After locked-out NBA players missed what would have been their first paychecks last week -- an average of $425,000 -- a Beverly Hills financial firm announced Tuesday it was ponying up $50 million in loan money for the out-of-work millionaires.
Paratum Inc. President Aaron Sokol said he already had heard from several athletes, and expects business to pick up after the Thanksgiving weekend.
"There's a strong likelihood these guys will not get a paycheck until next November," he said.
Like many of the nation's unemployed, the players might need some quick cash with a few more zeros. Negotiations between NBA owners and players are stop-and-go in their labor standoff, and the players disbanded their union to file antitrust suits against the league. With hundreds of games already lost, the season is on the brink of being fully canceled.
That means about 450 players on the elite breadline. NBA players do not have such a great reputation for money management, given that 60 percent go broke five years after retirement, according to Sports Illustrated.
While Paratum doesn't specialize in loans, it has focused on advising high net worth individuals. Yet players indicated they needed a little tiding-over money first, Sokol said. Players so far have requested loans between $350,000 and $1.5 million. Paratum's single-loan ceiling is $5 million.
Paratum's rates are not as favorable as banks, Sokol conceded; then again some NBA players, facing long unemployment, might struggle going one-on-one with banks.
"Banks are treating them no differently than small business owners," Sokol said. "While they are quality borrowers on some level, banks are conservative and the economy is not getting better."
The firm would first help players secure a loan through a conventional institution before talking turkey on a loan with Paratum.
Sokol wouldn't discuss rates, but he was game to offer a few details hypothetically. If you're a rank-and-file NBA player, here's what you might get from Paratum: Let's say you're in the second season of a four-year guaranteed contract for the league-average $5 million annually. Sokol said he would arrange a two-year $2 million loan in which you don't pay anything the first year. In the second year, you'd pay off the principal and interest quarterly. Most draft picks, normally 19 to 22-year-olds right out of college with no assets, face a more arduous qualifying process, as do free agents, those whose contracts have expired.
Clock running down on your savings? Sokol said in some cases he can secure the funding in 21 days.