Investing tips from the Great One
Wayne Gretzky prefers banks, not risky ‘adventures’
I’ve never borrowed and never levered
myself to try to turn $1 into $10
The National Hockey League’s all-time leading goal scorer sounds as if he’s taken a few passes on risky investment opportunities.
Wayne Gretzky doesn’t like to have any debt, keeps his money mostly in the bank and in lowrisk bonds and says he would never put more than 10% of his wealth into any investment opportunity.
“I was not a big risk-taker, an adventurer to invest in the things I didn’t really know anything about,” said Mr. Gretzky, who mentioned his restaurant in Toronto of 18 years and his five-year-old wine business as two of his more prominent investments.
The 51-year-old was speaking at a TD Waterhouse panel this week titled “Life after hockey, financial advice and the need to plan for retirement, even if you are Wayne Gretzky.”
The Great One learned much of his frugal ways from his father Walter, who Mr. Gretzky called the greatest advisor in the world.
“He was a very conservative man, that’s a typical Russian sort of way. His dad came over, worked very hard, had a farm,” he said. “We came from a really conservative family.”
He recalled signing his first contract with the World Hockey Association’s Indianapolis Racers in 1978 and getting a $250,000 signing bonus.
Like any teenager, he wanted to take the cash and get himself a car. “I say, ‘I want to buy a car,’ and [Walter] said ‘OK’ and he wrote me a cheque for $5,000 and said, ‘Go get whatever you want.’ I got a used Trans-Am for $3,800.”
When he looks at investments, he reviews them with his chief financial officer, his accountant and his business manager.
“We sit down. The one thing I’ve learned in my lifetime is you don’t know everything. People who think they do, those are the people who get themselves in trouble,” Mr. Gretzky says. “If somebody wants me to make an investment, we thoroughly read through it. Most importantly, I don’t risk more than 10% of my family net worth. It’s just not worth it to me to risk everything. I’ve worked too hard.”
He learned a few things from Los Angeles Kings owner Bruce McNall, who brought Mr. Gretzky to California via a trade from Edmonton Oilers — one of the most controversial trades in NHL history. Mr. McNall ended up defaulting on millions of dollars in loans and doing jail time for fraud.
“I’ve never borrowed and never levered myself to try to turn $1 into $10,” Mr. Gretzky says. “Entrepreneurs who know what they are doing love to leverage, love to borrow. That’s their thing.”
He called his best investment probably an income-averaging annuity he bought in 1978 but declined to talk about his worst investment. Published reports have indicated Mr. Gretzky was owed as much as $8-million when the Phoenix Coyotes went bankrupt.
While there have been many stories about the high bankruptcy rates of professional basketball and football players, Mr. Gretzky says hockey players tend to be a more cautious lot.
“I think the biggest thing is most of the players, whether they come from Europe, or Canada or the United States, come from middle-class families,” Mr. Gretzky says. “Right from the get-go, their parents are teaching their kids to be conservative and even though you are making money at 21, 22 or 23, it is in their brains not to be outlandish.”
The Great One also knows a little something about the concept of retirement, having been exposed to it well before members of the general population might face the prospect.
“The most interesting thing is that as a professional athlete at the age of 38 or 39, we are considered to be old and, in the real world, you would just be hitting your stride at age 38 or 39,” he says. “You can’t just retire at the age of 40 years old and play golf every day. I tried it for one year and you quickly find out it’s nice to be active.”
He doesn’t sound like he favours early retirement either, based on his advice to other players.
“There is a short life span as a professional athlete. If you can keep playing and participating, play for as long as you can,” Mr. Gretzky says.