Remember that Coca-Cola commercial with Mean Joe Greene? We’ll always have “Hey kid, catch!” but the days of athletes and companies working together have changed. Instead of starring in a commercial or slapping their name on a product, athletes want to be more involved, with business investments they believe in.
“More athletes are investing in business for three main reasons: tax advantages, social media, and financial education,” says Kevin Kleinman, a financial advisor with Blue Haven Capital.
Players can leverage their unrealized gains into agreements with companies or use social media to creatively promote products to millions of fans. Additionally, the NBA offers financial courses as soon as rookies enter the league.
“This gets them thinking about investing earlier than ever before,” Kleinman says. “In addition, player safety is at the forefront of their minds. They know they can’t play forever and will need other ways to make money, making business investments attractive.”
Here’s a look at some of the most successful athlete investments.
Like all of us, LeBron James loves pizza
Founded in 2012, Blaze Pizza offers quick, tasty pizza in a casual setting. The company caught the eye of LeBron James, who had the eye-opening revelation that everyone in the world loves pizza. He purchased a 10% ownership stake, which exploded in value as Blaze became the fastest growing restaurant chain of all-time.
LeBron’s stake was worth $40 million a couple of years ago; it’s only continued to increase since then. With more than 300 locations, Blaze Pizza plans 500 more by the end of next year and an IPO on the way. The chain was voted the best fast casual pizza in America.
LeBron has made several other successful investments, too. He acquired an ownership stake in Beats By Dre. James led Team USA around the 2008 Beijing Olympics with all 15 athletes showing the headphones off. When Apple bought Beats in 2014 for $3 billion, LeBron netted an estimated $50 million from the sale. He also scored a 2 percent stake in Liverpool F.C. in 2011. The soccer club went on to win the 2019 UEFA Champions League, bringing their net worth to $1.9 billion. LeBron’s value in the team is now worth about $30 million.
Kevin Durant and Andre Iguodala run Silicon Valley
Kevin Durant not only wanted to join a historically great time when he signed with the Golden State Warriors in 2016, but he also started working with the best minds in technology. Through his Thirty Five Ventures investment company, he’s backed more than 30 businesses. Durant has invested in a variety of industries, including CoinBase (cryptocurrency), Acorns (investing), Rubrik (cloud computing), Postmates (delivery) and LimeBike (bikeshare). Durant joined the Brooklyn Nets this summer, but don’t expect his investing game to slow down. He’ll still look to diversify his portfolio – a key consideration for any athlete.
“Diversification is something that should be considered when making any investment,” says John Bush, a financial planner for Elevate Financial Planning and president of Bush Consultants. “Many investments by professional athletes are in areas they do not have experience in, making it essential they have honest, excellent business advisers.”
Andre Iguodala also left the Warriors this offseason, but the 35-year-old is still felt in Silicon Valley. He opened up an E*TRADE account to begin learning about investing. The Grizzlies forward has got a hand in several enterprises – the types of investments Iguodala and his business partner really love.
Iguodala’s invested in teleconference tool Zoom, which had its IPO in April, leading to huge stock gains. He’s also on the board of Jumia, an e-commerce company looking to become the Amazon of Africa. Finally, he has investments in business company Mayvenn (valued at $113 million in November), The Players’ Tribune (valued at $140 million in 2017), and Casper. If you’ve ever listened to a podcast, you’ve heard an ad for Casper. That’s good news for Iguodala – the company is now worth $1.1 billion.
Alex Rodriguez gets into real estate
A-Rod transitioned from a baseball career that spanned three decades to a successful stint in the broadcasting booth. But one thing has remained constant throughout is his interest in real estate. Rodriguez began investing in 2003, when he purchased a duplex in South Florida. He’s continued to branch out across the country ever since.
His A-Rod Corp. founded Monument Capital Management, which opened up its fourth housing fund this year. Monument has more than $700 million in real estate assets across 13 states, specializing in capital upgrades and post-purchase value-adds. He also began working with fellow entrepreneur and Shark Tank star Barbara Corcoran, acquiring smaller multifamily properties in the New York area.
Peyton Manning know his team’s market
In 2012, the Denver Broncos signed Peyton Manning. With marijuana legal in his new home and that smoking it leads to hunger cravings, Manning snatched up 21 Papa John’s locations throughout Colorado.
Manning ended up with 31 stores in all. He sold them last year, just two days before the NFL announced it was switching to Pizza Hut as the league’s official pizza provider. Per Papa John’s website, the average franchise costs $300,000. A conservative estimate gives Manning $9.3 million from his sale alone, and that’s not even accounting for his six years of business with one of the most popular pizza chains in the country. He still remains a Papa John’s spokesman and brand ambassador.
Shaquille O’Neal’s massive business empire
At 7’1”, 325 pounds, it was hard not to feel Shaq’s presence on the basketball court. His post-retirement business career has been similarly impactful, mainly because he seems to have a hand in just about everything. Despite making $30 million per year in the NBA, Shaq earns even more from his investments.
At one point, he owned 155 Five Guys franchises – 10 percent of the chain’s restaurants – as well as 17 Auntie Anne locations and a Krispy Kreme store. O’Neal has also invested in Google, 40 24 Hour Fitness gyms, and 150 car washes. More recently, he joined the board of directors at Papa John’s, where he’ll earn $8.25 million over three years and is invested in nine Atlanta-area stores.
Kobe Bryant’s re-energizing drink
As one of the most ruthless athletes on the basketball court, it’s no surprise that Kobe Bryant’s investing strategy follows a similar pattern. Bryant’s tireless work ethic paid off in 2014. He invested in BodyArmor, a healthier Gatorade alternative. At the time, the company did $10 million in sales.
In just five years, BodyArmor’s numbers have skyrocketed. It made north of $400 million last year and continues to grow. Its projections are so high, Coca-Cola purchased a majority stake in the company in 2018. As the fourth largest investor, Bryant saw his $6 million investment grow to $200 million.
Brian Orakpo and Michael Griffin make cupcakes
Former NFL players Brian Orakpo and Michael Griffin were intimidating forces on the football field, but they’ve been far more welcoming off of it. The duo opened Gigi’s Cupcakes in Austin, TX, serving treats to customers that share their sweet tooth.
Orakpo and Griffin wanted to ensure they were hands-on with their business. They took extensive courses to learn how to bake and decorate cupcakes, as well as how to run a successful company. Gigi’s makes an estimated $7 million in revenue annually.
When investments go south
Of course, not all investing is successful. Whether through poor foresight, mismanagement, or just plain bad luck, things don’t always work out as planned. here are a few of our favorite failed investments.
Hoping to capitalize on the growing gaming market, Curt Schilling founded video game company 38 Studios. The company produced the roleplaying game Kingdoms of Amalur: Reckoning, and filed for bankruptcy a few months later. According to Schilling, he lost $50 million in the company.
Former MLB outfielder Torii Hunter lost nearly $70,000 on an inflatable raft that could sit under furniture. The pitch: when high-rainfall areas flooded, consumers could pump up the device. Their sofa would float and remain dry. Hunter said the man pitching him wanted an additional $500,000; the outfielder wisely stopped after his initial investment.
Raghib “Rocket” Ismail dropped $300,000 on the Rock N’ Roll Cafe restaurant. It turned out to be as destructive as a rock and roll band in a hotel room. Ismail still doesn’t know what became of the restaurant. That’s not all – he also invested in failed companies that did cosmetic procedures and dispensed phone cards, and opened up a souvenir shop in New Orleans just two months before Hurricane Katrina hit.
Expect to see more athletes getting involved in investing. The ones that really do their homework and are smart with their money will be most likely to thrive.