Luol Deng, a former refugee from war-torn South Sudan, is 30 years old and extremely rich. Over 11 years of playing professional basketball in the NBA, the 6-foot-9-inch-tall small forward has made close to $100 million in gross wages alone. It’s only natural that Deng spends a good deal of thought on what to do with all that money. Recently, much of that thinking has revolved around real estate.
“Throughout my career, I’ve been trying to find something that I really love doing, besides the fact that I just want to make my money work for me,” Deng told The Real Deal last week. “And I looked at real estate as something you could really get into if you understand it and if you have capital.”
The Miami Heat player was sitting outside a conference room in the W Hotel at Union Square, taking a break from a long day of seminars on real estate investing. Along with 10 other NBA stars, he was in town for a two-day real estate symposium organized by the National Basketball Players Association (NBPA).
At a nearby table, Avison Young principal David Eyzenberg – “Professor Eyzenberg” for the day – was talking to New York Knicks center Lou Amundson, Charlotte Hornets guard Brian Roberts and his wife Jenna about avoiding personal recourse on loans. “This has been by far one of the most personally gratifying things I’ve done,” he later said. “It was very interactive because all of them have some experience or want to have experience, so they know what they want to learn about and what you teach them will have a meaningful impact on their activities.”
Eyzenberg was in charge of teaching for the symposium, which also featured a guest lecture by developer Don Peebles. The curriculum included cap rates, structuring appropriate joint ventures and due diligence, with Eyzenberg talking over PowerPoint slides and players scribbling notes like very, very tall college students.
In essence, the two-day symposium taught players how to avoid common mistakes when investing into commercial real estate.
“It was challenging, because I tend to be very technical when teaching the master’s degree classes at NYU and Columbia. For this audience I had to take off the pedagogical hat and just give them the basic facts,” Eyzenberg said.
The idea for the symposium spawned from a conversation between Luol Deng and his business manager David Gross, a former Wall Street banker and recent graduate of Columbia University’s master’s program in real estate development, they explained. Gross and Deng had invested in a residential project in London and developed properties in South Sudan, and soon found that other players were also interested in real estate.
According to Gross, many players grew up in poorer neighborhoods, where real estate is the main source of rare wealth.
“It’s straightforward, it makes sense and they feel like there’s no hocus-pocus, no voodoo where one day it’s going to disappear like some of the financial instruments that they are pitched,” he added.
Although interested, most players lack the know-how to differentiate good deals from bad ones, and so Gross and Deng suggested the real estate symposium.
At the NBPA, which already was considering a real estate program, their idea was well received. The association has long been wary of reports of players going broke after retiring, and had launched a career development program to help them ease into life after basketball. Since 2008, it had been offering training in broadcasting, and is helping players finish degrees and land internships. This week’s real estate symposium marks the first time the association is teaching players how to invest.
Lloyd Walton, a career development counselor with the NBPA and former point guard for the Milwaukee Bucks, recalled how challenging it was to find a footing after retiring from basketball in the 1980s.
“You know, IBM wasn’t looking for someone who scored 15 points a game back then,” Walton said.
According to Walton, players generally begin to think about life after basketball around the age of 30. Indeed, most attendants like Amundson (32), Charlie Villanueva (30), Richard Jefferson (35), Carl Landry (31) and Zaza Pachulia (31) are nearing the final stage of their careers. And while none of the players interviewed by TRD Tuesday seemed ready to become full-time developers anytime soon, all saw real estate investing as a big part of their future. Some are active investors already: Amundson had brought along several real estate deals he is currently reviewing as case studies for the afternoon session.
Brian Roberts, who is 29 and hasn’t invested in real estate to-date, said he joined the event because he considers real estate as a potential “avenue” for life after basketball. His wife Jenna, the only spouse at the symposium, added: “These guys come out of the NBA and they have these bank accounts, but not necessarily a direction they want to go in. And real estate is a good way to harness the drive from the NBA.”
Although the event was held in New York City, most players were cool on the local real estate market. Having just learned about cap rates, pricey Manhattan seemed far less appealing than Los Angeles or Phoenix. Luol Deng could be looking even further south. Just days before the symposium, news broke that he had exercised a contract option to stay with the Miami Heat for one more year. The deal will give him another $10.2 million – and more time to check out South Florida’s booming real estate market.