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The Drain Catcher

Even superstar athletes fall for get-rich-quick schemes. Managing them is Corey Galloway's business.

Mark Wilson/Getty Images

It's 1 p.m. on a Saturday in April at the Pennsylvania Farm Show Complex on the outskirts of industrial Harrisburg, and it’s dog-show day, as coiffed spaniels and collies roam with their owners on the lawn outside. But elsewhere inside the giant concrete edifice it’s game day—indoor football, specifically—and a stocky man named Corey Galloway, Dunkin Donuts coffee in hand, is preparing for the Harrisburg Stampede’s tilt against the York Capitals. I tag along with him up a flight of stairs, past a pasta buffet lunch for the players and down a corridor that's worn but spit-shine clean, as he explains the operations of the Stampede, a member of the independent, five-team American Indoor Football. After a few minutes, we reach an unmarked door to the team office, where a taut young player lies in a recliner, his jacket over his face.

"That's his pre-game routine," explains Galloway, who's busied himself making copies of the day’s schedule, while three staffers attend to the Jumbotron programming, concessions, and other pre-game minutiae. Galloway blends in, with his trainers and jeans and expertise in counting small bills. But he comes from another world—a Harvard-educated, New York City–based venture capitalist who is handling the team as an "alternative investment" for New Orleans Saints wide receiver Marques Colston, a Harrisburg native who bought the Stampede last year for only around $50,000. They redesigned the team logo, put down new turf and barriers in the arena, and brought on a raft of sponsors that have buoyed the team's bottom line by about $100,000 (Galloway declined to disclose the team’s total revenue). "Obviously, it's his passion," says Galloway, of his 29-year-old client. "So he'll do everything, from soup to nuts." 

As a result, the Stampede is no longer your average small-town indoor football team. The banners around the arena include some unusual names: Next to the Center for Farm Transitions, there's Nike, and a bottled water company called Wat-Ahh!, for which Colston and other athletes have done promotions. Along with a sponsor ad platform, the field also serves as a sandbox for startups in which Galloway has considered investing, like an online ticket management system and a site that creates virtual "trading cards" for athletes, displaying their favorite accessories and how to buy them. He's constantly getting pitched by startups who want access to his name-brand stable of athletes, so he'll try them out with the Stampede first.

Colston, lanky and graceful, chucks a football with the Stampede players, who make less than one percent of what he does for a season of play (roughly $8 million, according to the terms of his contract). He's gotten to know them, attending practices and games, but mostly sticks to the management side of the enterprise. For Colston, who's in his seventh year in the NFL, it's about setting the stage for his second act—not with the team itself, which he expects only to break even, but the business lessons and ancillary businesses that might spring from it. 

"It's one of those things that as you get up there, year after year in the league, you start to see how fragile that career is," Colston tells me, sitting in the empty stands as the players continue warming up. "And you start to think of ways to transition out of it before it happens on its own. Because you see a lot of guys aren't able to leave on their own terms. The way I see it is, while you're at the top of your recognition and your fame, you've got to strike while the iron is hot—that's the phrase we always use."

That's where Galloway comes in. His firm, Legacy Growth Partners, vets potential investments and has the athlete promote them as well as finance them, leveraging their celebrity into cash. Sometimes he co-invests, but usually just draws a standard management fee of 2 percent. He's working with about ten athletes now, he says, and thinks the model could expand to serve hundreds. "I want to be the private deal guy," he explains. "When you have that kind of influence, it's easy to put your own dollars in and affect the outcome. So that's our value proposition.”

Professional athletes earn more than $9 billion a year in the U.S., and a lot of that is spent unwisely on the usual: gargantuan houses, accessorized luxury vehicles, footlong nightclub tabs, and supporting hangers-on. But even more of that money is blown on ill-advised investments, which is where Galloway intends to cash in. 

There are a few, shining success stories of athletes who display as much savvy in private enterprise as on the ballcourt or playing field. Magic Johnson, for example, has built a business empire spanning real estate, food services, theaters, and his old team the L.A. Lakers. LeBron James is well on his way, with clothing lines, a mint in endorsement deals, plus stakes in a furniture company, Cannondale bikes, and the British soccer team Liverpool, to name a few. 

Of course, Johnson and James have tens of millions of dollars to play with. Most athletes, however, last only a few years in the pros and draw only a few million dollars per season. Much of it gets frittered awayon bling and bad deals, sometimes leaving them as poor at the end of their careers as they were when they started. Private deals are usually the biggest culprit—to the point where Ed Butowsky, a wealth manager who works with many athletes, advises his clients to only indulge in the practice rarely, if at all. “When people go broke, I can say without question that is the number-one reason,” he says. “No matter how good these things are, the majority don’t work out.” 

Galloway, though, thinks he can minimize the risk. His first lesson of investing with athletes, delivered in March to a packed room of tech types in a shared startup workspace in Manhattan, is to know who's got their ear. 

"Be aware of the entourage," Galloway warned. "The entourage is very powerful. Extremely powerful. Their time with each individual athlete is very influential. Whether the person hasn't graduated from high school, or has an MBA. Because they feel, Hey, I've known this person for a long time. Doesn't mean they're qualified. There is no thought process on qualifications. The thought process is, 'Do I trust them?'" 

The talk came days after 31 NFL players had gotten fleeced in a shady casino deal, losing $40 million between them.


