A brand new game: for these athletes, entrepreneurship is the next playing field. (Entrepreneurship).
According to A Study of Players Who Left Professional Football in the 90s, 25.8% of the ex-NFL players polled said they experienced financial problems after retirement. In the 2002 survey, 37.3% said they could maintain their current lifestyle after their playing days. And while the average salary in major sporting leagues with prominent African Americans is still a tidy sum ($4 million in the National Basketball Association, $1.1 million in the National Football League, and $1.9 million for Major League Baseball), the average career span for professional basketball, football, and baseball is a mere 4.5 years, 3.2 years, and under five years, respectively.
A growing number of athletes, however, are finding continued success on a different playing field: entrepreneurship. From the Dallas Cowboys' Emmitt Smith, whose company licenses his name to Reebok and Starter, to the NFL's Cris Carter, who, along with his brother and business partner, John, aspires to own a professional sports franchise, BUCK BLACK ENTERPRISE will look at this growing trend and what it takes for athletes to score in the world of business.
Business is not a new game for black athletes. Boxing legend Sugar Ray Robinson was a renowned entrepreneur who owned a Harlem nightclub in the '40s and '50s--a time when many African Americans were prevented from voting. The last 20 years or so have seen an explosion in the number of black sports figures who actively pursue business opportunities. While hard data is scarce, Jay Coakley, a professor of sociology at the University of Colorado at Colorado Springs and author of Sport in Society: Issues and Controversies, cites a combination of four events that has given rise to entrepreneurship among athletes.
* An increase in salaries that began in the mid-70s led to athletes making more money at a time when people were becoming increasingly aware of investment opportunities.
* Increased media coverage of sports provided athletes with greater visibility and name recognition than past athletes. This self-branding can be transferred into business success.
* Sports has taken on more of a commercial appeal within the last decade or so as athletes realize their potential as business entities. "The leagues as well as the players are thinking of themselves as professionals in more than just a sports sense," says Coakley.
* Stories about past athletes who made bad investments or went bankrupt have been a lesson to athletes today looking to bolster their business and financial acumen.
While one of the biggest challenges entrepreneurs face--access to capital--isn't as much of an issue for athletes, they, too, have their own set of obstacles. Since professional athletes spend much of their time on the road and are generally not as hands-on as the average entrepreneur, having the right people in place is essential. "I found early on that the key was to have good people and that my function was going to be to provide proper leadership, at least during the time I was playing football," says Dave Duerson, president and CEO of Duerson Foods L.L.C. A former safety for the Chicago Bears and the New York Giants, Duerson's company supplies meat products to Burger King, Hyatt Hotels, White Castle, and Hardee's. Duerson projects 2002 sales to be approximately $24 million in 2002 and $51 million for 2003.
Another challenge unique to athletes is the stereotype that "dumb jocks" can't succeed in business. For African Americans, the challenge is two-fold when combined with racial stereotypes. "Being a black man in business is difficult in and of itself," says Duerson. "Being a black athlete in business is even tougher because I have to disprove this `dumb jock syndrome,' even with a Notre Dame degree. Being African American, we have to be great just to be considered good."
Athlete-entrepreneurs have several things in common, even while their choices of businesses vary. Generally, they are not earning tens of millions a year and opting for lucrative endorsement deals. As a rule, they are five to six years into their sports careers and have either settled down to start a family or suffered an injury that made them aware of the precarious nature of an athlete's career.
One of the champions in the cause to increase entrepreneurship among professional athletes is Ryan McNeil, who oversees the Professional Business and Financial Network (PBFN), a 100-member organization of current and retired athletes interested in starting or growing their own businesses. "We take what we're capable of doing for granted," says the 10-year cornerback most recently with the San Diego Chargers. "The careers of most professional athletes is so short, by the time we realize exactly what we have and had an opportunity to do, it's too late. So now is the time to corral some of that earning power and reapply it to business." The PBFN's membership includes players Troy Vincent of the Philadelphia Eagles, and Raghib Ismail and Smith of the Dallas Cowboys.
Although they may not represent the majority, more athletes are planning ahead. "Players are now spreading out socially and learning about networking," says Carl Banks, a former Pro Bowl linebacker with the New York Giants who continued with the league as director of player development for the New York Jets after retirement. "They know that sports doesn't last forever." Banks is currently vice president of licensing for G-III Sports Licensing, the sportswear division of publicly traded G-III Apparel Group Ltd.
