Former Yankee Alex Rodriguez on Bloomberg Wealth with David Rubenstein

I've always had a great passion for baseball and business. And luckily for me I've started a long time ago doing both and I'm enjoying it. I never for once said oh boy I'm sad. I always thought about what's next. Just because I'm good at baseball doesn't mean I'm going to be good at investing. You've got to work really hard and you've got to surround yourself with the best people in the world. Just like you want to win a championship in baseball. The same formula works in business. A lot of labels come to mind when thinking of Alex Rodriguez athlete Yankee All-Star champion. But these days A-Rod is thinking about building a different kind of legacy. One is a world class investor like any athlete. I think I made mistakes in my 20s and even early 30s. But over time I really understood what it took to be a sound investor to surround myself with a world class team. And think about this for the long run. I'm talking about decades you know 10 20 30 years. Rodriguez was born in the Washington Heights neighborhood of Manhattan and spent his childhood growing up in Miami. He spent his major league career playing for teams in Seattle Texas and New York. But when it came time to start his business career he went back to Miami where he started buying real estate almost three decades ago. A little duplex. And then a few years later sold it for double and bought a fourplex and so on and so forth. That little duplex in 1995 marked the beginning of A-Rod Corp. Now it's grown to encompass Rodriguez's sprawling real estate portfolio including a fully integrated development company as well as investments and startups across the sports entertainment technology and health sectors. It requires a world class team and an economic alignment to go out and do the things that we want to do over decades. Today A-Rod Corp. says its investments and partnerships are valued at over one billion dollars. And the man himself recently added NBA owner to his resume when he bought a stake in the Minnesota Timberwolves. While I like home runs and grand slams in baseball at A-Rod Corp. here we shoot for singles and doubles and we definitely never want to check out. So most great baseball players when they retire they spend most of their time signing autographs or doing things around baseball. You have been doing something quite different. You have created a whole new world for yourself in the investing world including investing in a sports team that you now own a very significant stake in the Minnesota Timberwolves. So what is it that drives you to try to become a very very wealthy investor as well as a very successful former baseball player. You know ever since I was 10 years old watching baseball with my father I like the two B's. I've always had a great passion for baseball and business. And luckily for me I've started a long time ago doing both. And I'm enjoying it. So when you're a major baseball player you set many records. We'll talk about that in a moment. But one of the records was the most grand slam home runs in history. Before that it was held by Lou Gehrig. And I think you had 25 grand slams which means that the bases are filled when you're when you're at bat and you hit a home run for those who aren't baseball fans. So is there more pressure hitting a grand slam to try to win a game or making an investment decision. You've got hundreds of billions of dollars at stake. Oh without a question. The latter. Investing is I'm a very very careful investor. And while I like home runs and grand slams in baseball at A-Rod Corp here we shoot for singles and doubles. And we definitely never want to strike out. While you were playing baseball were you actually doing any investing on the side. I started my investing career probably my early 20s when I was in Seattle. But I started very very small. I started with a duplex out of Miami right by where the Miami Heat play in Biscayne. And it took a forty eight thousand dollar down payment. I sold a watch because I didn't want it to go into my savings and did a little autograph show. And that was my forty eight thousand dollar down payment. And off we went a little duplex. And then a few years later I sold it for double and bought a fourplex and so on and so forth. Now I go to a lot of investment conferences around the world. And the only former athlete I've ever seen at one of them is you. And a couple of times I saw you at a JP Morgan conference. And I said what is he doing here. And people said well he's really learning the investment business. I said but he's taking notes. I mean nobody takes notes. He's actually taking notes. It's funny. David when I when I played baseball for the Texas Rangers around 0 1 0 2 or 3 I would go home after the games and my teammates would make fun of me all the time. They're like why do you watch so much baseball. So I was always a study guy. Right. And I wanted to do my due diligence even when I was playing. I remember I would get home and I would watch all the West Coast games because they were still going on the Dodgers the Oakland A's the Giants the Mariners. And the reason why I was doing that is if I was facing you next week I wanted to watch every pitch every tendency and I had binders and I would sit there and take notes if I'm facing David Rubenstein I'm going to watch him and take my notes. So when I faced you next week I was ready to go. I've taken that same discipline and studying and surrounding myself with great people into the business world. So there's a prejudice against me and a prejudice against you. If you were a Jewish private equity person people will assume you might be reasonably intelligent but not a great athlete. If you're a great athlete people might assume you're not all that sophisticated when it comes to finance. When you talk to people in the financial world are they surprised at how much you actually know and how you can talk the same jargon that I can talk a little bit. And