Fantex Brokerage Services announced a deal Thursday with Arian Foster that would allow the company to sell shares of stock in the Texans’ running back.
“Fantex is bringing sports and business together in a way never previously thought possible,” CEO Buck French said in a statement. “By building a marketplace that allows customers to buy shares in a tracking stock linked to the value and performance of an athlete’s brand, Fantex is enabling a new level of brand advocacy through ownership.”
Fantex is paying Foster $10 million in return for a 20% stake in his future earnings on and off the field. As Foster’s business value increases, including endorsements, contracts, and other business ventures, so will the stock. Inversely, if earned monies from those things were to decline, so will the share’s value.
There’s something about treating a person as a commodity that doesn’t sit well with me, but for now I am going to address this new venture from the aspect of the licensed investment professional that I am.
Privately, investors have been financially backing athletes, most often young boxers, for a long time. (Although you can make an argument that agents who funnel money to top college athletes have been doing this for years, but I digress…)
The general rule of thumb when buying stock is to buy low and sell high. Arian Foster is at the peak of his career (although some would say he‘s past it), meaning his earning potential would not be as much as say an, Andrew Wiggins, who although is expected to make millions, has not done anything yet and whose future is not guaranteed. The key to this will be the company’s ability to get young athletes to share their revenue, and I don’t expect too many young promising players with good advisors to agree to something like this. Plus, one injury, concussion, or run-in with the law and a player’s value can quickly diminish. There are just too many intangibles. It sounds like an interesting concept, but I don’t expect it will become wildly popular or lucrative.
The company will be taking reservations from interested investors in the next two weeks and may be selling shares within a month. The initial asking price is expected to be near $10 a share.