9
Learning Business the Hard Way

Through the middle of the 2000s I had grown very comfortable and confident on field. But off it I was still mostly an average 20-something, making good and bad decisions and trying to find my way in the world. Rugby had been very good to me financially. It’s a tough game, one which breaks far more dreams than it makes. But if you’re one of the lucky ones who makes the All Blacks and sticks around a while you can end up doing very well for yourself, earning what a lawyer or banker might not make until well into their thirties or forties. Unfortunately you’re earning it in your twenties, before you have the life experience to know what to do with it.

The public and media can lose sight of this — how young we are when all that arrives. Particularly when we screw up, say the wrong thing or do something silly on social media. I’m grateful that wasn’t around early in my career. But all that stuff is just noise. The real area we can struggle with is investment, financial planning and saving. It comes down to the right structures. When Rupert Murdoch made rugby professional overnight in the mid-’90s, the game had to scramble to pivot from a century-old amateur approach to professionalism in a matter of months. In many ways it’s a miracle we’re as organised and orderly as we are, given that in professional terms we still haven’t celebrated our twenty-first.

My generation were among the first to be able to view rugby as a viable career path, and the last to have grown up alongside men who’d played in the amateur era. In many ways that was a privilege that today’s generation have missed out on — the culture of amateurism was different, and in many ways a lot more fun. But it did mean that a lot of what we needed both as organisations and individuals simply wasn’t there. I rate my agents at Essentially very highly; they’re some of the smartest and most creative people in the rugby business. But they have had to learn by doing, figuring out the needs of their clients as they go along.

To the public, the investment I’m mostly known for is, ironically, one into which I never actually intended to put money. But because it was so widely covered, and in a glamorous industry, it’s commonly thought of as my big play as an investor. It’s nothing of the sort — that would be Arvida, a far less well-known and much more successful venture. But the story of GAS is worth telling, because it illustrates the hazards that exist for us as rugby players, of getting involved in ventures without fully understanding their complexity and particularly the risk involved.

Despite being a country boy, I’ve grown to love fashion. It started in 2004, on that first European tour. I was walking the streets of Paris, just enjoying the history and vibrancy of the city, when I came across a Louis Vuitton store. Ordinarily back then I’d have found it too intimidating, but for some reason I was in a confident mood, and walked in.

Security eyed me warily, and I could feel them judging me for wandering in wearing jeans and jandals. I think that’s what made me determined to show them I wasn’t who I appeared to be. I wanted to prove my worth by buying something. I ended up picking out a beautiful designer jacket. I’ve still got it, and wear it to this day. It cost a packet, more than my dad would have spent on clothes in years, probably. But it was worth it, both for the wear I’ve got out of it, and the looks on the security guards’ faces. After that I was hooked, and became more and more interested in that world. It was that experience which made me so open to the GAS opportunity when it came along.

I met Rhys and Lucy through a friend. They’d been searching for a good label to bring into New Zealand, and came across GAS, a premium Italian streetwear label. I hadn’t heard of it, but liked what I saw, and got caught up in the idea. I ran it past my accountant, he crunched a few numbers, and gave it a cautious thumbs up. Part of what made it easy to get involved was the dollar requirement: zero. My stake would come from my name and image, which seemed like a pretty good deal. Even so, it was a big unknown. In hindsight, I didn’t give it enough due diligence, but Rhys really sold it to me. That, added to my not having to invest any money, made it pretty easy to say yes. They just wanted to use my profile to help sell the business. Where was the harm in that?

We opened in Christchurch first, in a new development called SOL Square. It’s sad — the area was hard hit by the earthquake, and even today you can see a GAS billboard above the now-shuttered shop. The rentals were really cheap at the time, helping it feel low risk. I loved the process, and got involved in picking the ranges, which was a lot of fun. You’re predicting trends, shopping 18 months in advance. It was mostly out of lookbooks, but once I went to Italy after an end-of-year tour to do it in person. It was mentally taxing, and a long way outside my core experience, but I loved going through the process. It was so different to my day-to-day life as a professional athlete.

