Friday, July 25, 2003
Kansas City Business Journal - by Jim Davis Staff Writer
Danan Hughes did the usual thing after signing his first contract with the Kansas City Chiefs in 1993. He bought a new Jeep Cherokee and a house before reporting to training camp.
The car was acquired with a phone call; Hughes said he had no idea of the interest rate he would pay to finance the deal. He was equally clueless about the terms of his house purchase.
"My closing was like an autograph session," said the University of Iowa football and baseball standout.
Hughes has become much more financially savvy during the ensuing decade. After retiring from the National Football League, he became a mortgage banker. Today, he helps other athletes manage their newfound wealth.
Recognizing a client base with significant disposable income, area banks are beginning to tap former athletes like Hughes to help them cultivate new business.
Most of his clients at U.S. Bank are pro athletes. He'll finance as many as 150 houses this year, some worth millions of dollars, for athletes throughout the country.
Mary Carol Schriefer, a vice president at U.S. Bank Home Mortgage in Kansas City, praised Hughes' integrity and communication skills.
"Danan is very good at opening doors because he has relationships with the athletic community," Schriefer said. "It's kind of like a brotherhood."
Hughes said he gains players' trust because he doesn't prey on them. He said he views his role as educating, not selling. When it comes time to write a mortgage, he calls on the expertise of his business partner, Phil VanLeeuwen.
Additional support comes from U.S. Bank's Professional Sports Division, based in Cincinnati.
Jon Hayes, the division's managing director, said he contacts Hughes about every other day. The division, established in 1995, employs seven people in addition to specialists like Hughes.
U.S. Bank is unusual because it operates a unit that focuses solely on athletes. Hayes said he likes to contact prospects before they turn pro. U.S. Bank can gain access to amateurs because it provides loans for players to buy disability insurance policies that protect their future earning power in case they're injured.
After the bank establishes a relationship, it offers more products and services. Hayes said his unit serves about 130 accounts -- baseball, basketball and football players and a NASCAR driver.
"Our whole goal," he said, "is when these guys retire, they can live comfortably."
Hughes said his background gives him an edge. He understands players' financial needs and knows how they think. Referrals from other players with whom he has worked are especially valuable.
"The locker room is a powerful place," he said.
Doug Elstun also speaks athletes' language. The former University of Kansas basketball player works for William Larmer & Associates, an Overland Park investment adviser.
Elstun, whose hoop career ended with the Jayhawks' title game loss to Duke University in the 1991 Final Four, said he has been fixated with finances since high school. He met Larmer shortly after graduating from KU and joined the firm, which specializes in high net worth clients, about one-quarter of whom are jocks.
Elstun relied on personal contacts to find his first clients. Then he was introduced to Will Shields, the Kansas City Chiefs guard who entered the NFL in 1993. Working with Shields, who's beginning his 12th season, gave Elstun confidence to add such people as Los Angeles Lakers forward Rick Fox and former KU star Danny Manning, who played last season for the Detroit Pistons.
Athletes' economic lives are measured differently than most people's, Elstun said, because their peak earnings come right after they enter the job market. Guys barely old enough to drink legally suddenly can find themselves flush with net worths of six, seven or even eight figures.
Temptations are great. To manage them, Elstun recommends a simple formula.
"Everything boils down to spending and your expenses," he said. "You can make all the money you want. You have to have a budget."
Elstun said he aims to set clients up for life and usually suggests conservative investments, sprinkled with a small percentage of growth stocks to combat inflation.
"So we have enough principal and interest to equate to the budget they're living on, or something close to it, while they're playing," he said. "Leaving the pros is culture shock enough. We want to make sure they don't have to look for a job out of necessity."
Elstun works with a small group -- about 15 current and former players.
UMB Bank serves a larger clientele through the private-client services division of its trust and wealth management group.
William Lowe, a UMB senior vice president, said the bank provides many kinds of services to athletes. Convenience prompts some members of the Kansas City Chiefs and Royals to open checking accounts at UMB's branch across the street from the Truman Sports Complex. Other players turn to the bank for comprehensive financial planning and wealth management.
"A successful relationship is where we show them the numbers," Lowe said. "We become a trusted adviser."
Trust also grounds the work that Kathy Kuluva does at Bank of Blue Valley in Overland Park, where she's a vice president in the private banking department. She counts as clients about 40 players from the Chiefs and the Kansas City Wizards.
"If they trust you," she said, "they'll have their friends call. It doesn't matter what name is on the front of the bank."
Bank of Blue Valley doesn't have any branches outside Johnson County -- as opposed to U.S. Bank and UMB, which have offices throughout the area. Kuluva said Bank of Blue Valley's narrower footprint isn't an impediment because all of her Wizards clients and most of the Chiefs live in Johnson County.
Kuluva said athletes require constant attention. One Saturday this summer around 7 a.m., she got a call from a player whose ATM card wouldn't work.
"When they have a need, they want it answered," she said. "You are on call all the time."
Every Monday during the Chiefs' 16-game regular season, Kuluva goes to Arrowhead Stadium to gather her clients' paychecks. Because players don't get paid during the off-season, they have to put more than a little away each week.
"I can't tell you," Kuluva said, "how many (players) need home equity (loans) in March."
With the average NFL career lasting just two and a half years, she said, players can't afford to wait to plan for the future. They need to capitalize immediately on the NFL's 401(k) retirement plan, which includes a matching contribution by the league.
Kuluva, who has been working with athletes for 13 years, said she isn't fazed when she enters their testosterone-charged world.
"I think they do better with a woman," she said. "It's like being with their mother or a sister -- someone they can trust."