Advantage Set: Andre Agassi Serves Up Charter School Construction With The Help Of Century City Bankers
What the deuce?! Former tennis star Andre Agassi has partnered with Canyon Capital Realty Advisors in Century City to finance the construction of $750 million worth of charter schools in urban communities nationwide. According to the LA Times, the Canyon�?Agassi Charter School Facilities Fund hopes to serve 40,000 students by developing 75 schools in the next 3-4 years while "earning a financial return for investors, which include Citigroup Inc. and Intel Corp."
The "unusual" and "novel" business model is expected to "attract investors who realize that making money and making societal change don't have to be mutually exclusive," says Bobby Turner an investment banker whose firm is partnered with Agassi.
North Philadelphia will be home to the fund's first location. The new charter school -- a public school operating "independently of local school boards" -- is set to open in August as "part of the Knowledge Is Power Program, a network of free, open-enrollment, college-preparatory public schools."
SoCal real estate is pricier than in other urban markets, and with California providing less funding per student than other states, it is unclear whether the fund will be building locally.
Since retiring from tennis in 2006, Agassi has focused his efforts on education, operating the Andre Agassi College Preparatory Academy in Las Vegas and the Andre Agassi Foundation for Education. Said Agassi, a ninth-grade dropout, "I turned pro at 16 and felt profoundly throughout my life the results of my education."
"It's been one of the most rewarding experiences of my life but also quite a frustrating one," Agassi said of his academy. "I have 650 kids in school and 1,500 on the waiting list."
Traditional funding sources for school like philanthropy and public spending are not enough to support the "the scale Agassi and Turner hope to achieve." The for-profit fund will build facilities, or retrofit existing ones, and then rent the facilities at an "affordable" rate to charter school operators with the intention of eventually selling to them.
Accredited schools receive a certain amount of state funding per pupil. As new charter schools grow, they become financially more secure. By the fourth or fifth year of operation they should be stable enough to borrow tax-exempt money at a low interest rate from the municipal bond market and buy the school from the fund. "What our fund does is provide a bridge to ownership," Turner said. Investors in the fund profit from the rent and sale. Turner declined to say what the rate of return is expected to be, adding only it would be "market rate."