Steven Reed has 75 clients with a combined worth of $500 million to $750 million. He helps them plan for their futures and talks them out of Bentleys
A typical day for Steven Reed might just start with a few e-mails—one perhaps to find someone who can design a state-of-the-art home gym for Tampa Bay Devil Rays standout Carl Crawford. Then it's on to the cell phone to arrange for another client, Philadelphia Phillies all-star shortstop Jimmy Rollins, to be placed on the waiting list for the new Audi R8. He later faxes Rollins a spec sheet for the car.
Up next: trying to line up a private jet for pitcher C.C. Sabathia to fly from Cleveland on a rare day off from the Indians' schedule to one of his homes north of San Francisco. Finally, it's off to Dodger Stadium to watch Brad Penny pitch and then take him out to dinner to talk about investment opportunities, maybe something in Arizona real estate.
Reed is a personal adviser to the modern-day, multimillionaire athlete. He is not an agent—he doesn't negotiate contracts or endorsement deals—but he pretty much handles all other aspects of ballplayers' lives once they start making the megabucks. Through his Capital Advisors Consulting, Reed represents 75 athletes, mostly baseball players, whose multiyear contracts add up to between $500 million and $750 million.
Diamonds at the Diamond
While big agents and agencies such as Scott Boras, Octagon, and IMG offer athletes in-house financial services, Reed says he and his partner, Ken Gamble, are unique in that they offer their clients full service for not just financial matters, but also lifestyle and even emotional issues. "We manage their careers," says Reed, 45, who started Capital in the early 1990s after a career as a broker at several large wire houses, including PaineWebber. "I am astounded by the amount of money in sports. And what you often have are high-paid players, some of whom understandably are relatively unknowledgeable about how to use vast amounts of money."
If a client wants to buy a Bentley, he calls Reed first. And Reed says, more times than not, he tries to talk a player out of a big-ticket purchase. Except in one case. Reed says he referred a client, whom he won't identify, to a jeweler to buy a gift for his fiancée. But when the ballplayer called Reed and told him he had just bought a ring with a one-carat diamond, Reed insisted he turn around and go back to the store. "I told this guy you have diamond studs in your ears right now that are bigger than what you just bought. You can't give that to your girl. I understand the politics of baseball, and I know what the other wives and girlfriends will be wearing."
Reed also says he makes an effort to understand where a client is coming from culturally and where his priorities might lie. "I can't tell you how many times I have been on a private jet and it's just me, the athlete, his best buddy from home, and a hair stylist." Choosing the right hair stylist is a badge for a player, just like driving the right car or owning the big house. As far as private jets go, Reed says he tries to discourage their use, but he adds sometimes athletes are so busy that from a time perspective it makes more sense to spend the $40,000 for a round-trip ride on a Gulfstream.
Preparing for Life After Sports
The athletes of today are at the top end of the wealth class, says Reed, who has a half-dozen clients who make more than $8 million a year and two dozen who make more than $4 million. "Athletes and entertainers are the über class, but that 18-year-old who makes $4 million is going to need advice and guidance," he says. "A retirement planner for a big institution isn't going know that young ballplayer. We know those kids."
Reed is often part-father, part-teacher to his clients. Friends and families often become the "tail that wags the dog," says Reed, so "you need to be involved to assure that the player will be set after he leaves baseball." That means getting the athlete involved in entrepreneurial ventures such as franchises and creating multiple corporations or foundations.
Reed lets partner Gamble handle the stock and bond investments for clients through a separate entity called Capital Advisors Asset Management. The first thing Reed and Gamble do when considering a client is a credit check. If they take on a client, the players' paychecks from the teams go directly into an account Capital sets up at Charles Schwab (SCHW). Then Reed and Gamble go to work, whether it's advising on a stock investment or buying a new house.
Delivers in the Clutch
At least once a year, Reed sits down with his clients and goes over a written evaluation of where they stand in terms of spending, investments, and cash. "That way we can project and try to plan for years to come," he says.
About a year ago, Reed says, he was walking down the street in Lake Tahoe, Calif., when his cell phone went off. It was a client calling from St. Louis who needed $7,000 in cash to take care of some yearend expenses, but wasn't able to get it from the ATM or from his credit cards. So Reed called a business associate in St. Louis who was able to advance the cash to the player as a favor to Reed. "See if Bank of America (BAC) will get that done for you on that kind of turnaround," he boasts.