Investing in Pro Athletes


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Investing in anything can be a gamble especially when the ability to turn a profit on that initial investment of your hard earned money is questionable at first glance. The concept of investing in professional athletes is not a new concept but is for the first time in history becoming a reality. Fantex Holdings announced yesterday that it would introduce the first ever sale of the San Francisco 49ers tight end Vernon Davis, would go on sale Monday April 28th. This will be the first time athletes will be able to sell stock on their personal brands, branching investing into a whole new realm.

How does one invest in a Pro Athlete?investing in pro athletes

Starting Monday, April 28th Vernon Davis will be selling stock, in himself. The National Football League owns the rights to his likeness when it comes to advertising for the NFL and NFL related fundraisers. Davis is essentially selling off shares of his personal worth to investors that are interested in buying shares that will be sold off at $10 dollars per share. While the shock of this pending transaction is still fresh in our minds, it is important to see this investment as a potentially explosive money making opportunity. The overall worth of these professional athletes isn’t any different than if a company offering a product or service, was looking to sell off shares of ownership in order to gain capital.

Vernon Davis was a sixth overall pick in 2006 and signed a five year extension contract with the 49ers in 2010. He has been named to the Pro Bowl twice during his eight season tenure in the NFL. Davis’ success isn’t only limited to the football field, he is also the owner of an art gallery and a Jamba Juice franchise. Fantex Holdings is currently holding Davis’ IPO and offering to sell 421,000 shares pending the approval by the Securities and Exchange Commission.

Will it work? Can it work?

Fantex thinks it can work. To the holdings company and the investors behind it, this move is the next natural progression from the already widely popular fantasy football leagues. Investors will be able to purchase their shares of these pro athletes only through a closed exchange on fantex.com. Investors then are claiming a financial stake in the success of an individual’s branded income which is not limited to endorsement money either during or after the professional career, team contracts, or anything related to the brand name or image of the athlete. Earlier in the month prior to the Vernon Davis announcement, Fantex had endorsed the same deal when it signed Arian Foster into the program. Foster, the running back for the Houston Texans IPO will offer 1.06 million shares also selling at $10 dollars per share.

investing in pro athletesFantex is 100 percent behind allowing investors to be able to invest in the brand image of pro athletes. Fantex’s CEO Buck French told Forbes.com, “If there are any shares left outstanding, then Fantex Holdings will take over whatever the delta is…We are happy to put our money where our mouth is.”

If successful, Fosters deal will guarantee him $10 million dollars and in turn Fantex will get 20% of his future earnings. Davis’ deal is slightly smaller, granting him $4 million dollars up front and giving Fantex 10% of his future earnings. The way this whole concept works is all dependent upon its success. The key to these shares gaining worth comes from their ability to gain momentum by creating residual income for all investors involved.

 

 

How does Brand Image Ownership work?

According to the holdings company, once an investor buys even a single share of a branded image of a pro athlete they own the share until or even after the athletes career. Hypothetically one can continue to own the rights to profiting off of an athlete’s branded image well beyond his or her career, even beyond their death. Buck French’s thinking on the matter is that certain athletes who achieve sports related infamy will be able to generate income well past their lives. For example take Babe Ruth, well beyond his lifetime any type of signed memorabilia continues to generate massive amounts of income. Those that own the rights to his name, fortune, or estate are the ones that will continually bank of his former greatness. According to Fantex, the same can happen now by opening up the availability of ownership when it comes to a pro athlete’s branded image.

Anytime one comes upon a new form of investing there are always reservations, but there is a difference between cautious investing and conservative investing. When it comes to investing in pro athletes, one can remain cautious and still venture out into the unknown without ruining themselves financially. It will be interesting to see where Fantex goes with this type of brand image IPO sell off and how the next evolutionary stage of fantasy football takes off as well as how it branches into other sports.

 

 

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