you know I have two daughters Natasha and Ella 18 and 14 and I tell them the same thing. You're females and people are going to underestimate you. And I think you can use that as a competitive advantage. But the one thing I know is for sure nothing comes easy. You talked about my grand slams. Twenty five of them. And I'm very proud of that. I'm part of the World Series. But what people don't talk about I'm also fifth all time fifth all time in the history of strikeouts. That means there's only four people in the history of mankind that have struck out more than me. One of them is ready Jackson. So I kind of like that have bragging rights. So the point is like it's it takes time. It's methodical. It requires a world class team and an economic alignment to go out and do the things that we want to do over decades. Not just one deal. Not just two years. You see many people in sports come and have a big year or two years. But the Cal Ripkens you talked about Brooks Robinson Willie Mays. It takes decades. So let's talk about your baseball career. After a number of years of the Seattle Mariners you had a contract that was offered to you by the Texas Rangers. It was at the time when it was all said and done the most expensive contract in the history of sports for an athlete at the time. It was 10 years and it was two hundred and fifty two million dollars. So did you say wow and I don't deserve that much. You say how come I didn't get a little more. I definitely said wow. And I couldn't believe it. It was overwhelming. And I was just 24 years old and I didn't know what to think. So you're making an effect. Twenty five million dollars a year guaranteed. So when you have a 10 year contract do you say well geez I don't have to work that hard because I already got a guarantee or do you say I have to work harder to justify the contract. I think work harder. And I've always thought about the process not results. And I've always been process driven. I love to work. I've always enjoyed practice even more so than the game. So I never for once said oh boy I'm set. I always thought about what's next. How do we how do we give Tom Hanks our owner who gave me all this money who believed in me. How do we give him a great ROI. And that's what I thought about every night before I went to sleep. So eventually after a number of years very successful years there you get traded to the New York Yankees a team you wanted to play for. Right. So you play for the New York Yankees and then the New York Yankees at one point you're able to opt out of your contract. You opt out and the New York Yankees sign you for a contract of two hundred and seventy five million dollars for another 10 years. Right. More or less you make any blush. So that's a lot of money. So many times when you see professional athletes making large sums of money they tend to not spend a lot of time thinking about what they're doing with the money they spend it on a lifestyle. And when their career is over they don't have that much left. So you obviously weren't in that category. I assume you were not spending all your money. Well look like like any athlete. I think I made mistakes in my 20s and even early 30s. But over time I really understood what it took to be a sound investor to surround myself with a world class team. And think about this for the long run. I'm talking about decades you know 10 20 30 years not just the short circuit. So when you're at the Yankees you're doing quite well. And ultimately you win three most valuable player awards. And ultimately you also win a World Series championship. You hadn't won one with the Mariners or the Rangers but with the Yankees they win a World Series. So what's it like. What's it mean to you to win a most valuable player or to win a World Series. Which is the higher thrill. Without a question is a World Series. That's what you play for. That's why we dress up and to do it in New York David and pinstripes. And I had to wait 15 years which felt like 50 or 75 years when we won the World Series. And Mariano Rivera is on the mound. And Victorino had to grumble a second to Cano and to take Cheryl. And they say the Yankees are world champions for the 27th time. That was with the exception of the birth of my two girls. That was by far the greatest moment of my life. So in the era that you play there were performance enhancing drugs that were fairly relatively common. And as a result of that some people were suspended for a short period of time. But you were suspended in 2014 for the entire year. Nobody else ever got anything like that in terms of a year suspension. You accepted it. You didn't appeal it or anything like that. So how difficult was it to do that in that year to just sit home for a year and not play. It was not only the most embarrassing time of my life it was. One of the darkest most saddest points of my career here was on my way to play almost 25 years in the big leagues on my way to potentially the Hall of Fame. I'm letting my mother down that in my my siblings and of course my two daughters. But what was interesting about that year when I look back at it now almost almost almost a decade later. Hard to believe I'm going to say this but it's probably the most the best thing that happened to me because of the lessons learned the way I was able to turn the lens inward and have a lot of therapy. And really I may have caused myself the Hall of Fame David and I have no one to blame but myself. Nobody who has been caught up in their performance enhancing problems has been voted into the Hall of Fame. So Barry Bonds is not in. Roger Clemens is not in and you're not in. You think the world will change at some point or the baseball will vote you in. I hope so. I hope so. I still have some hope. But look I knew the rules. And when you break the rules there's ramifications. We understood that sports was more than just baseball or basketball. That is this kind of 360 media entertainment sports enterprise. For former baseball superstar Alex