Growing up, Roger Staubach was the first athlete turned investor I can remember. Staubach, a Hall of Fame quarterback who played for the Dallas Cowboys, had a good head for business.
Staubach sold life insurance during the off-season while still playing for the Cowboys. Then, after 11 seasons, he retired and went and sold life insurance full-time for six years until he set out on his own to represent tenants in commercial real estate transactions. in 2008, Staubach sold his business to Jones Lang LaSalle (NYSE:JLL) for $663 million.
Not too shabby.
Professional athletes make better investors than most people realize; a lengthy professional sports career requires hard work, persistence, mental toughness, and many other attributes, including good fortune … many of the same qualities needed to be a reasonable investor.
So, the next time you’re reading about your favorite professional athlete, remember that he or she might just become one of the most celebrated athlete investors of all time.
Athletes Turned Investors: Kobe Bryant
The retired Los Angeles Laker first invested with his venture capital partner, Jeff Stibel, in 2013. After investing in 15 businesses together, the duo set up Bryant Stibel in 2016, a venture capital fund self-funded to the tune of $100 million.
Outside of his venture capital firm, Bryant recently made headlines for his $6 million bet on Body Armor in 2014. Today, Bryant’s 10% stake in the healthier alternative to Gatorade, is estimated to be worth $200 million — a 3,200% return.
When you compare Bryant’s investment to some of Body Armor’s publicly traded peers in the drink business, there’s no question the former basketball player made the better bet.
I have no doubt his vision for the future will take his investments much farther and someday with a little luck and hard work, Bryant could be on the Bloomberg Billionaires Index.
Athletes Turned Investors: LeBron James
While President Donald Trump might have a problem with LeBron James, the basketball star’s tough upbringing made him resilient to the difficulties life sometimes throws you. The Los Angeles Laker’s intellect is evident by the care he puts into everything he touches, whether it’s a for-profit or non-profit venture.
In 2012, James, business partner Maverick Carter, and financial adviser Paul Wachter invested less than $1 million in Blaze Pizza, a little known fast-casual restaurant chain looking to grow.
Fast forward to July 2017.
Blaze Pizza sold a piece of the company to private equity firm Brentwood Associates so the company could keep growing. At the time of the deal, Blaze was valued at $250 million, putting James and company’s investment at around $35 million.
Also, endorsement agreements with the pizza franchise boosted the total value to close to $40 million.
“LeBron and I have always been about finding companies that we truly believe in and putting real money into them,” Maverick Carter said in 2017. “We’re not talking putting in $15,000 or $20,000. It’s real money plus the expertise, understanding, and knowledge that we bring, as well as bringing LeBron’s name and likeness to the product.”
Investing success, the Warren Buffett way, is always about believing in the investments you make and holding them indefinitely.
Someday, I could see LeBron James opening an investment fund for the little guy because most of what he touches seems to turn to gold.
Athletes Turned Investors: Magic Johnson
Man, it is hard to believe that Magic Johnson’s been retired from the NBA for more than a quarter of a century, but that’s exactly where we sit in 2018. Of course, Johnson’s been anything but sitting at home on the couch or out on the golf course playing 18 holes.
No, he’s been busy building Magic Johnson Enterprises into one of the biggest minority-owned companies in the country.
Magic Johnson Enterprises got started in 1981 while he was still playing for the Lakers, investing in two Colorado radio stations and opening the Magic 32 chain of sporting goods stores, which closed a year later after failing to capture the customers’ imagination.
There have been lots of investments and partnerships since then, including opening 125 Starbucks (NASDAQ:SBUX) stores, which he ultimately sold back to the company using the proceeds to join a group that was buying the Los Angeles Dodgers in 2012. Although Johnson’s share was just $50 million, or 2.3% of the team’s purchase price, he’ll likely profit nicely, just like he did with Starbucks.
The key to business, Johnson’s learned, is having good employees.
