Alex Rodriguez is best known as the New York Yankees star who hit 696 home runs over the course of his 22-year baseball career, but today he’s making a name for himself as the founder and CEO of A-Rod Corp. One recent example: While serving as a guest judge on CNBC’s Shark Tank, Rodriguez backed Ice Shaker, an insulated bottle maker founded by former National Football League fullback Chris Gronkowski. Rodriguez talked about his life off the field as a savvy investor since his 20’s as the keynote speaker at EisnerAmper’s 4th annual Alternative Investment Summit at the The Museum of Modern Art on June 19. Among the topics discussed in a conversation led by Charles Weinstein, CEO of EisnerAmper: Rodriguez’ childhood as the son of a single mom; his investment thesis, which shares much with other middle-market investors; how he’s helping singer/dancer/actress Jennifer Lopez (to whom he became engaged in March) transition her business initiatives from licensing her brands to owning them; and how one day he just might buy a baseball team.
Investing from an early age
The fourteen-time Major League Baseball All-Star recalled growing up in Miami, the son of a single mother who worked two jobs, “as a secretary in the morning and serving tables at night.” Every day after school, he headed to the Boys & Girls Club of Miami-Dade. It was there that he learned to play baseball – “after I did my homework.” It’s an organization he supports today through his philanthropy.
Growing up with limited means made Rodriguez, now 43, sensitive to financial issues from an early age. He was first motivated to invest back in 2003, when he was 28. He said he was shocked to learn that most professional baseball players earn 90 percent of their total lifetime income between the ages of 20 and 30. “What happens between 31 and 80?,” he worried. His answer was to buy a duplex apartment in Miami and establish his investment firm, A-Rod Corp. He quickly parlayed the initial investment into thousands of apartment units. But that was just the beginning.
“The greatest break in my business career was when I met Stuart,” Rodriguez said, referring to Stuart Zook, who previously worked with Sam Zell at Equity Residential. Today, Zook serves as a principal at Rodriguez’ Monument Capital Management and Monument Real Estate Services. “We’ve done 82 deals so far and made money on 79 of them,” Rodriguez said. “Stuart is a great manager. I believe in investing in jockeys, not horses.”
A-Rod Corp currently identifies, originates and manages investments across a broad array of industries, including real estate, sports and wellness, media, and entertainment. “With a flexible and opportunistic investment mandate, the firm focuses on long-term opportunities, where it can add value to create superior risk-adjusted returns,” explains the firm’s website. Led by Rodriguez and a team of seasoned investment professionals, including chief investment officer Lane LaMure and COO Jeff Lee, the firm manages both internal and external capital.
4th inning companies at 1st inning prices
When asked to describe his investment thesis, Rodriguez said he’s looking for “A great product, great leadership that’s experienced, with track record, and we want to go out and scale.” A-Rod Corp invests in the middle market, passing on bigger deals, such as Uber, he said. Sounding like many a middle-market private equity investor and likening his approach to the family office model, Rodriguez said, “We play really well with companies on the $1 billion mark. We like 4th inning companies at 1st inning prices. We’re patient capital, with no pressure of selling in downturns.”
Rodriguez has his eye clearly on the future, with some of the investments he’s most excited about aimed at younger audiences. In addition to backing UFC fitness centers and TruFusion studios, A-Rod Corp recently invested in NRG eSports. “When younger people told me about eSports, I didn’t even understand what they were telling me. ‘You watch kids play video games. Where are the sports?,’ I said. ‘That’s the sport,’ they said.”
Rodriguez is mindful that things change rapidly. He sold his Mercedes-Benz dealerships in 2014, once he realized that millennials are buying fewer cars, thanks to car services like Uber and Lyft.
Leaving a $4B business on the table
One idea he’s been mulling (and that Major League Baseball would do well to consider) is a subscription service that would broadcast on-the-field activity, such as batting practice, from 4:00 to 7:00 pm. “Baseball is in the entertainment business,” Rodriguez said. “There should be cameras everywhere, and you could get an alert when Aaron Judge is hitting. This is the low-hanging fruit. We’re leaving a $4 billion business on the table.”
Might he buy a sports team?, he was asked by an audience member. Not now, he answered, saying he was having too much fun and was too busy with all the other things he’s doing. “To own a team, I’d have to be all-in. But maybe one day. And it would be a baseball team.”
When asked what advice he would give to younger baseball players, Rodriguez said: “In order to have a great life after sports, it’s incredibly important to be proactive and save early on.” He favors a program that would require younger players to save 10 percent of their income.
“Jennifer is a freak of nature”
Now is a pivotal point in his personal life, with his upcoming marriage to Lopez. When asked by this reporter how Lopez figures into A-Rod Corp, Rodriguez said that preferred a “Chinese wall” between business and romance, but Lopez urged him to help her. “Jennifer would listen to me have business conversations on the phone, and when I’d get off, she’d say, ‘You own all this stuff. I don’t own anything.’”
Lopez, whom Rodriguez described admiringly as a “freak of nature,” earns money through a wide array of revenue streams, including sales of her music and concert tickets, earnings from participation in TV shows and movies, and from endorsement deals and sales of consumer merchandise, like her line of clothing sold through Kohl’s. J-Lo earned $47 million in 2018, according to Forbes, and her net worth is an estimated $400 million, according to Celebrity Net Worth. But the primary business model for much of her earnings has been licensing. Now, Rodriguez is helping her transition to an ownership model.
He is cognizant of the influence the power couple can wield. “Ten to fifteen years ago, big meant big, but today, small can mean big,” he said, pointing to Lopez’ social media presence, where she has more 95 million followers on Instragram alone.
“Jennifer and I have a competitive advantage between the both of us, and we can be disruptive,” Rodriguez said. “We can have a global impact in 30 seconds.”