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Former Hogs Play New Game: Real EstateLock Icon

5 min read

Former University of Arkansas and NBA player Joe Kleine recently found himself in the business news when a Fayetteville office complex sold for $7.4 million.

Kleine was involved in the deal, reflecting a trend of former Razorback athletes and coaches making inroads in the real estate industry, especially in the robust northwest Arkansas market.

Some, like ex-football stars Jim Lindsey and Bill McClard, made real estate their second careers; Kleine and others are happy to be investors.

Kleine, who made millions as in the National Basketball Association, said real estate isn’t the bulk of his investment portfolio. He was the nominal lead and the best-known member of a limited liability company called Joyce Street LLC, which sold the Commerce Park Center on East Joyce Boulevard to an LLC led by Patrick Cameron in mid-May.

The office development was started by Ben Israel in 2000, when Joyce Street LLC was formed with Israel, Kleine, B.W. Dykes, David Cannon and Owen Bushaw. It was originally tied to a $8.78 million construction loan from Community Bank of Northwest Arkansas in Fayetteville.

The complex weathered Israel’s financial problems in the 2008 real estate meltdown — and a subsequent lawsuit between Israel and the remaining members of the LLC that was settled in 2008.

Joe Kleine

Kleine, 57, said buddies tried to tease him about his payday after the transaction was reported in Arkansas Business. Actually Kleine was one of several in the ownership group, and there’s a big difference between a sale price and how much money owners realize.

“Have you ever heard of depreciation and bank loans and paying the note and real estate taxes?” Kleine replied to friends.

He played 15 years in the NBA after being the No. 6 overall selection in the 1985 NBA draft, and he has an NBA title and an Olympic gold medal on his resume. He decided early in his career to take an active approach to his investments after originally working with a broker his agent suggested.

Kleine said the broker was reputable and he didn’t lose his shirt, but he wanted to be more involved.

“Early on in my career, I did a couple of those [investments] with a limited partnership, and I was very grateful they turned out good,” said Kleine, co-owner of Corky’s BBQ in Little Rock. “Even as they were turning out good, it was the not knowing what was going on and the lack of control that was uncomfortable. The first couple of years I had them doing a lot of investing and I found out real quick … I didn’t want to be in a pond with so many other fish.”

Kleine graduated from Arkansas with a business degree, so he had some preparation for the wealth he earned as a pro athlete. Not all players are so prepared.

Bill McClard, a former UA and NFL kicker, has been a commercial real estate executive for more than 40 years. He said when he first signed a professional contract, he invested some money in a project only to learn later it was the proverbial beachfront property in the desert.

“While I was still playing I got involved in a scam, and I still have about $6,000 in a piece of property that is utterly worthless in Albuquerque, New Mexico,” said McClard, a senior vice president with Lindsey & Associates. “The first deal I ever did I got scammed on. It took five or six years to understand that.”

Former UA and NFL quarterback Joe Ferguson is also a senior vice president at Lindsey & Associates, a company founded by UA football legend Jim Lindsey; Jim’s son Lyndy, a three-year letterman at UA, runs Lindsey Management.

Recently, Cushman Wakefield/Sage Partners hired ex-UA and NFL kicker Zach Hocker in its commercial division.

“There is a correlation between athletes and real estate from the standpoint that it is like a game, figuring it all out,” Lyndy Lindsey said. “They are intrigued about it. If you’re willing to take a chance on a piece of property, does it come back to you twofold?

“Dad always used to say, there you are. You are at the craps table and juggling the dice. It may work out, it may not work out. It’s a calculated risk.”

Hocker said he didn’t know what he wanted to do after his NFL career ended, but he had been intrigued by real estate because his best friend, former UA and minor league pitcher Nolan Sanburn, had invested in properties while trying to make the major leagues. Sanburn runs a real estate investment company in Birmingham, Alabama.

Hocker met T.J. Lefler with Sage and was hired soon after.

“If I had been approached by real estate as a young guy with a little bit of money, that would have been way more intriguing,” said Hocker, 27. “It would be something fun that I would really be into. A lot of buddies of mine who have recently retired are now almost all getting into real estate to some degree.”

Safe Money

McClard said flashy investments have an allure — quick turnaround with big profits — but he wishes more investors would shoot for stability. He used Dollar General as an example, where an investment in the retail property is a good bet at a steady 6.5% return.

That lacks a wow factor, but it’s no black hole in Albuquerque.

Former Arkansas track and field Coach John McDonnell has been busy the last couple of months buying several self-storage properties in Springdale. Lyndy Lindsey said that is a good example of a non-sexy investment with a reasonable expectation of steady revenue.

“If you go out and buy oil futures or that sort of thing, there isn’t any guarantee that there would be anything left after all is said and done,” McClard said.

McClard and Kleine said if someone comes along with an investment idea, an athlete (or any financial nonexpert) is probably unlikely to be astute enough to judge the intricacies. The novice can, however, do due diligence on the deal; if the person making the pitch touts previous successes and riches, McClard and Kleine advise asking for proof.

“You have to research it; you have to know who is talking to you,” Kleine said. “Looking back now, I could have lost it very easily. You are at the hands of somebody else. I didn’t understand it. It is something people go to school to understand.

“What a lot of athletes do is [hear], ‘Hey, we’re going to build an apartment complex and I feel we are going to triple your money in four years. Give me $500,000.’”

Lindsey said athletes often ask him for investment advice because the northwest Arkansas market is considered so fertile for profits.

“Golly, you want to call it the land of milk and honey,” Lindsey said. “Northwest Arkansas is just thriving. It is hard to go wrong right now.” Nevertheless, he added: “I hate to be overconfident.”

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