"You know, you kind of wonder, who was in his circle," Galloway mused, weeks later, running errands in a shiny maroon Chrysler before the game in Harrisburg. "Because it's not just saying, 'Hey, don't do it.' It's like telling your kids, 'Have safe sex,' right? Because you say it doesn't mean that's what they're gonna do. You've got to be on them, every day, understanding what they're going through, saying 'if you're going to do this, here's what you should use,' educate them all the way through the process." Galloway says his firm doesn’t handle more than 20 percent of an athlete’s net worth, and advises them to put the rest in boring stuff like Treasury bonds and mutual funds.

Still, Galloway isn’t always successful in trying to provide adult supervision—and ultimately, it’s not his money to spend. Last year, he tried to talk a client he declines to name out of investing in a Miami nightclub that his buddies figured could make a million dollars a year. "I'll run the numbers and say, 'How are you going to feasibly do that?'" he recalls. "You'd have to have 2,000 people in the building ordering hundred-dollar tabs. Is that impossible? No. Can it happen? Yes. The odds of it happening are not likely. So when you have that conversation with them, somebody will disagree, and say, 'We can do it.' And I've watched them do it. I watched them spend the money." Plagued by a less-than-scrupulous general contractor and repeated delays, the club went under. "They had a three-month party, and it cost them a million five," Galloway says.

Galloway, just like the late-career athletes he works with, knows something about second acts. He spent his first 12 years of professional life in entertainment, rising to become the director of studio operations at MTV and then Sesame Street. In 2005, he left to form his own business consulting firm, first doing real estate deals, and then moving into private equity and venture capital. After eight years, Legacy Growth Partners is a relatively small operation, with just $10 million under management. To attract institutional capital, Galloway says, they need to have some “exits”—investor-speak for selling off businesses. 

To do that, he needs to gin up more deals and recruit more athletes to fund them, with business development people based in Houston and Philadelphia who talk to agents and financial managers. Some come through the STAR Angel Network, an outgrowth of a George Washington MBA program for athletes. Galloway entertains about 400 pitches from startups a year, and matches them to the athlete's expertise or interests, often in areas like nutrition, fitness, and sportswear. New Orleans Saints defensive tackle Sedrick Ellis is doing a swimsuit line, for example. The Arizona Cardinals' Pat Peterson is mulling a jacket that monitors your heart rate. 

But the people Galloway works with sometimes have different incentives than purely making money—which means keeping track of an extremely eclectic portfolio. Detroit Lions wide receiver Calvin Johnson is having Galloway produce a film called "Real Love," a coming-of-age story about a girl trying to stay true to her virginity and her religion. "It's a message he wants to get out there," says Galloway. "Our goal on the film is just to get our money back." (That’s not the case with all films—the firm is also backing one called Let Me Explain with comedian Kevin Hart, which they expect to turn a tidy profit, especially if some of their athlete-investors can be cajoled into showing up for a buzzy premiere.)

And then there's Lou Williams, a shooting guard who plays for the Atlanta Hawks and would like for his investments not just to turn a profit, but to create jobs for his friends and family. So they're trying to get a sneaker store off the ground, and also finance a food-truck operation, which has been a dream of Williams' best friend and cook.

"It's one of the hardest things. Between Harvard Angels, STAR, and my own network, I look at a lot of opportunities," Galloway says. He sighs. "Can I employ your family in those opportunities? I can't do that! It's like, alright, you got to choose your poison." 

Ultimately, the real returns are likely to come from businesses that the athletes would have no business promoting—like one that Galloway’s business partner Gordon Bell is handling called International Asset Transactions, which basically trades in invoices (it’s complicated). That’s one lesson athletes also need to learn: Making money isn’t always fun. 

Back at the Farm Show complex, it's nearly game time. Galloway changes into slacks, and the players are suiting up in their locker rooms. The Stampede were undefeated, but their opponents tonight are the best they've faced. Spectators filter in—most of them friends and family of the players, judging by their shout-outs to, and conversations with, the players on the sideline. Tweets from fans who used the hashtag #ineedthestampede scrolled on the Jumbotron. The Stampede's nylon-clad cheerleader squad, the Starletz, prance around on the sidelines, near where Colston's whole family has come to watch. I asked Galloway what his job is during the game. "When these guys hit the walls," he says, “they’re heavy.” Galloway helps put the soft, waist-high barriers back up.

I wondered why Galloway, who has a family of his own and a whole lot of other businesses to manage, is spending his Saturdays doing odd jobs for a two-bit football team in the Rust Belt. It's practice, he explains. Someday, he'd like to cobble together enough cash to buy a major league team, either football or basketball. "A lot of that stuff is the same, you're just adding a zero," he says. "So, you're going to do all the same sponsorship sales pitches, except instead of talking to Pepsi about doing a five-million-dollar deal instead of a fifty-thousand-dollar deal. And instead of game day being one office, it's 50 different departments, running around." 

How to get there, though? Galloway's idea is to rack up some acquisitions—he says Wat-Ahh!, now worth $30 million, is ripe for sale—which will attract interest from big banks and private equity funds. He can then amplify that cash with his clients' fame into the hundreds of millions of dollars it takes to be a serious contender when pro teams hit the market.  

Colston is interested in that dream, too. But right now, as he's called to attend to a rank of lights that isn't working, that seems very far away. "Once the game starts, it's putting out fires," Colston says calmly.

And there are some things that won't be the same in the big leagues. Like when, after the mic cut out on the woman singing of “The Star-Spangled Banner,” the thin crowd joined in as backup singers. She got through it. The lights came up, and the game began. 

Corrected to reflect Wat-Aah!'s valuation, not annual sales.