Since launching in 2018, athlete investment platform Patricof Co has amassed nearly 200 athlete clients and deployed over $125 million across a series of private equity investments in companies like Bombas, Cholula, Daily Harvest and SpaceX. It’s now added a new asset class to the portfolio: farmland. Patricof Co has acquired a 104-acre farm in northern Iowa that specializes in corn and soy production. The $5 million investment is the first step of a broader farmland strategy for the firm, which has plans to invest in at least four more farms in the United States. Around two dozen athletes have committed capital to the farmland investment strategy, including Boston Celtics forward Blake Griffin, Cincinnati Bengals quarterback Joe Burrow and Milwaukee Bucks guard Khris Middleton.
“I think of it as a really smart recession hedge for people who are learning to invest for the long term,” said Mark Patricof, the firm’s founder and CEO. “It provides really significant downside protection and the opportunity to create a long-term investment strategy that fits the profile of somebody who’s young and can continue to make a lot of money and wants to be conservative with their investment strategy.”
Farmland investments have been popular among high-net-worth individuals like Bill Gates and Warren Buffett because they are government-subsidized, cash-generating assets that have historically shown little volatility or correlation with public markets. According to a 2020 report from PGIM Real Estate, farmland investments posted an annualized return of 12.3% over the prior 20 years, outpacing stocks, bonds and commercial real estate investments in that time. That same report, citing a study from the 2017 Census of Agriculture, said 3% of all U.S. farmland is owned by institutional capital.
Patricof Co’s investment is through a Midwestern company he wouldn’t name specifically that sources and manages farm investments. Patricof said his New York-based firm had an eye on the space for over two years before finally ironing out the initial investment late last year. The athletes involved have made a financial commitment to invest in five total farms across a diversified crop profile, though Patricof declined to comment on the total value.
“As a pro athlete, I’m pitched countless investment ideas and ‘opportunities’ all the time,” said Middleton. “When it came to this specific deal that Patricof brought to me, I was attracted to it because of how different it was. Why farms? But when I looked at the history of returns, especially how U.S. farms have performed over the last 30 years, including during bad times in the economy, the stability is what stood out. I’m always thinking about the long term when it comes to my wealth and how I can provide for my family after I retire. And this deal is a long-term deal. That’s why I wanted to be part of it.”
Patricof added that the farmland investments will be long-term holds, perhaps even for several decades, which is far longer than the typical private equity hold of five to seven years. While that means Patricof Co won’t generate the near-term return it typically looks for, the CEO said the deal will generate value for the firm in other ways.
“I believe that if you do the right things for these guys and give them an opportunity like this that may not be what a traditional manager would be looking to do, you build trust. And that trust pays back in many different ways,” said Patricof. “Right now we’re doing our next PE deal. It’s a $20 million check, and it will be our biggest check. I would assume that’s because we’ve been demonstrating through actions, not through words, that athletes’ needs and interests come first here. The trust factor increases, and when we show them a deal that’s a little riskier, but has the same attributes we’re looking for which is downside protection but real upside, they lean a little harder into that because they know we’re looking out for their best interests.”
ATHLETES AND BAIN CAPITAL BREAK BREAD IN BOSTON
Last month, Patricof Co took a group of athlete clients from the Boston Celtics, Miami Heat and New England Patriots to visit Boston’s Bain Capital for an investor boot camp. Patriots defensive lineman Davon Godchaux and NBA players Blake Griffin, Victor Oladipo, Derrick White, Duncan Robinson and Malcolm Brogdon were audience to seminars by and participants in a Q&A session with the private equity firm’s leadership, including Bain co-chairman and Celtics co-owner Steve Pagliuca. Patricof invested alongside Bain in Virgin Voyages in 2021.
A following networking dinner at steakhouse Grill 23 & Bar, joined by the Patriots’ Matthew Judon and Jonnu Smith, featured a larger group of Boston-area founders, executives and private equity firms. Notable attendees included Whoop founder Will Ahmed and Coravin CEO Christopher Ladd.
Athlete attendees jumped at the opportunity to spend time with those major players from a different field.
“For them to finally have a night off and to want to spend their time going to Bain Capital to learn and network with these people, I think it says a lot about them and their eagerness to learn,” said Patricof Co partner Matt Siegel. “We’ve done a lot of these where it’s just one player. This was the first time where we really had a large group of players. At the dinner there are 10 players, and they’re all working the room.”
Siegel added that the firm is planning a similar event in New York and hopes to replicate the model for athlete clients in major markets throughout the country.