CalPERS boss pushed sports deals before calling it quits

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Former CalPERS CEO Advocated for Sports Deals Prior to Departure

In her inaugural year as Chief Investment Officer (CIO) at the California Public Employees’ Retirement System (CalPERS), Nicole Musicco assembled a sizable team and outlined an ambitious vision for the largest public pension fund in the United States. Her plans included a call for innovation and exploring unconventional investment opportunities, notably in professional sports. However, Musicco’s tenure at CalPERS, which spanned just 18 months, came to an abrupt end, adding to a series of recent quick departures from this challenging role.

Musicco, who drew from her experience with pioneering Canadian public pension funds and a background in sports-related investments, envisioned a transformation for the $463 billion pension fund. She even considered acquiring a stake in her hometown’s NBA team, the Sacramento Kings, and invited Tony Ressler, co-founder of Ares Management and owner of the Atlanta Hawks, to speak before the board.

However, Musicco’s efforts to introduce the Canadian investment model, emphasizing direct investments to reduce fees, faced resistance from key staff members at CalPERS. Some were skeptical of her focus on sports, technology, and venture capital investments, as they felt the plans lacked clear execution strategies for a fund of CalPERS’ magnitude. Additionally, her frequent commutes from her family’s home in Toronto raised concerns about her presence in the office.

At her departure announcement, Musicco defended her approach, acknowledging resistance to change but highlighting the support she had received from her team.

CalPERS spokesperson John Myers noted that Musicco had the full backing of the pension board and staff leadership, attributing the criticism to a minority within the organization.

Despite these challenges, CalPERS posted a preliminary return of 5.8% for the year through June, though it ranked below 80% of its peers for the two fiscal years during Musicco’s tenure.

CalPERS faces multiple hurdles, including funding levels below target and the pressure to deliver a 6.8% return. Falling short could lead to increased financial burdens on municipalities across the state, affecting public services and the 2 million people, including police and firefighters, relying on the pension fund.

Musicco’s appointment as the second woman to lead CalPERS’ investment operations aimed to replicate the Canadian model of direct investments. However, the shift proved challenging due to budget constraints and salary differences between the US and Canada, making it harder to attract buyout professionals.

While Musicco aimed to modernize CalPERS’ investment office and push for bolder deals, her constant travel and high-profile appearances at sports events raised eyebrows among some staff, who questioned the blurred lines between personal and professional interests.

Ultimately, Musicco cited the difficulty of balancing work and family life as the reason for her resignation, adding to the string of short-lived CIO tenures at CalPERS, an institution known for its demanding and public-facing nature in the world of finance.

References

www.ocregister.com/2023/09/18/biggest-us-pensions-investment-boss-pushed-sports-deals-before-calling-it-quits/

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