Former tennis star Andre Agassi has spent the last few years building schools. Recently, he has stopped doing it out of pure generosity. After years of raising money for charter schools, Agassi has had a conversion. He teamed up with investors and joined the growing ranks of education capitalists.
Agassi has been touring some of his schools this fall, including a recent in Nashville.
The second graders in this Rocketship classroom were barely born when Agassi hung up his tennis racket. So they don’t really know much about the guy with the shaved head touring their new school, other than they should be grateful to him.
“What made you want to play tennis?” one student asks. “I never really wanted to,” Agassi says, explaining that his dad made him.
But turns out, he was pretty good.
“And then all of the sudden when I won, I had the chance to build my own school,” he says.
The irony is not lost on him, since Agassi dropped out of school himself. He has since raised $100 million to supplement public funding for a charter school in his hometown of Las Vegas.
But in the last few years, he teamed up with investors to start a hedge fund. They don’t run schools. They just buy the land, finance construction, then rent the school back to a charter, typically part of a national chain like KIPP Academy or Rocketship.
Critics of the charter movement have charged investors with lining their pockets on the backs of public education, and Agassi says he had his own hesitance before switching gears into profit-mode.
“I thought about it a thousand times going into this adventure,” Agassi says.
But given the struggle to finance his own charter school, Agassi says he’s decided charity has limitations.
“I don’t believe – personally – that philanthropy is scalable,” he says.
Agassi’s charter school real estate venture certainly satisfies a need. School founders almost universally struggle to find adequate facilities. Often school districts are reluctant to rent out vacant school buildings to charters, who are sometimes seen as competitors. They occasionally have to locate in less-than-ideal learning environments, like a renovated strip mall.
The pitch from Agassi’s investors is something like this: “Let us build you a school. You focus on teaching. And if you want to buy the building from us in a few years, great.”
Santa Monica-based investor Bobby Turner helped get Agassi on board.
“If you want to treat a problem in society, philanthropy is fine,” Turner says. “But if you want to cure – really cure – you need to harness market forces to create a sustainable solution. That means making money, because only then is it scalable. And by the way, there’s no rulebook that says you can’t make money and societal change at the same time. They’re symbiotic.”
But some parents don’t buy the sales pitch.
“It kind of makes my stomach turn,” says Brett Bymaster, a parent in San Jose where the Agassi-Turner fund has been active.
He’s taken it upon himself to dig into their business model, though one can only dig so far. While they’re building public charter schools, there’s very little disclosure, including what they charge tenants.
“We need to partner with people outside, but I don’t think the solutions to problems in my community are one-percenters getting filthy rich,” he says.
Bymaster wonders what happens to one of these buildings if the charter has to shut down, and many do. So far, all 39 schools built by the fund are still up and running. A spokesman says if one closed, the building could be rented to another charter operator.
Even among charter school advocates, there is some quiet suspicion of partnering with hedge funds. First, there’s cost. One charter founder said a deal with Agassi was 25 percent above any other option.
Jessica Johnson leads the Colorado-based Charter Schools Facilities Initiative and doesn’t take a position on for-profit investors.
“I mean, I know of many instances where it’s worked out really well. I know of others where there have been challenges,” Johnson says.
Johnson says plenty of charter schools have had trouble working with non-profits too. That’s why she cautions everyone to read the fine print, no matter who is helping build their school.