Something I didn’t have an understanding of was the mark-ups and margins. With what we were paying to GAS, we needed to sell jeans for $250 to $300. Shirts were over $150. There just aren’t that many New Zealand men who are willing to spend that kind of money on clothes. But I just put my trust in my partners. I thought that they had a handle on the business side. Their backgrounds were in engineering and retail, respectively, so it seemed a fair assumption.

At first, GAS did well. We had a good opening, and were ticking along and not losing money. In hindsight I wish we’d just stayed in Christchurch and been content to remain a small business. But we took a store on Mercer Street, around Lambton Quay in Wellington. Suddenly we were paying prime retail rent, before we’d really established ourselves. It wasn’t just the rent, either — the stores had to have that premium, European look. And while GAS helped out with some of the fit-out costs, they were still very expensive exercises.

Even though the rents were costly, I didn’t worry about that stuff at the time. I was still caught up in the feel-good element. The brand felt like a hit and was attracting a lot of positive media coverage. GAS was expanding and it seemed fair to assume it would continue to. It was also a lot of fun. Rhys and I would go down to SOL Square and work behind the counter on a Friday, and there was a great energy around the business.

Then financial crisis started to bite, and the kind of discretionary income people have to spend on high-end clothes dried up. We started to have to pay for the clothes up front, before they’d be shipped, which put pressure on Rhys and the accounts, and he asked if I could invest some money. I put in a little, not a huge amount, but something. Rhys was working incredible hours, still at his engineering company, but running the business, too. I felt like I had to help him out, even though it was a ways off the original terms of the agreement.

That was when we were approached by Cameron Brewer. He was head of the Newmarket Business Association, and pitched us the idea of coming to Auckland. He said we needed to be there, that it was New Zealand’s fashion capital. We hadn’t thought about expanding into Auckland, but it was a seductive idea. And even though the Global Financial Crisis was rising, we thought that a store in Auckland might turn it around for us.

We had a great opening and tremendous publicity. But after a few months — when it became clear the GFC wasn’t a blip, but the new normal — it started to die away. I found it incredibly stressful, watching it get stretched to breaking point, desperately wanting the brand to work but not having the experience or time to make that happen. The worst part was that we’d had to put down personal guarantees to get the leases in Auckland and Wellington. So even though I hadn’t put money into the business, suddenly I was on the hook for hugely expensive commercial retail sites, with lengthy leases.

At that point I got my accountants and lawyers involved to assess the situation. They pointed out that the only way to keep the business operating was to continue to keep reinvesting until it turned around. The worrying element was that there was no guarantee that would ever happen. And from my position I had very little control of the business. After a lot of back and forth, and a significant amount of stress and pain, we made the decision to wind up the business. We got some short-term sublessees into the stores, which was important, but at a much lower rent than we had committed to. At the time it was near impossible to lease commercial retail, so we were lucky in a way to even get tenants. So for the next couple of years we were all continuing to top up the rent of stores we no longer occupied. It was a painful period for all of us.

When I entered into the venture, I never contemplated what would happen if it went south. The media loves a good fail story, and because of my involvement it got so much more coverage than it would have had it been just an ordinary retail failure. I found that really difficult to take. Up until that point I’d had almost entirely positive coverage, on and off the field. But now my name was constantly in the press, associated with an entity over which I really didn’t have any day-to-day control.

It became a tremendous learning experience, both as an investor and about the dangers of being publicly associated with a business. In the end it was probably more my decision to shut it down. I felt awful for Rhys, because the type of workhorse character he is, he would’ve done anything to save it. But the advice I was given was that it would continue to demand money with no end in sight. Maybe that was a selfish way of looking at it, but at the same time I needed to concentrate on my rugby, and the original pitch was of an investment which would trade off my name, and not my capital.

Since then I’ve had dozens of opportunities come my way, some of which I’ve taken up. I think what I’ve learned from the way GAS ended was to look for those which involve people with a proven record in an industry. If they’ve done something over and over, and been successful, then they’re much more likely to be able to do it again. Whereas with GAS, none of us had any real experience in managing a retail business. So if we were going to make it, we were going to fluke it. And there are not many flukes in business.