So as these athlete-entrepreneurs work on their game, they're also working to perhaps position themselves to join the ranks of the largest black-owned companies in the U.S.--the BE 100s. Just as today's athlete is stronger and faster, pushing the limits of the human body, they are also using their tenacity to create thriving enterprises and succeed in the business world. Here are a few examples:
ORONDE GADSDEN: PLAYING A NEW GAME OFF THE GRIDIRON
Oronde Gadsden started Original Gear Inc. back in 1999, but his apparel company has been mostly kept on the back burner. That was the case until the 6-foot-2-inch, 215-pound wide receiver most recently with the Miami Dolphins was forced to go under the knife at the beginning of last season. The operation forced him into a new arena: cutting deals. Today, those efforts are beginning to pay off, thanks to a lucrative agreement he's discussing with retail powerhouse Federated Department Stores.
During the first few weeks of the 2002 NFL football season, Gadsden was having a solid year. In six games, he averaged 14.2 yards per reception and in his last game on Oct. 13 with the Denver Broncos, he had five receptions for 77 yards. In the third quarter, Quarterback Jay Fiedler connected with Gadsden, who was cradling the ball in his hands to prevent a fumble while rushing downfield to gain extra yardage. On that play, a defender's helmet struck Gadsden on the wrist, tearing a ligament. The five-year veteran opted to undergo a season-ending wrist surgery rather than risk further injury by continuing to play.
Since Gadsden had been focused on his football career, Original Gear never really got off the ground. The line had been relegated to some 37 mom-and-pop retail outlets in Florida and Georgia. Gross sales for 2002 were roughly $100,000. But the sidelined athlete was determined to make his business gain significant yardage. "I got serious for the first time," he explains. "I finally hired a staff, six people, including a designer and sales people." But Original Gear needed to get into the big stores to make the big money. Gadsden brought on Charlene Marsh, a high-powered consultant who had connections within large retail chains.
Gadsden's game plan was coming together. With Marsh's help, he was able to secure a meeting with Federated's buying brass last December. But then a life-threatening, business-debilitating crisis hit. One day before the big meeting, Marsh suffered a heart attack. Fortunately, it was mild, and she was back on her feet after several days. With some last minute rescheduling, Gadsden was able to push the meeting to mid-December. "Thank God she pulled through and everything was all right," says Gadsden.
Gadsden flew into Cincinnati and began discussions to supply Original Gear to 40 stores in the Atlanta area. He expects preliminary orders of roughly 3,000 pieces, and if the items sell, it will open the door to larger orders from other stores under the Federated umbrella. Gadsden expects revenues to increase more than 400% to nearly $500,000. "We're just going into 40 to 50 stores, but if the tests go pretty well, then sky's the limit."
With his cast removed after meeting with Federated, Gadsden plans to devote his time to his two passions: football and entrepreneurship. While working on expanding operations, which include purchasing a larger warehouse, hiring staff, and expanding office space, he'll also prepare to return to the gridiron. "We have Tuesdays off [from practice], so I can come in on those days," Gadsden says. "Hopefully, we'll have the infrastructure in place so the business can run on its own."
NIKKI McCRAY: DAYCARE IS HER PASSION OFF THE COURT
When Nikki McCray, the 5-foot-11-inch guard for the WNBA's Indiana Fever, decided to become an entrepreneur, she knew she could score in the daycare industry. Launching the Halls, Tennessee-based Cubby Bear Daycare Center, located just outside of Knoxville, was a natural for the hoopster. "I think I've always loved kids and had a passion for kids," McCray says. "I felt there was a need for daycare, and it's one of those growing businesses that will always be around, like doctors and morticians. So I just thought it would be a great opportunity."
Cubby Bear, which is open from 6:30 a.m. to 6 p.m., has three playgrounds and tends to 62 children who range in age from 6 weeks to 12 years old. With a staff of 12, the center generated $500,000 in revenues for 2001. But running Cubby Bear has been no slam dunk. Staffing is always a big issue. "In daycare, the turnover is so high," says McCray, 31. "Parents definitely like to bring kids to centers where staff members stay on a lot and that's difficult because you get mostly part-time workers."
Cubby Bear must also comply with a great deal of regulation. Federal law dictates that Tennessee daycare centers must have at least one adult for every four infants and no more than eight infants in any given room. "I have a room size that holds 16, but I can only fit eight kids in there. So now I have to structure my prices so I don't lose out," says the two-time Olympic gold winner. Cubby Bear's fees range from $120 a week for 12 months or younger, to $95 a week for preschoolers. Its after-school rate for students in kindergarten through fifth grade is $60 during the school term and $80 during summer vacations.
