He shows them their earnings for the coming season, less taxes.

“Then you can talk about things you want to do over the short, medium, and long term,” Rothstein said, adding that they still have to be sensible about their spending. “If you want to buy a truck, what’s the best way – lease or own?”

Unlike a doctor who might have a good idea of how much he or she will earn over the next decade, a pro athlete’s future is largely unknown. And it comes in lump sums.

“It’s chunky money,” Rothstein said. “It comes in large spurts, and then you go away for off season. You have to plan around … one to three possibly large liquidity events from contracts over a lifetime.”

Financial planning for these clients can even include getting an insurance policy to compensate a player if he ends up missing out on nonguaranteed contract money due to an injury.

“You want to get ahead of the ball,” Rothstein said.

Taking Credit

L.A. credit unions were flush with members and deposits as they rung in 2016, according to the latest data from Ontario trade association California Credit Union League.

Credit unions headquartered in Los Angeles County served 2.7 million members, had $26.4 billion in loans outstanding and deposits of $35.7 billion as of Dec. 31 – all record numbers for the group.

Those lenders have assets ranging from about $82,000 to more than $4.2 billion and tend to be smaller than area banks, which boast assets of about $57 million to almost $44 billion.

Credit unions have been growing their loans and bulking up deposits thanks in part to an economy on the upswing, but also by eating into banks’ customer base, said Dwight Johnston, chief economist for the league.

“It’s been a strong trend for credit unions, especially in California, going back almost three years now,” Johnston said. “The economy has done a lot better, despite what you might hear on the TV these days.”

The rosy outlook is tied closely to the consumer economy, he said, as credit unions focus mostly on mortgages and auto loans due to longstanding statutory caps on business lending for those organizations. But commercial lending is slowly growing, too.

Outstanding local business loans grew 12 percent year over year to $881 million, as outstanding used- and new-auto loans each jumped 22 percent to $2 billion and $4 billion, respectively, for the same period. First outstanding mortgages rose 12 percent year over year to $22 billion and outstanding credit card lending rose 6 percent to $1 billion for the same period.

“What you see in credit union land is a reflection in large part of the improving economy, but also credit unions were well-positioned coming out of the recession,” Johnston said, adding that credit unions didn’t suffer the way banks did because they were more risk averse on the lending side.

“Overall, credit unions came out with a strong capital base, able to come in and make a big push and grab market share in auto lending and mortgage lending,” he said.

On the Move

Downtown L.A. interim management and advisory firm SierraConstellation Partners has opened offices in Dallas and Houston to support firms in transition as oil and gas prices have fallen. … Suzanne R. Brennan has retired from her position as chief risk officer of Beverly Hills-based Pacific Western Bank and its holding company, PacWest Bancorp, to be succeeded by Stanley R. Ivie, who previously served as the regional director for the Federal Deposit Insurance Corp.’s San Francisco region. … CBRE Global Investors, an investment management subsidiary of downtown L.A. real estate firm CBRE Group Inc., has named Ritson Ferguson chief executive.

Staff reporter Marni Usheroff can be reached at musheroff@labusinessjournal.com or (323) 549-5225, ext. 229.

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