SBJ/October 3-9, 2011/People and Pop CulturePrint All
When it comes to managing his financial portfolio, Luke Donald, as in his golf game, is no bomber off the tee. Instead, the world’s No. 1-ranked golfer has an investment strategy that reflects his style of play: controlled, steady and precise.“I’m low-risk and fairly conservative, but I also have a very competitive streak and I don’t like to lose money I earned on the course,” Donald said.
The 33-year-old British golfer has had a breakthrough year on the course, and while he didn’t win the FedEx Cup, his $5.8 million in prize money has put him atop the PGA Tour in total earnings this year. Since he began playing in 2001 he has made $25 million in total earnings on the PGA Tour, on top of the millions of dollars he has earned playing in international events along with income from marketing partnerships with RBC, Polo Ralph Lauren, Rolex, Mizuno, Titleist and FootJoy.
“If I can get a 5 percent return in this market, I am happy. I don’t need to take big risks.”
So Luke Donald is a very rich man, and while he has focused on being the best at his craft, he has also taken a consistent approach in securing his financial future.
Talking with Donald on a recent morning at a Chicago-area golf club where he had just finished playing with a group of members in a fundraising outing, one gets the sense of his low-key approach. There is no entourage. Only his college coach and good friend Pat Goss accompanies Donald off the course.
But his calm demeanor belies the crush of new business opportunities that have come Donald’s way during his ascension to the top of golf’s world rankings.
“The strategy hasn’t changed much since I started with Luke 10 years ago, but what has changed is the volume of interest in the past 12 to 18 months,” said Jon Wagner, co-managing director, IMG Golf Americas, who is Donald’s marketing agent. “But the structure of his business and who he wants to align himself with, none of that has changed. He has never done anything for short-term gain.”
Donald has been with IMG, which handles his tour responsibilities and off-course endorsements, since 2001. Wagner and Donald talk at least once a week, with Wagner running point on most off-the-course business matters
“The last call we had was about 16 items on the list ranging from corporate stuff to new deals to a new iPhone app,” Donald said.
On the endorsement front, there is room for growth. “The plan is to add one more blue-chip company with a global footprint,” Wagner said.
Along with Wagner, Donald shapes his portfolio by leaning on a small, close-knit circle of financial managers and advisers who have been doing business with him since he turned pro 10 years ago after graduating from Northwestern University with an art degree.
His main business interests are divided into three areas of operation.
Donald’s U.S. investment portfolio is managed by MAI Wealth Advisors, a Cleveland-based company once owned by IMG’s late founder, Mark McCormack. MAI became independent from IMG in 2004.
Donald’s overseas portfolio is managed by Partners Capital in London, while IMG handles Donald’s marketing and endorsement business.
Also included in Donald’s financial inner circle is his brother-in-law Robert Ellis, a highly successful steel industry executive in the United Kingdom. Ellis, who is married to Donald’s older sister, is a close business confidant, providing another trusted sounding board for Donald’s business affairs.
Within the structure is a firewall between his financial portfolio and marketing efforts to avoid conflicts of interest. IMG handles all of Donald’s appearances, endorsements and media requests, but is completely hands-off with Donald’s financial portfolio.
“[Donald’s investments and marketing portfolio] is all done very separately but under the same strategy, which is that Luke is very blue chip and is the CEO,” Wagner said. “Luke is extremely involved in both his partnerships and his portfolios. Once the money moves, we have nothing to do with it.”
Business and marketing opportunities first are vetted by Wagner, who decides whether they fit into Donald’s preference for a risk-averse strategy that in the past year has become as much about the preservation of wealth as the generation of wealth.
At least once a quarter, Donald meets with his two investment companies to reassess his portfolio balance, which is structured to include a blend of about 40 percent equities and 40 percent non-equities such as bonds, with the remaining 20 percent balance coming from nontraditional investments (see sidebar). There is no real estate in Donald’s portfolio with MAI, and there is little investment in private equity and hedge funds.
There are five to six employees handling Donald’s MAI financial dealings out of Cleveland, led by company director John Ciancibello. The company represents other athletes but would not disclose its client list.
“Luke’s risk tolerance is low to moderate,” Ciancibello said.
Donald’s equity portfolio is globally diversified with a growing focus on emerging markets in China, India and Latin America. On the non-equity side, Donald’s focus is on fixed-income investments such as tax-exempt municipal bonds.
Gone are the days when Donald expected double-digit returns during the bull market.
Donald, with wife Diane and daughter Elle, aligns his investments with his personal interests, including a wine label.