McCray, whose future plans includes purchasing an apartment building and other real estate, says entrepreneurship is uncommon in the WNBA. "I think [most] don't know what it is they want to do after basketball, but you always have to think in terms of basketball not [being] around forever," she says. "It's very hard to go from freedom to doing something as structured as a 9 to 5, so I figured I'd like to own my own business and go when I want to. I have someone working for me and I still [have] money coming in."
VERNON FORREST: FIGHTING IN THE HEALTHCARE ARENA
Welterweight boxing champ Vernon Forrest has been involved with so many charitable efforts, it's no surprise his business venture, Destiny's Child, is devoted to community service.
After shelling out $80,000 to form the company, which involved purchasing a suburban Atlanta home in 1996, Forrest designed the facility to provide long-term care to patients with mental disabilities. Although the business isn't highly profitable, it's the champ's labor of love. "One of the things that I always wanted to do is help people out," Forrest says. "But I didn't want to do something cosmetic. I want to know what I do is going to make a difference in somebody's life." With 30 patients, the facility generates just over $1 million in annual revenues, derived primarily from Medicaid reimbursements.
Patients are referred from institutions or family members who are no longer able to take care of them. "Our objective as a whole is to make sure nobody is abused or mistreated, and so we try to do right by the people we have there," maintains Forrest, who ended 2002 with a 35-0 record (26 KOs), ranking him among the world's best prizefighters. "There are certain things that we instill in our program that a lot of places don't, like we make sure our clients go to church."
Destiny's Child, like many community-service organizations, is not without its share of challenges. Costs are high. Forrest employs a staff of 25, including caregivers, coordinators, and administrative staff. He also pays premiums on the company's $5 million insurance policy as protection against malpractice. But the company's greatest test has been the unforeseen. In 2000, the state of Georgia requested that Forrest's company provide emergency shelter for 17 patients who were enrolled in a competing firm that folded. The additional expense was a crippling blow to his venture.
But Forrest proved he wasn't down for the count. Without state funding in place, he provided clean clothing to all of the new patients, many of whom were in poor health and suffering from ringworm. He also brought in doctors to provide any necessary medical treatment. Forrest financed the entire $100,000 rescue operation until Medicaid payments flowed in six months later. "We almost went under because we didn't have any funding for them," he says. "So I took personal money and put it in the business account."
With that matter now settled, Forrest is looking to expand his operations and eventually construct a small housing community for his patients. In addition to Destiny's Child, Forrest owns Champion Limousine, which he launched in 2002 after purchasing five limos for $70,000 each. With Destiny's Child going into its sixth year, Forrest plans to concentrate his efforts on his fledgling limo service. "Right now the limousine company is my baby," he says.
ALLAN HOUSTON: SCORING WITH RETAIL
Seated behind a desk in his home office conversing with his business partner, Allan Houston looks like any other executive. Discussing inventory and design issues, the 6-foot-7-inch New York Knicks guard and CEO of Allan Houston Enterprises is discussing plans for Top Gun Leather, a retail store located in Roosevelt Field Mall in Garden City, New York. Houston partnered With Ayal Hod, an entrepreneur who has operated nine Top Gun Leather stores since 1996.
"I talk to Ayal maybe once or twice a week and he keeps me updated," says Houston, 31. With the long hours and amount of traveling that comes with being a pro athlete, joining forces with an experienced partner was critical, says Houston, who was signed by the Knicks as a free agent in July 1996. "It's hard to start something up while playing, so it's important to partner with someone who is knowledgeable and successful."
While Hod manages the day-to-day operations, Houston provides creative input and develops new contacts by networking at high-profile events such as fashion shows. "I play whatever part I can, sitting down with Ayal and with a manufacturer that might be helpful to us," Houston explains. "I also tell him what I think would be a nice fashion-forward style--what other people and my peers like."
Top Gun Leather is an integral part of Allan Houston Enterprises, a holding company with assets that include a 50% interest in the retail store, a 43.5% stake in an NBA apparel license expected to launch this spring, and the recently launched H20 Productions, a venture Houston hopes will produce family entertainment such as training videos, books, and inspirational music artists.
