Story originally published in the March 20 issue of Orange County Business Journal
A field of dreams for NFL fans broke out at Saddleback College on a recent Saturday.
Aaron Rodgers, the four-time MVP who is mulling a trade from the Green Bay Packers, tossed footballs to the Pro Football Hall of Famer Terrell Owens during a flag football tournament on March 11.
Also making appearances were former USC quarterbacks, Matt Leinart, a Heisman Trophy winner, and Sam Darnold, who last week signed a one-year deal with the San Francisco 49ers.
Also playing were highly ranked college quarterbacks certain to play in the NFL, Dorian Thompson-Robinson of UCLA and Max Duggan, who quarterbacked Texas Christian University to the national championship game in January.
“We’re raising good money for charities out here,” Buffalo Bills quarterback Josh Allen told the Business Journal.
The 10-team tournament was hosted by RX3 Growth Partners, a consumer-oriented growth equity investment firm co-founded by Rodgers, Principal Nate Raabe and Byron Roth, owner of Roth MKM investment bank of Newport Beach.
The event, emceed by former NFL quarterback and local businessman Jordan Palmer, raised $1.5 million, far exceeding the $400,000 garnered last year in its inaugural event.
“It’s unbelievable,” said Roth as he stood on the sidelines watching the games. “The gross and net are almost the same. The players weren’t paid anything.”
Roth spoke a day before the start of Roth MKM’s 35th annual conference, Orange County’s biggest investment banking conference.
Among local executives watching the tag football games along the sidelines was Mike Mussallem, chief executive of Edwards Lifesciences Corp., the most valuable publicly traded company based in Orange County (NYSE: EW).
Another executive who played with the professionals was Alex Bhathal, co-owner of Newport Beach investment firm Raj Capital and the NBA’s Sacramento Kings. Two days prior to the event, Bhathal won a Business Journal Excellence in Entrepreneurship Award (see separate article, page 1).
“It was a great, high-energy turnout,” Bhathal, who is also senior operating partner at RX3, told the Business Journal after the tournament. “Our teams were more evenly matched than ever before with a lot of impressive talent on the field.”
Instead of doing a traditional charity golf event, the athletes gathered to play flag football.
At the flag football game, 10 teams played four-on-four for a game of about 20 minutes duration using half of a typical football field. All the players wore jerseys with RX3 prominently displayed. Quarterbacks weren’t rushed but given a few seconds to get rid of the ball or take an “imaginary sack.”
Referees in the black-and-white-stripe shirts blew whistles as though it was a real game. There was no hitting except a few accidental ones. The national anthem was played and replays of controversial plays were often shown on a giant video monitor overlooking the field.
“A lot of these quarterbacks and players are investors in RX3,” said Raabe, who was a college friend of Rodgers.
A day before the game, company executives met with their investors to discuss results.
“We’re in a tough macro environment. Fortunately, our portfolio is doing very well,” Raabe said. “We’re well ahead of our peers.”
Since 2018 when Rodgers, Raabe and Roth began RX3, the firm has raised more than $200 million from investors, who are typically famous athletes, actors or professional investors.
It focuses on “culturally relevant” consumer brands that typically have more than $10 million in annual sales. The investment firm’s website says its typical investment is in the $5 million to $7 million range.
Some winners have included Hydrow, a rowing machine business which has a valuation approaching a billion dollars and is similar in respects to Peloton; Nom Nom Now, a dog food provider that was sold last year to Mars Petcare; and Chemical Guys, a maker of car waxes, that was sold last year to private equity investor AEA.
RX3 invested $3 million in Irvine-based Orgain Inc., a provider of protein power, drinks and snack bars, with annual revenue around $400 million. Last year, a majority stake in Orgain was purchased for an undisclosed amount by Nestlé Health Science, a unit of the giant Swiss-based food manufacturer. Orgain was reportedly valued around $2 billion in 2021.
The fund has turned the typical model of athletic endorsement on its head. Rather than athletes being paid to endorse a product, the athlete backers of RX3 often look to invest in the company to get a piece of the equity.
“We invest in brands where we can provide authenticated value with these athletes,” Raabe said. “We help the athletes be smart with their money.”
Where the QBs are Investing
The Business Journal talked to several quarterbacks at the event about their business investments.
What follows are their replies:
“Therabody is my favorite training device,” the Buffalo Bills quarterback said. “They are doing such a good job.
“Dr. J is the fricking man,” Allen said, referring to Therabody founder Dr. Jason Wersland.
Therabody promotes its Theragun as the first-ever percussive massage device of its kind to relieve debilitating pain. The company, which has raised $165 million in three funding rounds, says it’s the only device “consistently validated by science publications and research studies.”
Allen also said he often visits Corepower Yoga, a fitness chain with over 220 locations that offers “a physically intense workout that is rooted in the mindfulness of yoga.”
“That’s another good investment,” Allen said.
RX3 has invested in both Therabody and Corepower Yoga.
“I’m just starting out,” said the UCLA quarterback who is often called by his initials, DTR. “I haven’t made any investments yet.
“I’ve heard a lot of things about real estate, especially going back home to Vegas.”
“I was familiar with a lot of the companies like Therabody before we were investors,” said the quarterback for the Houston Texans. “So, it was super cool to invest in companies I already knew. The returns have been great.”
He’s been to about 12 to 15 RX3 events.
“They bring such a unique group of people together,” he said. “It’s cool to meet all these people.”
“RX3 sounded like a great idea. I brought it to my financial advisers and they said it’d be a great opportunity to invest,” said the quarterback who last week signed a deal with the San Francisco 49ers.
He also praised Therabody and Privé Revaux, a maker of affordable sunglasses.
RX3 exited its investment in Privé Revaux, which was sold in 2020 to Safilo Group.
“I wore their sunglasses. They were just fun, something I had no idea about. The sunglass company did well.
“It’s cool to hear the backstory of the brand and become a fan of the brand.
“There are a ton of investments. There are some that don’t do as well. There are a lot of brands going forward, but I’m not going to name them to put any expectations on them.”
Duggan, who took TCU to the college championship in January, said he’s going into the NFL this year. He isn’t yet an investor in RX3 nor has he started thinking about investments.
“I haven’t really put much thought into it. I probably will in the future.
“I’m a bad one to ask about this. I don’t have a lot of information.”
Leinart, who also wasn’t an investor in RX3, likes to make his own investments.
“Like anybody, I’ve made good investments and bad investments. As you get older, you build your portfolio. I’m trying to do more things as a business entrepreneur.”
When asked for homeruns where he’s made three to four times his investment, Leinart replied, “Nothing that big!”
“There hasn’t been much. The stuff I’m doing now, I feel very strongly about.”
He’s part owner in video game company Hall of Goats along with another Heisman Trophy winner, Caleb Williams, who won this past season. Hall of Goats provides a free-to-play arcade style college football game.
Known nowadays as a TV commentator, Leinart spends his fall traveling for four to five months a year. He said that leaves him seven months to dive into his investments.
His top criteria is people.
“It is about the people. They’re selling you on a startup or a product. To me, it’s the people who are passionate about what they’re building.
“I’ve been a part of the opposite where you make a bad investment and things don’t happen. That’s business. That’s the risk.
“I’m attractive to people who have a vision to build a business. It’s hard to find those people.”
Leinart led his team to the RX3 championship and donated the $100,000 prize money to Children’s Hospital of Orange County.
—Peter J. Brennan