Video: Mike Tyson and the Money Lessons We Learned

Watch on YouTube: Mike Tyson and Lessons on Money

My son Matthew talking about how Mike Tyson made over $300 million and lost it all, and about the lessons we can learn from his mistakes. Fortunately, he’s on a comeback with his movies and TV shows. Good luck Iron Mike.

Matthew got cut off on part of the webcam, but he didn’t want to re-record it. So I guess it’s a one-shot take ;).

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Video Transcript:

Hi! Welcome Back. This is Matthew from A in Finance.

So last week we talked about NOT buying that over-priced bottle of water at the movie theaters when we went to see Ip Man 3, a kung fu flick that had Mike Tyson in it.

After seeing Mike Tyson in the movie, I wanted to find out more about him. So, we went home and looked up some videos on Mike Tyson. We found a documentary on Netflix called “Champs” and watched it. My dad said that some of the documentary is a little inappropriate for kids, so we had to skip some parts. Then I said to my dad, “Tell me more about Mike Tyson.”

He told me about one time, back in high school, my dad and his friends actually ordered a Mike Tyson fight on pay-per-view. He said they were really, really mad because the one time they actually paid for it, the fight lasted only 91 seconds. Mike Tyson destroyed Michael Spinks for the heavyweight championship. All that money for just a few seconds. And then all of the news channels replayed the full fight for FREE later that night.

Anyways, my dad then says to me, “Did you know that Mike Tyson made tons of money but he ended up broke?”  I said, “Really? He did? How did that happen?” So me and my dad looked up a bunch of stuff on Mike Tyson and learned about what happened.

So in this video, we want to talk about how Mike Tyson made a ton of money and lost it all, and some of the things we learned from his mistakes.

Mike Tyson turned pro at age 18, became the youngest heavyweight champion in history at age 20. He started out 36 and 0, and ended his career with a record of 50–6–0–2. He made an HUGE amount of money during his 20 year boxing career. At the peak, he made $30 million per fight and he made over $300 million during his career. Yes. That’s right. Over $300 M-I-L-L-I-O-N  dollars. Can you believe that? But he lost it all and went bankrupt in 2003. He had to continue fighting for a few more years just to pay off some of his debts of over $30million to the IRS, ex-wives, and to other creditors. So how did he lose all of that money?

First, he was reckless and out of control with his spending. He bought stuff just to show off. He bought mansions. The one in Ohio was 19,500-square-foot mansion on 58 acres.  And the mansion in Connecticut  had a total of 52-room including 9 kitchens, 21 bedrooms and a casino. When rapper 50 Cent wanted to buy it, he tried to convince him not to. “No one was gonna buy it with 60,000 square feet; it’s gonna cost them $25,000 just to mow the lawn.“ The mansion required $850,000 per year in upkeep and it’s ironic that 50 Cent also recently went bankrupt living in it. If I were rich, I wouldn’t need such a big house. Who need 9 kitchens? I’d probably get a house like my cousins in Virginia. It has a giant basement for us to run around and play video games in.

He bought cars. Lots of cars – over 100 of them – including this $500,000 Bentley. Why have a $500,000 car. That’s just to show off. I’d be fine with a regular car like we have and keep it for a long time. Saves us money. My dad also says it’s not just the cost to buy the car, but the ongoing insurance and maintenance. For 100 cars, that’s probably another $200-500,000 you have to pay every year.

Mike also spent millions on clothes and jewelry and he bought his first wife a $2 million solid gold bathtub for a birthday present.  And he even bought two white Bengal tigers for $140,000 and $125,000 a year for their trainer and thousands more on food.

My dad says that all of these things aren’t real assets. They lose their value as soon as you buy them.

Another big reason Mike Tyson had money problems is because he had bad partners and advisors. His boxing promoter Don King, whom he trusted and managed all of his business, totally ripped him off. Tyson sued King claiming it was $100 million. While he can blame his partners, ultimately, he needs to take responsibility for himself.

Just like problems with business partners, Mike Tyson had problems with his partners at home. Mike Tyson has been married 3 times and divorced twice.  He’s currently married now for 7 years, so it seems like he’s found the right one. Anyways, my dad says that divorce is one of the worst financial mistakes you could make. You basically have to pay your ex-wife half. Do that a few times and you aren’t left with much. ½  becomes ¼ becomes 1/8 and so on. So my dad tells me, you never know, but you try to make sure you really know the person you want to marry. Like you shouldn’t marry somebody after only a few months.

So Mike Tyson made over $300 million and then he went into debt for more than $30 million and had to file for bankruptcy. He had to keep fighting to make money even though he didn’t have the heart to do it. He got beat up and lost the last few fights just to collect a paycheck. Man, that’s tough.

He’s retired from boxing now, but fortunately, he’s making his way back. He was in Ip Man 3, the Hangover movies, his own Broadway play called Mike Tyson Undisputed Truth (based on his book by the same name), and Mike Tyson Mysteries TV show. It says that he has a net worth of about $1.5 million. That’s far from the $300 Million he earned during his boxing career, but at least he back on the right track. So, hopefully, he has better partners and advisors now and he invests his money on real assets instead of wasting it on flashy things.

Like Mike Tyson, there are tons of athletes and celebrities that have lost it all too. But we want to leave on a positive note. While we were Googling, we found an article about a pro basketball player named Adonal Foyle (he has a book on pro athletes and personal finance called Winning the Money Game). He was drafted 8th overall by the Golden State Warriors in 1997. He played for 13 years for the Warriors and the Orlando Magic. Anyways, he’s one of the good guys and he’s trying to help other young pro athletes with making sure they end up with money when they retire from pro sports.

So the lessons we learned are that: 1) you shouldn’t just spend more money because you have more money; 2) instead, you should invest your money in real assets that generate income so that your money can work for you; and 3) you need to have partners you can trust, both at home and at work.

Anyways, thanks for watching.  Hoped you enjoyed it and learned something.  Please subscribe to our A in Finance YouTube channel and like us on Facebook. And look out for another video next week. Thanks. Bye-bye.

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