Rodriguez buying a pro sports team which seemed to be an obvious move but it was a basketball team he bought the NBA's Minnesota Timberwolves and the league has never seen a deal structured like this one. A little less than two years ago Rodriguez and e-commerce billionaire Mark Laurie agreed to buy the Wolves and the WNBA's links for one point five billion dollars. But owner Glenn Taylor didn't give up control right away. A-Rod and Laurie initially bought 20 percent and last December exercised their option to buy another 20 percent. By March 2024 they plan to buy at minimum another 40 percent of the team at which point they will become the primary owners of the franchise. Was it a good deal for A-Rod. In February Mark Lazzaro agreed to sell his stake in the NBA's Milwaukee Bucks in a deal that value the team at three point five billion dollars. Meanwhile Sportico estimated the value of the Timberwolves to be 200 million more than what A-Rod and Laurie agreed to pay one point seven billion. And that was before the Bucks deal. So using the language of A-Rod's other sport he may have knocked it out of the park. Well recently you did a deal that was a little bit bigger than a forty eight thousand dollar down payment on a duplex. What it is is that you agreed with a partner to buy the Minnesota Timberwolves and the links the female team as well for a price that is was considered at the time a pretty good price. Today it might seem a little cheap but a pretty good price. It was one point five billion dollars. So why would you want to buy a team in sport that you're not as famous for. Why not buy a baseball team. Well it's funny you say that what one of the guys that I love growing up who's now a friend and a mentor is Magic Johnson and we often laugh about that. He was a basketball legend and he owns a baseball team with the Dodgers. And I played baseball for so many years and I own a basketball team. The truth is we try to make a run at the Mets and we had a hell of a run and we came second to Steve Cohen who's doing an incredible job. And and then we kind of one door shut and this door open. And Mark and I my partner Mark Laurie we moved very quickly within seven days. We understood all the levers we can pull. We understood that sports was more than just baseball or basketball. That is this kind of 360 media entertainment sports enterprise. So once we saw the Mets deal that fell apart we were able to move very quickly shake hands almost within seven days with Glenn Taylor and the rest is history. So usually when somebody buys a sports team they buy either 100 percent of it or whatever they're going to buy they buy them on one day. You're doing it kind of the installment plan. You bought initially you put down I think 250 million or 300 million dollars to buy 20 percent. And then recently another 300 million or 400 million dollars to buy another 20 percent. Now you have the remaining 60 percent you're obligated to buy or 50 percent is that you own 40 percent now. Right. Yes. And you have an agreement where you going to buy at least another 50 percent to give you 90 percent more or less. Is that right. Plus or minus. Yeah. So why did you do it that way as opposed to say here's all the money at once or did you need to go raise the money which is nothing wrong with doing that. Yeah. So David it was an interesting time. It was right after Covid. And when you looked at the trailing 12 you had 30 arenas basically empty. And then the double the bubble happened. Disney. And I really kind of the art of the deal here was the price wasn't negotiable and terms were. And what we saw which turned out to be a beautiful thing for Mark and I my partner that Glenn Taylor would be the managing partner for another two and a half three years. And as we pay these installments not only do we get to learn from Glenn but it turns out that I would advise this for any ownership. They didn't just hand you the keys to the kingdom. You get to learn under someone like Glenn and Becky Taylor. They've been doing it for almost 30 years. And it's just been a beautiful partnership. And the transition has worked out very well. So many times in the investment world you see people making a good deal. And once they make a good deal people say well you should do another deal. Today the deal you've done with the Minnesota Timberwolves seems to be from the outside a very very attractive deal because recently a team was sold for four billion dollars. The Phoenix Suns and another team a partial sale at roughly I think a three and a half billion dollar valuation. You bought a team for about one point five billion dollars. So one point five three point five four billion. You seem like you have a pretty good deal there. So you think you're doing more deals or people calling up and saying I'll give you some money to invest. We have a lot of phone calls inbounds that that some we take some we don't. There's a lot of great friends titans like yourself in the industry that are intrigued about sports. They're intrigued about our deal about the structure. But what people don't talk about David is it took me 25 years to get to a deal like that. My partner Mark Laurie has been one of the greatest entrepreneurs in e-commerce for the last 25 years. And we both have worked hard. And it was kind of the perfect storm for us. And again I think at the time it was a very fair price coming out of Covid. We didn't know it was covers in the last two years or five years or forever. I mean it was a very scary time. And we stepped up and it's worked out well. Now we're also not sellers. So you know you mentioned some really big and fancy numbers but we want to have this asset for generations and generations. So you live in Miami. The team is in Minnesota. So obviously like M as a letter. But you have to go all the way to Minnesota to watch the games and go around the country. Is that a bit of a pain because it's not in your hometown. Well we have that in common. I'm on the plane a lot. And