“I keep a lot of young people around me, because my old way of thinking sometimes gets in the way of success,” Johnson stated in a 2018 speech. “I had to be open to listen to the young people who work for me. Hire people that are smarter than you.”
The lesson for me is to invest in businesses that treat their employees right.
Athletes Turned Investors: Michael Jordan
One of the all-time NBA greats, the retired Chicago Bull is probably the wealthiest of the seven greatest athlete investors on my list at $1.7 billion.
Most of Jordan’s current wealth comes from his 90% ownership of the Charlotte Hornets, which he first invested in in 2006. Eventually, Jordan bought control of the team in 2010 for $175 million … it’s now worth $1.05 billion!
Of course, he’s had a relationship with Nike (NYSE:NKE) since joining the pros out of North Carolina. His first contract paid him $500,000 a year. Today, Air Jordan is said to generate $100 million annually for the basketball star, ensuring he’ll have the cash flow to continue making smart investments like the purchase of the Charlotte basketball team when it was swimming in debt.
Jordan might not be an open book like LeBron James, and he’s certainly not the activist James is, but that doesn’t make him a lousy investor or a bad person for that matter.
Jordan’s key to success is knowing that when an opportunity knocks, you let it in.
Athletes Turned Investors: Shaquille O’Neal
When you think of former athletes who are great investors, Shaq probably isn’t the first person that comes to mind.
O’Neal saves 75% of his annual earnings living on the remaining 25%, and most of those savings get plowed back into investments, public and private.
His investment strategy a simple one:
“I’m going to invest in things that are going to change people’s lives,” he told CNBC’s Bob Pisani in May. “I never say, ‘If I invest in this, five years down the line, we could sell it for this.’ Every time I’ve had that model, it’s always been a failure.”
This is coming from a man who spent a million dollars in one hour after signing his first professional NBA contract.
If he can learn how to save and invest, you can too.
Athletes Turned Investors: Ion Tiriac
Unless you’re a big tennis fan, you’ve probably never heard of the former Romanian tennis coach, manager, and player, whose biggest claim to fame on the court was winning the 1970 French Open Men’s Doubles title.
After coaching tennis greats Ilie Nastase, Guillermo Vilas and Boris Becker, Tiriac got the business bug, becoming the first Romanian to appear on Forbes’ list of billionaires in 2007.
Worth an estimated $1.1 billion, Tiriac apparently learned how to save money unlike his former pupil, Boris Becker, who went bankrupt in 2017.
Tiriac’s investments in Romania include high-end car dealerships, real estate development, and construction, property management, automotive leasing, insurance, renewable energy and others.
In April, Tiriac bought a massive 2,000-hectare property in Tuscany that once belonged to the Italian Prime Minister Giulio Andreotti for 8 million euros, 20% of its estimated value.
Tiriac might be the Romanian version of Ben Graham.
Athletes Turned Investors: Steve Young
It seems like at least once a year, right around NFL preseason, somebody writes an article about former San Francisco 49er quarterback Steve Young and his Monday-to-Friday career as a private equity investor.
Young co-founded HGGC, a San Francisco private equity firm in 2000, a year after retiring from the NFL. HGGC currently has capital commitments totaling $4.3 billion with Young overseeing five of the company’s current investments.
“Private equity is a science project for many, many years, and when you have a science project, it leaves the human beings as a secondary fact,” Young told CNBC in July. “I think that we’ve tried to introduce this artistic approach to partnership and a holistic approach to the transaction.”
They say you have to be smart to play QB at the NFL level. Well, Young is “Hall of Fame” smart focusing his investments on companies that are disrupting their industries.
Not only that but he’s buying companies with an aim to grow through a true partnership with HGGC and not just a financial marriage.
Shortly after Young’s appearance on CNBC, a story came to light in the New York Post that alleges Young’s company covered up fraudulent activities at one of its investments.
If that’s remotely true, the damage to Young’s reputation will be a lot worse than any hit he took in the NFL.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.