Andrew Kline, a beefy 300-pound lineman drafted by the St. Louis Rams in 2000, was forced to retire from the National Football League after suffering a series of concussions in his first year in the league.
But he wasn’t done with sports.
Kline started a sports marketing firm and, with a team of investors, came close to buying a professional hockey team. Despite falling short, Kline learned a lot about the process and “fell in love with investment banking,” he said.
“Once I figured out what (the bankers) were doing technically, I realized I offer a lot here because I have a sports background,” said the 33-year-old, who has since slimmed down to a trim 200 pounds. “I realized if I could leverage what they had technically and combine that with my connections, we would have something pretty valuable to people who wanted to buy and sell sports teams.”
In 2005, Kline started Park Lane, a Century City boutique investment bank providing mergers and acquisitions advice, corporate finance, and other services to sports teams and sports-based businesses.
In a few years of existence, the firm has worked on deals for a number of professional teams, including the Anaheim Mighty Ducks of the National Hockey League, the Memphis Grizzlies of the National Basketball Association, the San Diego Padres of Major League Baseball and the Los Angeles Marathon.
The private firm keeps its finances closely held, though Kline said in the last six months that Park Lane has advised on transactions totaling $1.4 billion. Most recently, the firm helped sell the Stockton Thunder, a minor league hockey team in Northern California.
“We got the highest price ever for a team in the league,” Kline said, proudly.
With more money flowing into the sports world, the boutique is up against a small but growing network of sports-focused investment banks, which analyze the financials of a team, market it to wealthy potential buyers and negotiate a sale.
Among the players are divisions of larger banks such as Bank of America and smaller firms such as Allen & Co. in New York, a boutique investment bank that focuses largely on media and entertainment businesses.
The niche requires real sophistication, given the increasingly complicated real estate and media elements associated with many sales, said David Carter, executive director of the USC Sports Business Institute.
However, as in much investment banking, who you know still plays a central role in who gets the deal.
“Many of the big banks are in it, as are many midsized boutiques,” said Carter, “but the decision usually boils down to how strong and deep the business ties run, as well as how strong the referrals are from colleagues.”
Kline had never envisioned going into investment banking.
The native Angeleno, who starred on football teams at Beverly Hills High School and San Diego State University, was selected in the seventh round of the 2000 NFL draft by the Rams, who had moved to St. Louis in 1994 after almost 50 years in Los Angeles.
“Growing up in L.A., it was really cool to play for them,” Kline said.
But his playing days ended much earlier than expected due to injuries.
Kline had done some internships with real estate companies in college, so he decided to jump into the real estate world. He worked for a developer and even opened his own small investment fund, which saw a whopping 800 percent return. Kline admitted, however, that the fund’s success was probably due more to the luck of market cycles than his skill.
“It was just good timing,” he said. “I was confident in my business abilities, when the reality was I hit the cycle right.”
Meanwhile, the budding entrepreneur started and sold his own surf shop, and founded a small marketing firm to take advantage of his connections in the sports world. Through the business, Kline caught wind of an opportunity to buy the St. Louis Blues, a professional hockey team.
After assembling a group of potential buyers, Kline closely observed the M&A process, which he realized was not dissimilar from the buying and selling of development properties he was used to.
“It just looked like a real estate deal to me,” he remembered.
Kline started putting together his own firm, snagging dyed-in-the-wool investment bankers from firms such as Credit Suisse as well as a mix of former players, including retired NBA center Rony Seikaly. Over the past year, the firm has doubled its employees to 14; the firm now has three other locations, including one in San Francisco.
Kline does not want to grow much larger. The current size is good, he said, because it allows Park Lane to handle the largest assignments, but the firm has not become unwieldy.
These days, Kline thinks of himself more as an investment banker than a former player. In fact, his playing days are something he rarely talks about.
“I have friends that I’ve known for four years that have no idea I ever played football,” he said.
Carter said former players may help establish connections in the sports world, but the ability to close deals is paramount for successful firms.
“It’s really the quality of the work, not the number of rebounds you got in the NBA,” he said.
But quality results can be elusive, because unlike traditional businesses, which are often sold based on standard metrics such as EBITDA, sports team prices can be all over the map based on a variety of financial or emotional factors.
“A sports franchise isn’t necessarily going to be valued based on what the current owner is doing with the franchise. (Instead), it is what that potential owner believes he can do better to increase revenue,” Carter said. “It can be difficult to price these properly. Your instincts have to be great.”
Kline’s instincts have been sharp recently as he has worked with some high-level professional teams.
The firm represented the sell side when the NHL’s Tampa Bay Lightning was recently sold. And local entrepreneurs Russ Pillar and David Kingsdale hired Park Lane in 2008 to raise capital and advise on the buy side when they acquired the L.A. Marathon. In some cases, the firm has been hired for deals that did not come to fruition: A wealthy New York investor hired Park Lane to help buy the Mighty Ducks, but the owners were not willing to part with it.
Michael Reinsdorf, who founded the Stockton Thunder in 2005, said he first looked to a prominent New York firm when he planned to sell the hockey team, but the deal was too small, so bankers suggested Park Lane.
Reinsdorf, son of Chicago White Sox and Bulls owner Jerry Reinsdorf, said he was very pleased with the professionalism and results achieved by Park Lane, though he would not reveal the final sale price.
“I walked away happy,” he said. “There’s not an exact science to buying and selling a sports team, (but) they did a really nice job.”
Reinsdorf maintains an interest in several other sports teams and plans to look to Park Lane the next time he wants to sell a team.
“I wouldn’t even hesitate to pick up the phone and call them,” he said.
HEADQUARTERS: Century City
MANAGING DIRECTOR: Andrew Kline
CORE BUSINESS: Investment banking services for sports teams and sports-related businesses
EMPLOYEES: 14 (up from 7 last year)
GOAL: To become a respected firm in the growing business of sports M&A
THE NUMBERS: Has handled deals totaling $1.4 billion in the past six months
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