Propose a business deal or investment with Donald and don’t expect a quick answer.
“Very rarely do you get an answer on the spot,” Wagner said. “And most of the time Luke bounces it off Diane.”
Diane is Donald’s wife, who also is closely involved in his off-the-course dealings. The two met at Northwestern University, where Diane earned a journalism degree.
“She gets the whole brand association and is very tuned in to it,” Wagner said.
Donald’s business investments are also closely aligned with his
His first major investment play followed the path of plenty of athletes: a wine label. In 2008, he rolled out his Luke Donald Collection label in a partnership with Terlato Wines International. Donald went into the business with Bill Terlato, and the label produces about 2,500 cases each year.
Donald put in no up-front money. Instead, his deal calls for him to get an undisclosed percentage of sales of the bottles priced around $40. Donald actively markets his label, routinely holding tastings while out on tour to promote the brand. The company is selling most of its cases produced each year, generating an estimated $1.2 million annually in retail sales.
But Donald wasn’t about to slap his name on the label without much input into the product.
He traveled to Napa Valley on numerous occasions to help select and blend the grapes to create his Chardonnay and Claret wines that are now sold in Four Seasons Hotels and various restaurants and at retail.
He also secured one more key aspect as part of his investment in the business: an option to buy the vineyard.
Taking equity stakes in his business ventures is becoming an increasing part of his long-term approach.
“Getting equity, that is more important now and it is more prevalent now with the market,” Donald said.
As balanced and blue-chip-focused as Donald structures his financial portfolio, he also has a entrepreneurial streak. Consider that one of his latest investments is in a car-sharing business targeted at college students who can pay to use cars by the hour. It is a partnership with a friend, even though Donald is selective about mixing money with friends and family.
“I like to look for different opportunities,” Donald said. “But there are lots of people close to me asking for money, and it can change relationships.”
Donald also is beginning to try his hand in the golf course design business, with his first effort in the industry being a course in Vietnam. The course is owned by a private developer who hired IMG’s golf course design division and Donald, who received a six-figure fee to create the layout for an undisclosed fee.
Donald says taking equity stakes in business ventures is becoming an increasing part of his long-term approach.
Though he has no investment stake in the course, the level of its success will affect his future as a golf course designer. It is a skill that is a natural extension of Donald’s artistic talents. He still paints and collects, but only “if it fits the space.”
“Having artistic background is a big help in maybe being more visual than some of the other guys,” Donald said. “Being somewhat of a traditional player, I think course design has gone the wrong way. I don’t think making a long course some 7,500 or 8,000 yards is a great way to design a course.”
The Ba Na Hills Golf Club won’t open until late next year, but Donald, as with most everything else he aligns himself with, will put his own stamp on the development and get very involved in the business.
Consider that after he helped his Europe team win the rain-delayed 2010 Ryder Cup in Wales, Donald spent the night after celebrating with his teammates and then spent the next two days at an RBC outing where, exhausted, he held up his end of a business agreement with two days of corporate golf along with meet and greets with company executives.
“He isn’t just putting his name on and walking away. That isn’t what he does,” Wagner said.
Luke Donald is going alternative, at least in his recent investments.
We’re talking pipeline companies, emerging market debt and precious metals to add diversity to his portfolio.
In the past few years, Donald has moved away from a portfolio featuring a nearly even split between equity and non-equity investment allocations to a portfolio with up to a 20 percent mix of alternatives investments, including precious metals, energy partnerships including pipeline companies and emerging market debt.
The remaining 80 percent of his portfolio is split between equity and non-equity investments.
On the equity side, Donald’s portfolio features a growing percentage in emerging markets like China along with mutual funds and exchange traded funds, which are funds traded like stocks. On the non-equity, fixed income side, he holds high-quality individual securities including municipal bonds, corporate bonds and treasuries.
“Within equities, we are globally diversified and over the long term we believe that emerging markets deserve a significant allocation,” said John Zaller, MAI Wealth Advisors senior associate and portfolio manager who works with Donald on his portfolio. “Our primary focus for Luke is wealth preservation with a secondary focus on growing his wealth over time by taking calculated risk.”
On the fixed income side, Zaller said the goal is “to make sure his principal is protected first and foremost.”
While Donald holds an art degree from Northwestern University, he can talk economics like a business school graduate.
“I am wary to keep injecting money into the market,” he said. “I have bought some gold, but it’s a fragile market. It is going to be a slow climb with the deficit in the U.S. and with unemployment and politicians not wanting to do anything radical.”