Houston came from good entrepreneurial stock. His parents' ventures include a stake in a Louisville, Kentucky, grocery store, a fast-food restaurant, and two trucking companies: Automotive Carrier Services and Dallas & Mavis Specialized Carrier Co. The trucking companies have been perennials on the BE INDUSTRIAL/SERVICE 100. Houston was inspired by his parents' business pursuits to develop Top Gun, which is expected to gross some $1 million for 2002. The store specializes in leather and suede goods and features brands such as GUESS?, Steve Madden, Avirex, and Kenneth Cole. Houston says Top Gun has not needed to rely on his celebrity status or an advertising campaign, claiming that most sales have been driven by word-of-mouth, brand recognition, and spontaneous mall shoppers. Recently, the outlet has been involved in cross-promotional campaigns on several urban radio stations in New York City, where daily winners have received a jacket from Top Gun. Prices at the store range from $99 to $2,000.
Looking ahead, Houston plans to open another Top Gun Leather in 2003 or 2004 and develop ad campaigns that will run in urban magazines. He also plans to continue to develop the store as the model for future franchises through upgraded point-of-sale and inventory software. According to Houston, Top Gun's draw is its superb customer service, which all employees are taught to provide in a rigorous training program.
As Houston learned in the NBA, winning comes by way of effective teamwork. And his team must play for a championship ring every day--market share.
CRIS CARTER: GAINING ON THE B.E. 100s
Cris Carter is proving he can do more than catch touchdowns. When the seven-time Pro Bowl wide receiver isn't on the field or in the studio taping HBO's Inside the NFL, he and his brother, John, are plotting the direction of their company, Carter Bros. L.L.C.
The Atlanta-based firm, which is 50% owned by each brother, provides security and construction-project management for corporate clients such as ADT Security Services and Bank of America, as well as government agencies like the General Services Administration.
With some 40 employees and 2002 revenues approaching $15 million, Carter Bros. is positioning itself as a future BE INDUSTRIAL/SERVICE 100 company. The company's largest client is ADT, which it landed in 2001. After forming a partnership with the electronic security services giant, the Carter brothers' firm began supervising ADT systems installation in large-scale domestic projects such as corporate headquarters and high-rises. The firm also coordinates ADT's host of subcontractors. The deal is expected to result in some $100 million in business.
The Carter brothers launched their company in 2000 when they decided to combine their business acumen with John's 15-year background in construction. John's projects include the former Enron Field in Houston, Paul Brown Stadium in Cincinnati, and Turner Field in Atlanta. "With my expertise coming out of construction, it made a great deal of sense," says John of the venture. "I understood the management side of it, managing large, complex projects." The company initially went after construction projects but focused on security and project management after partnering with ADT.
Cris, who in 16 seasons in the NFL has 130 touchdowns on 1,101 receptions for 13,899 yards, holds nearly every receiving record for the Minnesota Vikings, where he spent 12 seasons. He retired in 2001 but returned to the league midway through the 2002 season to play for the Miami Dolphins after receivers Chris Chambers and Oronde Gadsden fell to injuries.
The future Hall of Famer says he's always thought beyond his playing days. Partnering with his brother, he says, was an ideal fit. "I never saw being in the NFL as the last thing that I would do," says Cris, 37. "I had someone who had run a company, and I could really trust him with something we could build together. That's one of the biggest hurdles for an athlete to get over because so many people are taking from them and they don't trust a lot of people."
Despite Cris' celebrity status, the Carter brothers have had their share of challenges in the business arena. Potential clients initially viewed their company as a minority-owned firm without the resources to handle sizeable projects. "The first thing they say about minority companies is, `It's a big job, can you handle it?'" says John, 39. "But when you walk into a company with ADT, it's very hard to say, `Oh, you're not big enough.'"
Cris' ultimate goal is to follow in the footsteps of Black Entertainment Television founder, chairman, and chief executive officer Robert Johnson, and eventually own a professional sports franchise (see "Slam Dunk," this issue). Cris says he sees his venture as a step along that path, as he gains the skills and experience needed to manage an NFL franchise in the business world. "I think athletes have limited themselves as far as their overall potential by just saying that they want to make it in pro sports, but ultimately the job to have is to own a pro team," he says. "I believe there are going to be plenty of minorities in the next 10 to 15 years who become owners of professional sports teams. I'd like to get myself in a position [like that], and you have to do that through free enterprise."
So while Cris says he may not return to the NFL, he seems well prepared for life after the game.
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|Date:||Mar 1, 2003|
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