For years, the only involvement many retired athletes had with real estate was deciding where to open a steak house with their name on it. But some sports stars, looking for a sustainable career outside the arena, have jumped into the development game buying hotels, building shopping centres and renovating affordable housing, much of it in and around New York.
The move to real estate has a number of explanations, investors. For one, the leagues are offering classes and workshops to help players make wiser business decisions, and development is an attractive path, they say, because it taps deal-making skills without requiring special licenses or degrees.
But benevolence seems to be a motivator, too. Citing a desire to contribute to communities like the ones in which they grew up, former stars like Mo Vaughn, who played for the Red Sox and Mets, and Emmitt Smith, the former Dallas Cowboys running back, are focusing their resources on low-income urban areas.
Athletes have been notorious for tying up their money in horse farms, or drag racing or record labels, said Wayne McDonnell Jr, an associate professor at New York University who teaches sports business courses. And real estate, with its brash personalities and public clashes, taps into players competitive natures, he added.
When their playing days are over, athletes cant just turn off that competitive energy, McDonnell said. They need to channel it into different exercises. What has not changed is that a game-winning score can be an enduring public relations bonanza, which can help get deals done, said Tate George, a basketball star at the University of Connecticut and a first-round pick of the New Jersey Nets in 1990. George is president of the George Group, a developer that mostly builds affordable homes in Newark, N.J. Indeed, Newark officials often refer to Georges buzzer-beater in 1990 that beat Clemson University in the NCAA tournament.
That star quality helped pave the way for Georges current project, the rehabilitation of five run-down row houses in the West Ward neighbourhood of Newark, where he grew up.
The single-family homes, which are being renovated with the Greater Newark Housing Partnership as the first phase of a larger 16-block, $25 million project, go on sale this month for $135,000 to $160,000, so that people making about $40,000 can afford them, George said.
Simultaneously, his company is planning its first commercial undertaking, Seaview Plaza, a 152,000-square-foot waterfront shopping and office complex in Bridgeport, Conn.
Several former athletes have been involved in failed food ventures, and so had Vaughn, who played most of his career with the Boston Red Sox before moving to the New York Mets. Flo Nitelife, a nightclub Vaughn opened in Columbus, Ohio, in 2002, around the time he retired from the Mets, closed a few months later.
But during that time Vaughn solidified a relationship with his lawyer, Eugene Schneur, with whom he founded Omni New York in 2004. Omni, which is based in Midtown Manhattan, rehabilitates dilapidated affordable apartment buildings throughout the Northeast and owns 4,015 apartments in 23 buildings, with an additional 1,200 under contract to close this year, Schneur said. Included in that group are 415 Bronx apartments formerly owned by the Ocelot Capital Group, which Omni won in a July auction, with closings expected by September. For Vaughn, who hit 328 home runs in a career that was ended by a knee injury, Omni provides a chance to be socially responsible and to repay the city.
Similarly focused on urban areas is ESmith Legacy, a commercial development company based in Baltimore that was co-founded by Smith, the NFLs career rushing leader.
Smiths latest effort is a mixed-use project in Harlem, at West 125th Street and Malcolm X Boulevard, where a weedy fenced-in lot has sat for years. The project will include 90,000 square feet of retail space, a 100,000-square-foot Hyatt hotel and a 50,000-square-foot Y. The complex will be built with Wharton Properties, a developer in Manhattan.
One of the first prominent former athletes to go into real estate was Smiths fellow Cowboy, Roger Staubach, who was a part-time agent while a professional quarterback. That experience led to the Staubach Co., which grew into a multimillion-dollar national company before he sold it to Jones Lang LaSalle. Smith worked with Staubach in the off-season before they started Smith/Cypress Partners, which focused on building shopping centres, in 2005.
Other recent entrants into the development field include former San Antonio Spurs centre David Robinson; former Jets receiver Keyshawn Johnson; and boxer Oscar De La Hoya.
Still, the main inspiration for the latest wave of deals seems to be Magic Johnson. After building inner-city movie theatres in the 1990s, his Magic Johnson Enterprises expanded into home building, courtesy of the Canyon Johnson Urban Funds, which is a partnership with Canyon Capital Realty Advisors of Los Angeles.
A recent project is One Hanson Place, condominiums in a former bank in downtown Brooklyn that were developed with the Dermot Co. for $267 million.