Magic Johnson revealed this week that he has put millions of dollars into an infrastructure investing fund, in partnership with Jim Reynolds, CEO of the brokerage Loop Capital. Meanwhile, another retired mega-star athlete, Derek Jeter, is reportedly looking to buy the Miami Marlins.
Those two business moves look pretty different: a basketball star launching an infrastructure fund and a baseball star buying a baseball team. But they are part and parcel of the same investing trend: the traditional playbook for what athletes do with their money off the court or field has meaningfully changed.
In the not-so-distant past, the go-to move for sports mega-stars after retirement was to go straight into broadcasting. Look no further than this week’s brutal ESPN layoffs: dozens of the on-air analysts cut were former players who had been with ESPN, in some cases, since right after they hung up their cleats.
If you didn’t go into television, you set up for your post-career by making one or more of these types of popular investments: fast-food franchises (Junior Bridgeman, NBA veteran, who owns hundreds of Wendy’s and Chili’s locations; Jerry Richardson, former NFL player, now owner of the Carolina Panthers); car washes (NFL alum Andre Rison; NBA alum Charles Oakley); or car dealerships (NBA alums Jamal Mashburn and Karl Malone; NFL legend John Elway, now GM of the Denver Broncos).
And there was good reason why many of the athletes who took that path found themselves in the red a few short years later. (In the NFL, some reports say, the rate of eventual bankruptcy is 16%.)
But at some point in the past few years, in timing with the formation of a new tech bubble (arguably), the map changed. Athletes, both retired and still playing, are hot for tech, or in some cases, other non-conventional investing areas. Steph Curry, for example, backed the private-coaching platform CoachUp, doubling as investor and celebrity ambassador.
Carmelo Anthony launched a tech investing fund in 2014, Melo7 Tech Partners, with Stuart Goldfarb, a former executive at German media company Bertelsmann and a board member at WWE. Kobe Bryant launched a tech investing fund last year, Bryant Stibel, with Jeff Stibel, vice chairman of consulting firm Dun & Bradstreet.
The new formula is clear: star athlete + experienced financier = hot new fund. The athlete brings the name recognition, the money manager brings the deeper pockets. (And the athlete’s name helps pull in additional investors later on.)
That’s evident in both Johnson’s and Jeter’s news from this week. In Johnson’s case, his partner in the JLC Infrastructure Fund is the CEO of an established brokerage who businesspeople know. Jim Reynolds was a Hillary Clinton supporter but was nonetheless inspired, it sounds like, by President Trump’s stated intention of spending $1 trillion to rebuild America’s infrastructure, saying that fixing the country’s infrastructure is “not Democrat and not Republican, but the basic needs of the citizenry.” JLC is already making moves: Johnson and Reynolds are part of a group close to winning the bid to redesign the “Great Hall” of the Denver Airport.