Texans’ Star Arian Foster To Go Public
It’s Fantasy Football meets The Stock Market Game. Fans will soon be able to purchase stock in Houston Texans running back Arian Foster. Once Foster’s “brand” goes public, holders will be able to invest into his lifetime earning potential, including future contracts, endorsements and other revenue earned from his abilities, name and likeness. Shares will be offered by San Francisco’s Fantex Inc., which will pay Foster $10 million for a 20-percent stake in his future income.
If Foster’s career continues on its path to success, companies will likely hire him as an endorser, causing his stock to go up. Should he have a bad season, however, and loses endorsements, his stock’s value would likely drop. As fans buy and sell shares, Fantex – which includes NFL Hall-of-Famer John Elway on its board of directors – would take a commission.
“Fantex represents a powerful new opportunity for professional athletes, and I wish it were available during my playing days,” said Elway in the company’s press release announcing the Arian Foster IPO.
During the next two weeks, Fantex will take reservations, and shares of Foster could be on sale in as little as a month.
The success of Foster’s personal IPO, however, depends first on clearance from the Securities and Exchange Commission. Fantex filed documents Thursday to complete a $10 million IPO of Foster, and hopes to add other clients to its roster in the future. The stock would be traded through Fantex Brokerage Services’ website rather than a major stock exchange.
Fantex hopes to sell just more than 1 million shares at a fixed price of $10 each. Foster will receive $10 million in exchange for the 20-perent stake in his future “brand income.”
Is this a wise venture for fans? Purchasing stock in a player’s future income isn’t exactly the same as buying his sports card, after all. Foster, 27, has been injured before, and a career-ending injury could wreak havoc on his earning ability.
In fact, Fantex estimates it will need 75 percent of Foster’s total brand income from future NFL contracts and endorsements in order to earn a return on its investment, including deals Foster hasn’t even signed yet. According to Fantex, Foster, who is in just the second year of a five-year contract, would need to enter into at least one more multi-year contract at similar terms for the investment to pan out. And as football fans know, you just never know when it comes to a player’s career – a good reason why investing in a player may be best left to fans.
Of course, investing in an athlete isn’t a new concept. Stars such as boxer Sugar Ray Leonard and golfer Richard Beem have invited private investors to purchase stakes in their future incomes, and fans have invested in racing horses for centuries. But Foster will be the first professional athlete to go public.
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.”
Reservations over the next two weeks will indicate interest to Fantex, and pending SEC approval, Foster investors would receive shares on a pro rata basis.
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