http://dealbook.nytimes.com/2013/10/17/want-a-piece-of-a-star-athlete-now-you-really-can-buy-one/ I found the article interesting...Arian is getting about 10 million out of this and this investment deal may expand to others in the public eye...not just pro players...does this make sense? Btw , the video inside the link is pretty inspirational for Foster but can this catch on?
Wow. That is pretty cool. This would be my concern. Not that athletes tend to have tremendous foresight, but I'm not sure how players' agents get in on this. I imagine if they aren't making something off it too, they will steer their players away from it.
I can't find an explanation of how this works. Do you get paid dividends over time as the athlete makes money? It seems like all these stocks would go to $0 over time whenever the player retires, no?
Yeah that's the part I didn't get. Players can still have endorsements and be brand ambassadors post retirement though. And there is always the media route that some are able to succeed at, but those are few and far between.
Wait a minute, wait, wait... so Arian Foster didn't get paid enough at U of Tennessee he has to now do this?
Foster gets $10,000,000 up front, but he is also giving up 20% of future earnings, including his current contract.
Given the lifespan of running backs, it seems hard to imagine him making another $50 million, even with endorsements - but who knows. Seems like a pretty good deal for him.
i would have zero interest in investing in the future potential of a football player. Other than a QB, their careers are notoriously short, injury-prone, non-guaranteed contracts and so forth. I'd be more apt to consider a basketball player or baseball player over an NFL player..case in point, Arian only has 1 TD this season and last year was the league leader in TDs scored (so his value would presumably drop). I believe the way it works is players receive a lump sum based on earnings potential and the 'shareholders' are paid dividends via future opportunities. So the player would have to give up a signficant portion of future earnings. To me the problems are, very few players have longevity with their 'brand' and many could get over-exposed too fast and wear out their market. Also, I wonder what the % are because what is the incentive for a player to keep finding endorsement deals when a significant portion has to go to the shareholders? Why not just quit when you are ahead since there it seems like the funds are guaranteed and future earnings would be shared by a larger pool of people. Also do agents lose their cut? And finally, the fallacy of an individual brands is, once their 'star'-appeal stops shining, the brand is pretty much dead. Once a player is no longer active then his endorsements pretty much drop to zero. I suppose they can still profit doing tv, etc. but those deals aren't worth a lot. Unless the "Player IPO" inlcludes ownership of investments the player makes, for example 50 cent and Vitamin water, or their sneaker brand or something, then it is questinonable what long-term value a player has. I can only see very few players having this kind of long-term longevity. I mean shoot, the Michael Jordan cologne never worked, so even with top names, there are still a lot of uncertainties.
Agreed. $10,000,000 guaranteed would be hard to pass up. It just didn't seem clear in the posted article that Foster was giving up anything.
But in theory, all of this information is known by the market - so investing in the NFL player would be cheaper specifically because of that risk and limited lifespan. This would be logical, but the site seems to imply otherwise. But I can't tell what it's implying: Holders of shares of a tracking stock will have no direct investment in the business or assets attributed to the brand contract, associated brand or athlete. Rather an investment in a tracking stock will represent an ownership interest in Fantex, Inc. as a whole. The player only gives up 20% of their earnings, so there's still incentive to earn because they keep the other 80%. I think that part is well designed. Agreed - but the site lists what contracts are included. For Arian Foster: INCLUDED CONTRACTS COUNTERPARTY TYPE OF CONTRACT PRODUCT CATEGORY Houston Texans NFL Player Contract N/A Under Armour, Inc. Endorsement Retail Clothing and Equipment Kroger Texas LP Endorsement Grocery ProCamps, Ltd. Endorsement Sports Camps Gamebreaker Sports LLC Endorsement Sports Memorabilia Health Warrior, Inc. Endorsement Superfoods Saatchi and Saatchi North America, Inc. Commercial Automotive Pro Player Merch LLC Licensed Apparel Retail Clothing and Equipment First Pick Productions LLC Performer Daily Contract (Acting) N/A
It seems to me this is a big scam designed as an investment. Fantex pays $10 million to Arian Foster. Fantex sells $10,550,000 million of "shares" to the public. Those shares are traded back and forth with people making money off each other but ultimately those investors lose the full $10,550,000 as the shares eventually go to $0 when Foster is irrelevant. Net result: Arian Foster gets $10 million in exchange for 20% of his income. Fantex keeps the $550,000 they netted above plus 20% of Foster's income. Investors, in total, lose $10,550,000 - though individual ones will make money. Disclaimer: I have no idea if I'm understanding this correctly, but that's what I'm gathering from looking at the site.
If this is accurate, it's too bad. Because the idea of an athlete guaranteeing their salary and fans/investors taking on the risk is actually a pretty brilliant idea that's a win-win for everyone. But it would require Fantex distributing their 20% of Foster's salary to the owners of the shares and making their money off that initial spread of what they pay the athlete and how much they IPO the shares for.
I just rolled all of my savings and 401k into this. My retirement and the future well being of my family is now intertwined with the future success of Arian Foster. I've been rolling with my current sig since day one here on CF, now I'm rolling with Arian for the rest of my life. Make me smile Arian, make me smile.
people will equate fandom with investing. I think they're banking on the fact that the average football fan is an idiot. Kudos to Arian tho- think he made a lot of easy money.
Investors will receive dividends (20% of Foster's earnings). I agree that as an investment, very unlikely the investors come out on top, but the people doing this probably a)knowingly overpaid to get a probowl player to sign on and b)are banking on people wanting this stock just to be associated with the athlete. Similar to Packers stock, which is non-transferable, and technically worthless.
Are you sure about this? If so, I think it's a GREAT platform. But the website says this: Holders of shares of a tracking stock will have no direct investment in the business or assets attributed to the brand contract, associated brand or athlete. Rather an investment in a tracking stock will represent an ownership interest in Fantex, Inc. as a whole. That seems to imply no dividends. You're just getting a stock that tracks his brand value and somehow an ownership in Fantex (which I don't understand), rather than ownership of his actual income stream.
I'm pretty sure you will receive 20% of that player's earnings in some form or fashion (less fees). Edit: Fantex, Inc. will typically attribute 95% of the acquired brand income under the brand contract to the tracking stock. I take that to mean you can expect to receive about 95% of the 20%.