While Donald’s five-member investment advisory team at MAI is responsible for his day-to-day wealth management, the world’s top-ranked golfer takes a very involved role.
“I would call him a high-level client who is active and who participates well in his own management,” said John Ciancibello, a director at MAI who leads Donald’s investment team. “He has a good handle on what is going on.”
The Class A Midwest League’s Quad Cities River Bandits promoted Stefanie Brown to general manager, replacing Kirk Goodman, who stepped down.
The Detroit Tigers promoted Dave Owen to director of player development.
The Pittsburgh Pirates promoted Greg Smith to assistant general manager overseeing scouting operations; Kyle Stark to assistant general manager overseeing medical, physical, mental, personal and player development departments; Tyrone Brooks to director of player personnel; Joe DelliCarri to director of amateur scouting; Larry Broadway to director of minor league operations; and Kevan Graves to director of baseball operations. Doug Strange will have an increased role in the development department in his role as a special assistant to the general manager.
The Seattle Mariners hired Joe McIlvaine as a special assistant to the general manager. McIlvaine was a special assistant to the general manager for the Minnesota Twins.
The Class A Midwest League’s Wisconsin Timber Rattlers hired Jerrad Radocay as corporate marketing manager. Radocay was assistant general manager for the Northwoods League’s Madison (Wis.) Mallards.
Kent State University promoted Tom Kleinlein to deputy athletic director and hired Dennis Watson as group ticket and marketing manager and Kristan Dolan as coordinator of marketing and promotions. Former associate athletic director Pete Mahoney was named assistant director for the school’s Center for Student Involvement. Watson was director of group sales and an account executive for the independent Frontier League’s Southern Illinois Miners, and Dolan was coordinator of hosted events and catering for the Cleveland Indians.
The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management at the New York University School of Continuing and Professional Studies named Robert Boland academic chair.
The University of North Florida hired Melissa Baxendine as associate athletic director for compliance and senior woman administrator and Nick Morrow as associate athletic director for finance. Baxendine was assistant athletic director for compliance at Seton Hall University, and Morrow was an assistant athletic director for facilities, operations and events at the University of Maryland.
The University of Northern Iowa hired Kerry Dickerson as assistant athletic director for development. Dickerson was associate athletic director at Washburn University.
The University of Alabama in Huntsville promoted Taylor Flatt to sports information director.
Wheaton College promoted Julie Davis to athletic director.
The Miami Dolphins hired Michael Tannenbaum as marketing partnerships staff assistant.
AdSport promoted Andrew Johnston to director of client services and hired Cameron North as account director for the State Farm Territorial Cup Series.
Learfield Sports named Chad Jackson business development manager for its Gopher Sports Properties at the University of Minnesota. Jackson was vice president of business development for Summit Group.
ESPN promoted Jay Rothman to vice president and hired Hugo Balta and Diego Longo as coordinating producers. Balta was managing editor of the news department for WCBS-TV in New York City, and Longa was a senior producer for Telemundo/NBC Universal in Miami.
Awards and Boards
The International Tennis Hall of Fame and Museum named Stan Smith president, replacing Tony Trabert, who was named a life trustee. Named to the board of directors were Claudio Del Vecchio, Guillaume de Ramel, Michael Goss, Frew McMillan, Tim Phillips, John Ross II, Todd Traina and Gene Yoon.
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Warsaw students tour Shanghai arena
COURTESY: WARSAW SPORTS MARKETING CENTER
Warsaw Sports Marketing Center MBA students tour the Mercedes-Benz Arena in Shanghai during their annual China Study Tour. Their tour Sept. 6-17 marked the sixth straight year students have visited Beijing and Shanghai as part of their two-year program.
Commish x 3
Beyond Sport United brought together more than 80 sports teams at Yankee Stadium on Sept. 27 to address their role in triggering positive social change in the communities they serve. From left: MLS Commissioner Don Garber, NHL Commissioner Gary Bettman and NFL Commissioner Roger Goodell.
Did you hear? Polk Audio headphones launch
COURTESY OF TBC ADVERTISING
Polk Audio launched its new UltraFit sports headphones at the Cooper Square Hotel in New York City on Sept. 13. Front row (from left): Allan Charles, TBC Advertising chairman and creative director; Heather Mitts, Atlanta Beat and U.S. women’s national soccer team; Linda Cohn, ESPN sports anchor; Jim Minarik, Polk Audio president and CEO; Paul Rabil, Boston Cannons; and Howe Burch, TBC Advertising EVP. Back row: Thad Young (left) of the Philadelphia 76ers and Rudy Gay of the Memphis Grizzlies.
