Have you ever played fantasy football? You know the exhilaration you get when one of your players scores a big touchdown? Have you ever thought to yourself “Wow, wouldn’t it be great if I literally owned a piece of that person in real life.”
If you answered “No. That sounds sociopathic”, well maybe you don’t love capitalism enough, commie. But if you answered YES, then there is an investment opportunity out there for you. It is called Fantex, a new marketplace where you can purchase and sell stock related to the business performance of an athlete.
On Thursday, Fantex Brokerage Services announced its intention to allow fans to invest in stock related to the performance of an athlete’s brand.
The company said its initial public offering will be for Houston Texans running back Arian Foster. Fantex is paying Foster $10 million for a 20 percent stake in his future income, including contracts, endorsements and other related business revenue. The company will begin taking reservations in the next two weeks and could be selling shares of Foster in as soon as a month depending on demand and progress with the Securities and Exchange Commission.
It’s much like fantasy sports, except fans will be trading on Foster’s business value. If he does well on the field and companies become more interested in Foster as an endorser, his stock might go up. Fans can then buy and sell shares, with Fantex taking a commission.
Haha, no it’s nothing like fantasy sports. If this all sounds a little shady, rest assured it’s got the backing of some of Wall Street and Silicon Valley’s best and brightest. So you know it’s legit. Plus, the initial public offering won’t be restricted to high-net worth individuals:
Unlike many esoteric Wall Street investments that are available only to so-called high-net-worth individuals, the Fantex offering is available to United States residents 18 years and older, with a minimum investment of $10. There are some restrictions. For instance, investors with annual incomes of $50,000 to $100,000 may only invest up to $7,500 in the offering. Individual state securities laws might also place further limits and who can invest, Mr. French said.
Fantex will market the Foster I.P.O. in the coming weeks, offering 1.06 million shares at $10 a share. No one can own more than 1 percent of the offering, ensuring that it is available to a wide number of investors. If demand is less than the number of shares being offered, Fantex may cancel the deal.
But if it proves successful, Mr. Foster’s tracking stock will then trade exclusively on an exchange operated by Fantex. Presumably, the tracking stock will increase in value if Mr. Foster raises his earnings potential with standout on-the-field performance or increased corporate sponsorships. Then, the investor can try to sell his shares at a higher price. Fantex will make a 1 percent commission from both the buyer and seller on the trades.
This author is no financial expert (and may be slightly skeptical due to the whole “crashed the world economy” thing from a few years ago), but none of this seems like a great deal. Not for Arian Foster. Not for your average joe sports fan. Certainly not those of us who are squeamish at the idea of publicly purchasing a share of a human. Ultimately, the Fantex marketplace sounds like a highly speculative, volatile business venture best suited for someone who has extra cash to burn. Or as their marketing materials states: “Investing in a Fantex Inc. tracking stock should only be considered by persons who can afford the loss of their entire investment.”
In other words, a perfect fit for the Wall Street crowd.
