Fantex

From Dan Primacks post Thursday June the 5th


*** Football finance: One of my favorite parts of spending time in New York is that all sorts of interesting people filter through the Fortune offices. Yesterday it was NFL star Vernon Davis, who this week “went public.” Or, to be more specific, a Fantex tracking stock bearing his name went public.

We’ve discussed Fantex before but, for the uninitiated, here is the basic summary: Fantex basically allows investors to bet on a pro athlete’s future earnings (both during and after his playing career). It creates tracking stocks that list via IPO, with most of the offering proceeds going to the athlete via a one-time up-front payment. The athlete is then required to give a predetermined percentage of future earnings to Fantex, which also manages a trading system on which shares can trade. For Davis, it was a $4 million payout for a 10% earnings cut. The offering closed in April, with Fantex yesterday announcing a 70% per share dividend.

Davis says that the opportunity was first presented to him via his agent, and believes that it is just another way for him to better ensure his financial future (he also owns a Jamba Juice, sports club and several other ventures). He adds that he’s heard several teammates discussing Fantex, but that he steered clear of those conversations so as to not violate any SEC rules. A few other notes from our conversation, which also included Fantex founder and CEO Buck French:

• Davis did not go on the road show itself. I’m not entirely clear why, but French suggested it relates to the fact that Davis isn’t actually a Fantex employee or representative. He is, essentially, the product.

• French says that the top geographic market for Davis share purchases was New York, followed by San Francisco. Suggests to me that some “real” investors are involved here, not just Bay Area parents buying stock for their 49ers-obsessed kids (kind of like that Boston Celtics stock my grandfather once purchased for me).

• French took issue with the notion that NFL players are a poor investment, due to short career spans. He says that the average career for a Pro Bowler like Davis is 11.7 years, while the average first-round pick (which Davis also was) has an average 9.4 year career. That said, it sounds a bit like golf may be the next sport Fantex gets involved with.






Fantex sure is an interesting idea, it will be interesting to see in the long run how many players they can get to sign up for this.




Cheers,
http://www.LiveFootballChat.com/Dean.Collins