Sponsors on hand for Olympic/Paralympic Assembly
At the Sept. 23 dinner of the U.S. Olympic and Paralympic Assembly, at the Antlers Hilton Colorado Springs: Kevin Phelan (left), SVP of sales and marketing for BP North America, with USOC CMO Lisa Baird and Samsung North America CMO Ralph Santana.
What I Like: Carey Pinkowski, President, Chicago Event Management; Executive Race Director, Bank of America Chicago Marathon
What I Like …
■ An insight: Don’t ignore advice from someone you respect.
■ An influential person in my career: My college track coach, Jumbo Elliott. He made sure running wasn’t our only focus — that we had balance in our lives.
■ An out-of-the-box idea: Eight hours of sleep!
■ A timeless idea: Nothing beats the power of personal relationships.
■ A business deal: The partnership between InBev’s Budweiser and Goose Island’s 312 beer; a perfect example of a deal where everyone wins. … The mass marketer gains my favorite craft beer to extend their line, and the Goose Island folks get better distribution.
■ A sports facility: Chicago’s Soldier Field, because I grew up going there and because it found a way to modernize while retaining its proud historical roots.
■ A sports event: Sox vs. Cubs in the summertime.
■ A brand: Nike. The brand is clearly defined, easily understood, well-represented in all of their messaging and, most important of all, makes the right connection to the athlete in all of us.
■ A trend: A return to community involvement and volunteerism.
■ A pro league or team business initiative: The creative and custom-made messages in the billboard ads Miller Beer creates relating to every visiting team who plays the Cubs at Wrigley Field.
■ A story that bears watching: The IAAF’s ruling on women’s world records in marathoning.
■ A fantasy job: I’d like to be a PGA player, even one not at the top of the money list.
What I Like About …
■ My job: That what I do gives so many different people a common goal to shoot for, a dream they can achieve and a way to accomplish something many thought they could not do.
■ Sports: The way it brings together friends and family to connect over shared experiences and a common cause (which for us is usually, “Wait until next year!”).
■ Sports business: It allows me to work and promote an activity that I participated in as a kid, so it’s much more than a job.
■ Sports media: I prefer the traditional sports media who report, analyze and give context to what took place on the field, not the people who think their every opinion is important.
■ Sports technology: I love the instant accessibility of results, scores and updates.
What I’d Like To …
■ Change: The extreme polarization of politics in this country.
■ Change in what I do: Learn how to say “no” more often.
■ See more of in sports business: A conscious effort to make events more affordable for families.
■ See more of in sports: Championships in Chicago, especially on the south side!
■ See less of in sports: Performance-enhancing drugs.
■ See less of in sports business: Labor issues being fought in public because each side wants to WIN — just order some pizzas and beer, close the doors and figure it out!
■ Eliminate: Retro uniforms.
What I Don’t Like …
■ In general: People with hidden agendas.
■ Pet peeve: People driving 45 mph in the left lane on the highway. It’s the wannabe NASCAR driver in me.
■ In sports: Absolutely nothing! Well, maybe the long lines for bathrooms at the ballpark.
What I Like …
■ That would surprise those who know me: I try to keep up with the Kardashians!
■ Heroes: The four athletes who have set world records at the Bank of America Chicago Marathon: Steve Jones, Khalid Khannouchi, Catherine Ndereba and Paula Radcliffe.
■ Players: Paul Konerko, A.J. Pierzynski and Derrick Rose.
■ Possession: The couch in my den. It’s broken in just right.
■ Music: The Allman Brothers, Alicia Keys, Adele and Ray LaMontagne.
■ Books: Roger Bannister’s “The Four Minute Mile.” I have an original printing of it, and it’s still a good read.
■ Magazines: Golf Digest (even though the tips don’t ever really help my game), Rolling Stone and Esquire.
■ Chores: Does turning on the sprinklers count?
■ Trips: A five-hour drive with the family to northern Wisconsin.
■ Movies: “Straw Dogs,” “Glengarry Glen Ross,” “Roadhouse,” “Goodfellas” and “The Way We Were.”
■ TV: ESPN “SportsCenter” and “The Good Wife” (with my wife).
■ Dessert: Vanilla ice cream.
■ Scent: My wife’s chocolate chip cookies.
■ Car: I drive a 2011 Volkswagen Tiguan.
■ Singer: Gladys Knight.
■ Quote: “Winning is not a sometime thing. It’s an all time thing. You don’t win once in a while. You don’t do things right once in a while. You do them right all the time. Winning is a habit. Unfortunately so is losing.” — Vince Lombardi.