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Marv Dumon
Business and Finance Examiner
March 27, 2010
Popular HBO commentator Emanuel Steward was slapped with a tax lien last month for owing the Internal Revenue Service (IRS) about $38,000 for fiscal years 2006 and 2007, according to The Detroit News.
Steward has trained over 30 world champions including Evander Holyfield and Thomas Hearns.
Thomas "The Hitman" Hearns himself is facing foreclosure on his home and owed nearly $1 million in unpaid taxes and mortgage payments. (Hearns reportedly earned close to $40 million during his career.)
Regarding Emanuel Steward, penalties and interest caused his tax debt to balloon to close to $48,000. HBO's popular commentator said that he recently paid off his tax bill, and blamed the late payments due to possibly not checking his mail.
His response and version of the story seems incredulous. The tax lien was for calendar years 2006 and 2007. He has not checked his mail in over three years?
With the fast approaching IRS April 15 tax deadline, these cases serve as reminders for active fighters to practice prudent financial management. Floyd Mayweather, Jr, as it was widely reported last year, owed the IRS over $5 million in back taxes, penalties, and interest. Mayweather also reportedly faced repossession of numerous vehicles as well as owed the neighborhood trash collector several thousand dollars.
The National Basketball Association and National Football League have programs that routinely give their players training and classes regarding budgeting, financial and investment management. Boxing currently has no similar program. Golden Boy Promotions does sit down with fighters to give them periodic personalized financial overviews and reports.
Emanuel Steward's and Thomas Hearns' cases serve as warning for today's current big spender and pound-for-pound king Manny Pacquiao. Think of the once-great Mike Tyson. The former heavyweight champion earned over $400 million during his fight career. Titanic purses since lost on mind-boggling expenses, Tyson declared bankruptcy not too long after his prime.
Regarding Manny Pacquiao, "Pacman's" entourage size is approaching 200, and the congressional candidate is reportedly budgeting $10 million for his May electoral campaign.
While, the Filipino is expected to earn around $15 million in pre-tax income, IRS taxes (and Pacquiao belongs to the highest tax bracket) would bring earnings closer to $9 million.
That amount seems rich until you consider that the Philippine government also takes its portion of taxes. Pacquiao is taxed millions of dollars each year on both U.S. and Philippine soil.
Expenses are probably close to $2 million (about $1 million for Freddie Roach).
After its after-tax tabulation, the Joshua Clottey fight probably provides only about half the funds needed in order to financially support his congressional bid - a race that many are forecasting Pacquiao to lose.
A source close to the team also suggests that Pacquiao still ways to go in setting up a legal entity(s) that can classify his business expenses as deductibles in order to reduce his tax burden. If this information is true, and we say if, Pacquiao is likely losing several million dollars each year due to a lack of estate and tax planning in the United States alone.
If Pacquiao is not careful, business expenses can wholly eat up his investment income and start to reduce his cash-generating assets. Entourage spending reportedly tops $700 for a single restaurant sitting at Nit Nai (next to the Wild Card Gym), and that's just for one meal - dinner.
Gives proper meaning to the term "free loader" doesn't it? Chartered jet? Costs for a small commercial plane can range between $15,000 to $35,000. That's one hefty plane ticket bill.
Setting up legal en******, such as a Limited Liability Corporation (LLC), continues to be sound practice for managing legal risk exposure as well as for decreasing tax liabilities. The IRS tax code, as extremely complex as it is, provides ways to minimize taxes for individuals through the deduction of business expenses as well as provides tax credits for certain qualified expenses.
However, there continues to be no substitute for common sense and restraint when it comes to financial management. Cash is king. Unfortunately, many stars equate fame with financial stability. Far, far from it. Most likely, the opposite is true. The more fame, (eventually) the less financial stability.
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