And The Struggle Continues

This week we take a look at a totally different battlefield from sports, public pension funds, to make the point that we are on the mark in terms of trying to gain a greater piece of the $235 billion dollar per year sports dollar pie.

Pubic public pension funds are one of the largest sources of capital in America. Public pension funds are the largest sources of capital. These funds invest the billions of dollars members contribute through venture capital funds, hedge funds and asset management firms. The largest public pension fund in America, California Public Employee’s Retirement System, or CalPERS, has over 1.4 million members. According to the 2000 U.S. Census the majority of the residents of the State of California (35.5 % Hispanic, 12.4% Asian, 6.1% Black or African American, 0.7% American Indian and 0.4% Pacific Islander) are people of color.

Even though people of color represent nearly 60% of CalPERS membership, people of color are not aware of how the trustees are investing their money. Are they investing in urban areas, or are they investing more in foreign countries than in South Central LA or Harlem? How much did they invest and squander on Enron and WorldCom? Well, for the record, CalPERS invested only $275 million of the $28.8 billion in its active commitments, or less than 1%, in active commitments in what they call “Alternative Investment Management,” or private equity funds managed by people of color as of March 31, 2006. The Carlyle Group, on the other hand, a majority firm with several funds at CalPERS, alone has $1.489 billion under management. Minority-managed venture funds receive less than 3% of all funds from venture capitalists. Les than 1% of venture funds are invested in Black-owned companies.

Because the majority of the beneficiaries of public pension funds in California are people of color, the Black Economic Council (BEC), an Oakland, California-based, national organization, established to provide African Americans an economic platform that facilitates business formation, job creation, access to capital, affordable housing, financial literacy, and equal opportunity for employment in the workforce has taken up the battle to ensure greater participation by African American professionals in pension fund management.

It would not surprise me to learn that pension fund money was somehow used to fund these recent/pending capital transactions in sports handled by the Sports Finance and Advisory team at Bank of America, a leading financial partner to professional sports teams, owners, and leagues across all major sectors, and throughout motor sports, golf–related enterprises, Olympics, and concessionaires: the $1.6 billion (NFL) League-wide Credit Facility; the $907 million (MLB) League-wide Variable Funding Note Facility; the $390 million (NFL) Term Notes Offering; the $283 million Acquisition Financing for the purchase of the Milwaukee Brewers; the $150 million Senior Secured Credit Facilities for Anschutz Entertainment Group, the owner and/or operator of Staples, the home of the LA Lakers and The Home Depot Center, an Olympic training facility in Carson, California; or the new stadium development projects of the Dallas Cowboys, San Francisco 49ers, Arizona Cardinals, Florida Marlins or Philadelphia Phillies.

Though the pension fund battle has just begun, and there is more work to do, progress is being made. In fact, Governor Arnold Schwarzenegger recently appointed an African American to the board of directors of the California State Teacher’s Retirement System (CalSTRS) pension fund. Success in the public pension fund battle, like success in increasing the participation of African American professionals in the $235 billion per year sports industry, will require that we put aside our differences, come together, work for the good of the group, take action and not just talk the talk. Personal reward will naturally follow.

Stay tuned for next week’s edition. Stay connected.

If you have questions or require additional information, please contact Everett L. Glenn, Esq. at eglenn@espsportslawpro.com or call 562.619.8460.