I try to go to at least half the home games. When I sat down with some of my friends and mentors like the Jerry Jones of the world Jerry Reinsdorf Robert and Jonathan Kraft. The one thing they talked about from the get go is Alex. This can't be a hobby. This has to be a lifestyle. It is not that. Do not get into it. You must be a game. You and your partner Mark Lurie have to be a games and be engaged and think about customer service first. Your partner Mark Lurie started jet.com which he sold to Wal-Mart for a pretty good price. And he's well known in the business world. How did you get to know him. So we were introduced by a mutual friend and he was introduced to me as the Wal-Mart guy. And I was like well that's great. But I'm not sure I really want to meet the Wal-Mart guy. And when I met him he was exact opposite. But what's great about Mark is we have a lot of things in common. We're both New Yorkers. We both come from single mothers very strong mothers. Both have two daughters in everything. We're very complimentary instead of skills. Everything that I'm terrible at. And that's a long list. He is incredible. And then some of the experience that I have in sports over the last 30 years compliment his set of skills. The one thing that I always remember about Warren is he said Alex the two rules of investing are one never lose money and number two don't forget rule number one. So Ted Williams considered one of the greatest hitters of all time used to say the hardest thing in sports is to hit a baseball that's coming at you at roughly 100 miles an hour. Do you agree that that's one of the hardest things to do in sports. I agree. And I think hitting and Warren Buffett talks about you know kind of staying in your circle of competence in the batting batting zone is the other thing is 100 miles an hour can also come at your head and you have to make decisions that quickly. And it's not just a bad ball hits you in the head. It doesn't just take you out of baseball. I might take your life away. So I feel in many ways when I think about my business career I've been trained for 30 years to do what I'm doing today. Now Warren Buffett somebody you've mentioned and Warren Buffett is somebody you've met and you know what does he tell you about investing. He tells you to just do what he does or what does he tell you. Pretty much. I mean one of the things we have this great connection about the love for baseball. And the reason why Warren and I got to know each other is he was he insured my contract the 252 and I reached out to him and I said or now that we're business partners maybe I can come see you in Omaha. I thought I would never get an email back. And Debbie who's been with him for over 40 years wrote back and said how's October. I said I'll be there. We're not going to the playoffs. And that led a series of five or six years where I go back to Omaha. And the one thing that I always remember about Warren is he said Alex you always want to be a gentleman. You want to be a great baseball player. And then the two rules of investing are one never lose money and number two don't forget rule number one. And your mother is alive. And does she give you advice. She call you and say do this or do that. Yeah. My mother lives in the same house for the last 25 years. And she would give call me and say you've got to get your elbow up. You've got to get your elbow down. Now she says why are you investing in real estate. You should be investing in basketball or baseball. She's always giving me some advice. Well let's suppose I gave you a hundred thousand dollars today. I said I don't want to lose a hundred thousand. Where should I put that hundred thousand. Where would you put it. I would keep it in Tito's right now. I would not do anything. Everything to me is still kind of very expensive. The best investment advice you ever got was from Warren Buffett or from whom. I think so. And really kind of stick into your circle of competence. And Warren always talked about Alex. You know go out and buy the greatest business you can with the best management team and pay a fair price. Don't buy an average business and pay a great price. And what is the biggest investment mistake that you think people make generally when you look at other investors. What do you think the biggest mistake is they get caught up in some phenomena at some point. What do you think is the biggest mistake that you observe people making. I think for the most part I can speak about athletes. You know if athletes replace the word business manager with investment banker and make sure he was a good one and then have some economic alignment. So David if you were my business my investment bank I would say look I'm going to give you 10 bucks. I'm going to pay you nothing. However if this 10 bucks over time gets two hundred and ten I'll give you 10 percent of the hundred profit and then you walk away with 10 bucks. I think more of that some simplicity some alignment would would be very helpful. And the other part is a lot of people overestimate their ability just because I'm good at baseball doesn't mean I'm going to be good at investing. You've got to work really hard and you've got to surround yourself with the best people in the world just like you want to win a championship in baseball. The same formula works in business. Your incredible career investment career baseball career now sports ownership career. What is it that you're most proud of having achieved. You know David my my my my life changed when my father left at the age of 10. And I remember watching my mother go through all the pain and torture of having to raise two kids in a very tough environment. I made a promise to myself that I said I said dear God if I ever get an opportunity to be a father it was a little prayer that I said I'm going to make sure that I'm a present father. And that's my number one responsibility in life. I think when it's all said and done my fatherhood to my girls is probably the most important.