Life Beyond Home Plate
Baseball Stars Don't Balk At Real Estate Careers
By Alexis Muellner
South Florida Business Journal
12/22/2003
Dec. 22 - If it pays to have heavy hitters on your real estate team, The Royal Bay Group has a whole infield.
Active major league baseball stars Luis Castillo of the Florida Marlins, Edgar Renteria of the St. Louis Cardinals and Placido Polanco of the Philadelphia Phillies have not only taken 25 percent to 50 percent equity stakes in several of the Miami company's condominium projects, they are learning about development for a post-baseball career.
Athletes flush with cash are looking at real estate like many other investors looking to diversify, said Robert Thorne, president of Royal Bay Group.
"They don't know how long their careers will be and they don't have the advantage of knowing they'll work to be 64 and retire," he said. "Outside of baseball, there's nothing else."
There are countless stories - from Mike Tyson to Kareem Abdul-Jabbar - of athletes who got bad advice and squandered fortunes. While leagues, teams and agents have taken steps in recent years to help educate players on money management, pro athletes are still under a constant barrage of business pitches for "slam-dunk" deals, Renteria said.
"It's not a pretty picture when someone sits in front of you and says, 'c'mon man, this is the deal of the century,'" he said. "People come to me and say, 'if you put in a million bucks, you'll make two,' so I say to them, 'why don't you do it, brother?' They promise you fantasies - pajaritos," he said, alluding to a Spanish phrase for "birds and flowers," connoting flighty ideas.
Often, players are pitched deals with vague promises of money back without a clear business plan and "the promise of that money and interest back, thank you," said Emil R. Infante, a Royal Bay partner, lawyer and financial planner.
"We think he should make his percentage of interest like we all do, and get a piece of the deal, and become a partner in the deal. That's the difference. We don't see them as banks."
Renteria owns half of Royal Bay's Westside Lofts project along West Avenue in Miami Beach. His former infield partner, Luis Castillo, also has an equity stake. Ariel Prieto, who just signed with the Detroit Tigers, has a stake in Royal Bay's Grand Palazzo project.
When All-Star shortstop Renteria suggested developers add rooftop cabanas with private hot tubs to Westside Lofts, the developers agreed.
"If it was him buying, he'd like to have that on the roof and he sees it as something different and a new concept," Infante said. "If it is going to improve sales and if the answer is 'yes,' then it's good."
It was lawyer Infante's college connection with Tampa Bay Devil Rays player Eduardo Perez, son of baseball great Tony Perez - a former Cincinnati Reds star and Marlins interim manager - that led him to several Latin players. He developed a planning practice at Raymond James in Tampa before joining RBG earlier this year as a VP.
Infante does financial planning for the athletes. He encourages them to make real estate part of a balanced portfolio of investment that includes stocks, bonds and mutual funds. Building an income stream.
In addition to the development work, the firm will partner with the athletes to purchase rental or income-producing property. That way, when a player's career ends, an income stream is available, Infante said.
This is good news to Phillies second baseman Polanco, who last year was one of Major League Baseball's most difficult players to strike out. He enjoys working on the deals, but can't spend much time away from keeping sharp as a player.
"It's all about concentration," he said referring to both hitting and his new interest in development.
With Royal Bay, he took a 25 percent stake in the Chelsea, a condominium on Miami Beach.
The developers and the players meet monthly for progress reports and to talk investment strategy.
The group is targeting condos between $189,000 and $359,000.
"There's a huge shortage of that here," Thorne said. "We've been land banking for a while and develop projects that are able to fit that niche."
While the presence of the players in the deals isn't being used overtly for sales and marketing, Infante said he's looking to attract other corporate partners to the deals - in Polanco's case, a high-ranking executive at Goya Foods.
"Goya specifically has a big presence in the DR [Dominican Republic] where they built a huge plant, and it's important for [Goya] and Polanco to build a good relationship for future stuff in Dominican or TV commercials - and so he's already in," Infante said.
More players are learning about business and investing, said Greg Bouris, communications director for the Major League Baseball Players Association.
"Quite a few players today are sophisticated and, because of the amount of money they make, they increasingly see the need to protect those interests by surrounding themselves with solid financial planners," he said.
At Eric Levin's Pro Access, a sports marketing and development firm in Miami Beach, athlete clients have been counseled for several years on the value of real estate deals. A few clients have reaped sizeable returns, he said.
Many of the athletes he works with have "a natural business acumen," he said. "For them to understand what they are doing is another check and balance."
As for the entrepreneurial Renteria, that's true. It is about checks and balances - fat ones.
His Westside Lofts building on South Beach is nearly sold out and the sales center may never go up.
What's next in the real estate career for Renteria?
"I think the Marlins need a new stadium," he said.
Back to 2003 Articles Page