Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning.
These days, it isn’t unusual to see high-profile professional athletes touting their investments in private companies. Serena Williams, the tennis great, invests in early-stage companies through Serena Ventures. The NBA’s Kevin Durant has backed more than 100 startups via 35V, his family business entity. When the fitness band maker Whoop announced its Series G round earlier this year, its backers included Cristiano Ronaldo, LeBron James, Reggie Miller, and Rory McIlroy.
But most professional and college athletes lack the liquidity, dealmaking know-how, and connections to take a stake in promising private companies. Enter Patricof Co, an investment advisory firm that facilitates athletes’ participation in private equity transactions. The banker and entrepreneur Mark Patricof founded the firm in 2018 on the theory that athletes have an outsize impact on culture and society, yet were not significantly participating in the booming sports financial juggernaut.
The firm’s approach is, on the surface, straightforward: It provides athletes with advisory services, including networking and educational opportunities, and brings them potential investments that align with their interests and values. Athletes who are shareholders in brands they believe in will often eagerly promote the products to their fans and followers. Since investing in the sparkling soda Spindrift, Azzi Fudd of the WNBA’s Dallas Wings, a Patricof client, has done videos and wears company merch. “She’s done more for Spindrift than other [Patricof Co clients] in the deal, because she loves Spindrift,” Patricof says.
A new investment model
At a time when executives are looking for new ways to make their companies stand out, Patricof Co’s model underscores the convergence of capital, influence, and brand-building—and the benefits of harnessing all three. Since inception, Patricof Co has invested more than $200 million in 29 companies, with notable exits such as Cholula, acquired by McCormick & Co. in 2020; Orgain, which sold a majority stake to Nestlé Health Science in 2022; and SpaceX, which went public in June. Holdings include Real Truck, Kodiak Cakes, and L.A.B. Golf.
“Companies have come to understand that we’re able to meaningfully engage athletes in ways that are very authentic,” Patricof says. “We believe the efficacy of an athlete investor is far greater than that of an endorser.”
Brands aren’t the only ones taking notice. Earlier this year the LVMH-backed private equity firm L Catterton said it would team up with Patricof Co to create CHAMP, a $500 million fund that will invest in consumer growth companies. Of that total, nearly $60 million comes from more than 250 athletes who will invest directly alongside Patricof Co and L Catterton in portfolio companies. CHAMP validates Patricof’s thesis that athletes are driving all aspects of modern culture, and their participation in deals can lead to better deal terms and produce stronger returns.
Indeed, the symbiotic relationship between brands and athletes has become so mainstream that some observers wonder how long it will be before the wealth management arms of the big investment banks or global asset managers steal a page from Patricof’s playbook. KKR, which joined Patricof in a 2023 round for the travel site GetYourGuide, acquired the sports investing platform Arctos in February for $1.4 billion. While Arctos’s business model is different from that of Patricof Co, KKR said in a statement that the deal helps it “build a leading franchise” in sports. Patricof “has a moat,” one sports business insider tells me. “I just don’t know if it is as deep as he thinks it is.”
Ambitious plans
Patricof’s ambitions go beyond placing clients in private equity deals. He admires Byron Trott, the investment banker who gained acclaim by advising Warren Buffett and several prominent families, and he says he sees BDT & MSD Partners, the merchant bank Trott founded, as a model for Patricof Co. “The idea is to create a merchant bank with athletes and think of them as businesses, providing them with capital and access to the right types of people,” Patricof says.
That includes introductions to an impressive roster of Patricof Co advisers, including Howard Schultz, founder of Starbucks; Todd Gaines, founder and co-CEO of Raising Cane’s; John Schreiber, founder of Blackstone Real Estate Advisors; and Kewsong Lee, former chair of The Carlyle Group. Eventually Patricof Co will offer different deal types that leverage its clients’ unique strengths, offering the opportunity to reinvest returns when a client scores a big exit.
Investments may rise and fall in value, but as an asset class, professional athletes may be one of the safest bets in business. Says Patricof, “Their influence is going to grow, and it’s only going to keep growing.”
A merchant bank for athletes
Patricof began formulating the idea for a merchant bank for athletes as a cohost with the NFL star Rob Gronkowski on MVP, an entrepreneurial pitch show for Verizon’s now-shuttered go90 streaming service. While spending time with the show’s athlete panelists, Patricof concluded that they “have a lot of intellect and an ability to collaborate in different ways,” he says.
Patricof Co’s team provides athletes with collaboration opportunities, and the firm has also created structures that allow clients to engage as much as their time and interest permits. For example, it produces a “road trip calendar” for its basketball, baseball, and hockey clients—it started as a booklet and is now available digitally—that shows when players have days off during a road trip and what companies they might want to visit while in various cities. “People didn’t take us up on it in the beginning,” Patricof says, “but they understood why we did it.”
For every prospective deal, Patricof Co creates its own version of an investment memo drafted with their clients in mind. If a player expresses interest, Patricof or firm partners Matt Siegel, who leads the athlete advisory business, or Daniel Magliocco, who leads the private equity investment practice, might jump on a call to explain the proposed deal structure. Patricof insists that every client get on a virtual call with the firm before they write a check to invest in a company. He notes: “The goal here is for every athlete to have an opinion on every deal, not invest in every deal. We will not take an athlete’s investment unless they . . . understand the deal.”
