Google the phrase “
Shaquille O’Neal
investor,” and you will be inundated with a list of activities that, much like his physique, is strikingly large. The latest area of interest: advising blank-check companies.
The hoops great isn’t alone. A list compiled by The Wall Street Journal in March catalogs a growing roster of star athletes and sports executives who count themselves as investors or advisers in special-purpose acquisition companies. They include
Serena Williams,
Stephen Curry,
Naomi Osaka,
Tony Hawk
and
Colin Kaepernick.
As of last month, there were 61 sports-related SPACs formed this year alone compared with just five for the entirety of 2019, according to the sports business publication Sportico.
It is no surprise that celebrities are drawn to SPACs given the significant upside and the limited need for their capital. Mr. O’Neal, like other athletes, has said he started investing to build something more eternal than his basketball legacy. Similarly, NFL wide receiver
Odell Beckham Jr.
said he bets on startups because he doesn’t want football to define him. He recently signed on to be a strategic adviser for a SPAC sponsored by a tech-focused venture- capital firm.
That stands in contrast with athletes’ history of being roped into lousy investments. “Dude, where’s my money?” is the rallying cry of ex-athletes turned investors, basketball legend
Kareem Abdul-Jabbar
has said.
Mr. O’Neal, whose first big investment was highly successful—a stake in Google before it went public—currently serves as a strategic adviser for a SPAC that in February announced it would merge with the fitness and nutrition business Beachbody Co. in a deal that values the combined company at $3 billion. Mr. Curry, a basketball superstar, is involved with
Dune Acquisition Corp.
, a SPAC that is focused on finding a software target. Meanwhile, Ms. Williams, the tennis great, sits on the board of
Jaws Spitfire Acquisition Corp.
, a SPAC that said in March it would merge with a 3-D printing technology company that supplies hardware and software to industrial clients.
But just how successful can sports stars be in a domain so far outside their arena?
SPAC celeb betting, much like sports betting itself, is a crapshoot. Blindly throw all your money at your favorite player every time, and he or she will inevitably break your heart. Since 2014, Ms. Williams’s venture-capital firm, Serena Ventures, has invested in more than 50 early-stage startups.
Cathie Wood,
a star fund manager, is now an investor in the tennis star’s SPAC. At the same time, Ms. Williams is on the board of
a social e-commerce company that has seen its shares drop more than 50% since its January initial public offering.
The bigger question is why investors are drawn to an investment class increasingly known for its association with big names in sports. Just as a team scouts new talent, a SPAC enables investors to play a hot new trend based on future potential rather than a demonstrated record. With holding periods becoming shorter, today’s SPACs appeal to those with short attention spans, offering immediate gratification.
It is unclear the extent to which sports celebrities are involved in the vetting process as SPACs evaluate potential targets. But their name recognition as sponsors or advisers no doubt helps their investments to stand out in an increasingly crowded field. That SPACs need star power is a clear sign of just how glutted the investment class has lately become: SPACs that made their debuts in March hovered near their issue prices while those in January and February rose by an average of 5% after their offerings.
Celebrities’ participation has the Securities and Exchange Commission concerned. Big-time athletes can pack stadium seats in virtually any city they travel to, so what else will fans follow them into? The SEC recently put out an investor alert cautioning against investing in a SPAC just because someone famous endorses it. Stating the obvious, it points out that rich athletes can afford to take big risks.
That many individual investors can’t was implied.
Write to Laura Forman at laura.forman@wsj.com
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Appeared in the April 6, 2021, print edition as ‘Sports Stars Get in the SPAC Game.’