Despite the failure of GAS, I still loved business, and still liked the idea of leveraging my profile. A couple of years later Ali Williams, Richie and I were talking about wanting to give back to the community. We set up Water For Everyone on the principle that a certain percentage of every bottle sold goes to charity. Similarly to GAS, we probably started out with a little too much ambition. We also tried salads, and milk, but dealing with supermarkets was incredibly tough, and the margins are very slim on products like that. So we reverted to just the water side, and the charity — which recently changed its name to iSport, to focus on youth sport — has given over $200,000 to various causes.

GAS and For Everyone were learning experiences, and very public ones. But my first real investment was much less public, though hopefully it will prove far more successful in the long run. It came about through Grant Adamson, an old Canterbury rugby man and private banker, who kept an eye on guys like Richie and me as we were coming up in our early twenties. He knew instinctively that the dynamic I described above would be operating: young men earning good money, without a clue what to do with it. He and a group of investors had realised early that with an ageing population would come a long-running, near insatiable demand for retirement villages. And that could be a strong, sustainable investment opportunity.

Richie and I, along with a few other players, ended up putting money into a pool which would purchase individual retirement villages as their owners came ready to sell, or were given the opportunity to cash out. It’s a form of group consolidation which has happened throughout any number of industries over the past few years: everything from dentistry to radio has witnessed the phenomenon. Grant knew that there was an opportunity to build a portfolio of retirement villages which might one day be combined into a large group, with all the economies of scale that implies, and that it could prove a great investment, particularly for young guys like us.

We kept topping up the investment over the years, as new villages came up for sale, and it would sit quietly in the back of my mind, giving me a sense of security around my financial planning. Flash forward a dozen years to mid-December 2014 and I found myself on the seventh floor of Zurich House. It’s a state-of-the-art building in downtown Auckland, with expansive views across the waterfront. The room was full of men and women in sharp business suits, knocking back champagne at 10 in the morning. I was in a conference room of NZX, the New Zealand stock exchange, where I’d been asked to ring the bell to ceremonially commence trading for the day. At 10.30 am one new company would be listed on the New Zealand stock exchange.

Its name was Arvida, the group which held those retirement villages we started buying way back when. There was a real poignancy to the moment, as Grant had passed away not long before. Everyone in the room knew it was largely his vision and drive which had brought us to that moment, so his presence was very much there with us. Soon a countdown was chanted: 10, 9, 8, 7, 6, 5, 4, 3, 2, 1 . . . Clang! And with that the company was listed. It was such a privilege and thrill to ring the bell, and the culmination of a long, mostly quiet, but very satisfying investment experience. One which taught all of us a lot about where our money should go, and what we should look for when assessing opportunities.

The huge gulf in outcome between GAS and Arvida is a big part of what has me interested in helping athletes out after my rugby days are over. There are a lot of players out there who are quite naive financially, just as I was. We get an opportunity put in front of us, and our first instinct is to say yes.

Rugby rewards, even demands, risk-taking to an extent. The sport is full of adrenalin, and you look for experiences off the field which create a similar response and really excite you. And business can be exciting. But, like sport, it is also brutal. If not well managed, by experienced people, it’s going to fall over more often than not, and many more people fail than succeed. I would love to share some of my experiences, or even use some of my contacts, with young players getting their start in professional sports. I wished I’d talked to more people with experience in the fashion industry to help me make a decision on GAS. I might still have given it a go, but I would have been entering that world with a far more clear-eyed view of the very real risks involved, and not just the far less likely reward.

While that outcome was unfortunate, it wasn’t the end of the world for me, thanks in part to my luck in meeting Grant, who helped mentor me financially over the years. But too many other young players, who might not have such long careers, don’t meet a guy like that. Instead they’re vulnerable to making one bad investment decision and losing the largest chunk of their capital. That forces them to keep playing long after their bodies have given out, or leaves them starting from scratch — or even debt-ridden — in their early thirties. That just doesn’t seem right.