Patricof says he, Siegel, and Magliocco put their own money in every deal they offer an athlete, and the firm never requires a minimum investment. In fact, he’s advised some clients to cut back their investments based on their net worth.
‘An athlete is like a company’
Patricof Co is frequently called on to help clients with other financial pursuits. “I helped one NBA player get a letter of credit for a kid’s fishing-rod business,” says Patricof, enabling the company, founded by the player’s friend, to acquire more inventory.
When I suggest that such a request seemed outside the firm’s scope, Patricof pushed back.
“As an investment banker, if a company has a need, you solve it even if your way of making money with that company might be years down the road,” he says. “An athlete is like a company. They’re like FanDuel or Airbnb to me. If you can solve a need, you should do it. That’s what a good partner does.”
That low-pressure, high-touch approach has engendered trust with athletes. “I’m not a money guy,” says Steve Kerr, head coach of the NBA’s Golden State Warriors. “It’s not my world. I’ve always needed help in navigating how to invest and how to plan, and I felt like I could really trust Mark. The companies he would bring forward [for investment] always made sense to me.”
Scaling a bespoke approach
The way Patricof has nurtured client relationships caught the attention of Howard Schultz, who became an adviser recently. “Mark and I share a vision of the power and cultural relevance that today’s athletes have to meaningfully impact the outcomes of consumer businesses, as well as numerous other investment categories, and I appreciate the thoughtful, honest, and strategic ways they service their athlete clients,” Schultz tells Modern CEO.
Still, the bespoke nature of Patricof Co’s work makes it challenging to expand. And providing merchant banker services, offering more esoteric financial instruments opportunities to nonfinancial types, requires additional hand-holding. But Patricof isn’t trying to be all things to all players. “We’re not for everybody. We don’t need to be,” he says. “We’re trying to create an on-ramp for the athletes who want to be sophisticated businesspeople, and not just while they’re playing.”
Consigliere to athletes
Mark Patricof may not have set out to become a consigliere to athletes, but his résumé sits at the intersection of two powerful forces in sports: media and money. A son of the venture capitalist Alan Patricof, Mark studied film in graduate school at the University of Southern California and worked as a trainee at the talent powerhouse CAA. He founded the boutique investment bank Media and Entertainment Strategy Advisors (MESA), which helped raise money for Airbnb and FanDuel, did royalty securitizations for musicians, and sold Ars Technica to Condé Nast. He sold Mesa Securities in 2015 to Houlihan Lokey, where he worked on deals such as the sale of Gawker to Univision.
“I was the only investment banker that went to film school, not business school, and I didn’t train at a big investment bank,” Patricof says. In part due to that pedigree, he says his investing strategy at Patricof Co is driven by ideas, which means he’ll sometimes pass on projects that look good on paper, such as an opportunity to invest in a national steak chain alongside a prestigious private equity shop. “Sure, athletes love a steak dinner, but we just didn’t think it was the right investment . . . for our business,” Patricof says. The private equity firm “was apoplectic,” he recalls. “The partner called me and said, ‘I’ve been investing for 30 years. Do you think you know more than I do?’ And I said, ‘I probably don’t, but we have a limited resource that we can deploy a few times a year, and we have to look for where we make the most bang for our buck.’”
And when an athlete and a brand are aligned, the outcomes are palpable, says Todd Gaines, the Raising Cane’s founder who was advised by Patricof Co. “When there is excitement and buy-in from both sides, the athlete is so much more than a celebrity spokesperson,” Gaines says. “They become a strategic growth partner that views the partnership as something that’s mutually beneficial, and this energy and excitement flow through to consumers, who can tell when a partnership isn’t genuine.”
Indeed, these days Patricof Co believes it sees virtually every private equity-owned consumer company seeking to raise capital; it has received calls from CEOs, founders, bankers, and other private equity firms such as Bain, KKR, and L Catterton, offering to let Patricof Co “piggyback” on their deals. Now, with CHAMP, the new fund with L Catterton, athletes have the opportunity to co-invest or be the lead investor in deals. Recently, in June, the athletic apparel company Rhoback announced that it was selling a minority stake to CHAMP for more than $40 million.
Platonic ideal
Rhoback is in many ways the platonic ideal of a Patricof Co deal: The company has been profitable from the start and has a loyal following among professional and college athletes. The parties did not disclose terms, but Patricof says because of CHAMP’s athlete investors, the fund was able to come in at favorable terms.
Notably, Rhoback wasn’t introduced to Patricof and CHAMP by a banker or a private equity firm but by Sam Hubbard, a former defensive end for the Cincinnati Bengals whose cousin cofounded the company, advancing Patricof Co’s thesis that athletes are not only driving culture—they can also drive deals.
Read more: business and sports
- How Shaquille O’Neal made himself bigger as a founder and investor
- Inside the SpringHill Company, LeBron James’s entertainment empire
- The quest to build the loudest NFL stadium
