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We said last night that Michael Vick’s shaky financial situation has been taken care of thanks to his new $100 million contract with the Philadelphia Eagles.The truth is a little more complicated, however. (For starters, the real number on the deal is closer to $40M.)
Vick will certainly be living comfortably for the next several years, but the vast majority of his new contract is already spoken for.
Before going to jail on dogfighting charges, Vick was bankrupted by his legal obligations and the cancellation of his then-record NFL contract.
As a result, his finances since leaving prison are still controlled by the bankruptcy court that insists that he settle his debts.
As detailed in this story by ESPN’s Lester Munson from 2010 (via @MicheleSteele), Vick is on a court-approved budget until 2015. All of his expenses are categorized and laid out for him, based on a pre-determined schedule that will allow him to pay off nearly $12 million in debt by the end of that year.
The arrangement includes limits on how much he can spend on rent ($3,500/month), cars ($472/month), utilities and other expenses, plus it outlines child support payments, and salaries and gifts for family.
The plan also anticipated Vick’s big upcoming payday, arranging it so that the more money he makes from football, the larger the percentage of his income gets devoted to creditors.
For example, last year he made about $5.25M playing for the Eagles and 25% of that was allocated to creditors. This year, his income will soar to approximately $16M per season, meaning that 40% will now be automatically redistributed to various debts.
Add in state, local, and federal taxes and that means more than two-thirds of Vick’s new contract is already spoken for. That would make the take home pay on his “$100 million” deal (assuming he only collects the guaranteed portion) closer to $12-13 million.
According to Munson, two of his biggest expenses are to his agent, Joel Segal, (Vick will pay him about $800,000 over the next four years) and his bankruptcy lawyers (who he owes about $2.6M.) Now that he has a new deal, Vick could go back to the judge and renegotiate the terms, but that would cost him even more in lawyers’ fees.
And Vick’s financial trouble doesn’t end there. The trustee who oversaw his bankruptcy still wants Vick to account for nearly $5 million that he gave away to his various friends and family shortly before entering bankruptcy. The trustee has sued most of Vick’s family members (including his mother, brother, and the mothers of his children) hoping to recover that money.
All told, the trustee says Vick owes about $19 million to his creditors.
So while Vick’s fiancée and teammates celebrate their … uh, his … new windfall, they shouldn’t put their hands out just yet. There’s not that much cash to go around.