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Fantex: selling shares of athletes' future earnings

Do Not Sell My Personal Information

natedagg

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www.fantex.com

Some of you have probably heard of this, but I didn't. The idea is that you buy rights to part of an athlete's future earnings. The best way to understand it is to fish around the website for a few minutes.

Looking at the Arian Foster IPO - he's young, and although running backs have a short NFL lifespan, he has seen time in front of the camera. It would be fun to see some research in this thread regarding his contracts and exclusions. At least by the time I have to make the decision to buy, we can see how Vernon Davis is trading, so if this is a total flop, it'll be easy to diagnose before dollars are invested. I figure at least the dude is young, and if he has more football-related TV/Movie rolls, the dollars could be flowing for years to come. If the first IPO goes well, then the Arian Foster IPO could be really easy money, just flipping the initial investment day of...

Here's a useful article to get the 10,000 foot view of the concept: http://dealbook.nytimes.com/2014/01...ball-player-i-p-o/?_php=true&_type=blogs&_r=0

And here's Arian's prospectus: https://fantex.com/fantex-arian-foster-266729/brand-contract

This is fraught with risk, including me not knowing how the heck this really works, but it's a fun discussion to have, so hopefully this thread gets some traction.
 
So it's a modern day slave trade fighter evaluation from the old days? Where you "buy" stock in predominately black athletes? Django Unchained style?

Got it.
 
Fuck off IKWT. I've been trying to buy black people for years. Finally. I can OWN someone.
 
IKWT, slave trading would be someone else selling Foster's rights to future earnings of his work. This is Foster selling a percentage of his future earnings.

Think of it as the off the field version of Jason Kipnis signing a contract that gets him more money in years 3-6 without arbitration hearings and buys out a year of free agency in exchange for security. If he blew out his MCL and ACL before spring training this year, he wouldn't have received his new contract. He might have left $10-15 million on the table through arbitration if he had stellar years, but he also has a guaranteed $30+ million if he blew out his knee tomorrow.

The athlete is selling a portion of his potential future sports contracts and revenues off the court/diamond/field for a guaranteed payout. Established NFL players are known commodities, so there is less risk for Fantex to show viability of their product, A good "beta" test. It would be interesting if someone like Manziel would go in on it, or a high upside MLB draftee power pitcher/hitter who is 18 or 19 or freshman coming out for the NBA draft who is a low lottery pick. Think of it as a mid cap investment versus an internet IPO or penny stock.

I could see Scott Boras getting in on this to steer MLB draft prospects. Imagine if Boras tells a phenom (Bryce Harper-like) to threaten to hold out if picked by the Astros and go back in the draft next year (so he could drop and go to the Red Sox a few picks later) or he will negotiate a 10% contract for that player with Fantex for $2 million for the player to hold out if the Astros pick him. Fantex issues 210,000 shares of the draftee's stock at $10 a share. Boras gets $200k to showcase the kid for a year, the kid gets $1.8 million and MLB's draft rules get circumvented again until the leagues make a rule regarding these types of side contracts. MLB prospects are higher risk, but that would be an interesting scenario to decide to invest in a MLB draftee.
 
I'm fairly certain the Foster IPO was pulled late last fall, but I'm too lazy to Google it.
 
I'm doubting agents and insiders would be able to buy or sell
 
Foster's was pulled due to his injury. Expect his to be the second one issued.
 
What's Vernon Davis' starting price?
 
So you can't buy prospects? Only proven players and you're basing it on their off the field marketability?
 
So you can't buy prospects? Only proven players and you're basing it on their off the field marketability?

Right now it appears that way, I think it's still in the very first stages. Imagine if you would have been able to buy into LeBron, Tebow or even John Paul Football.
 

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