Start-up Fantex To Sell Stock In Professional Athletes, Sort Of
If you’ve ever wanted to invest in the future earning potential of a professional athlete, say hello to Fantex, a San Francisco start-up that is offering shares in an IPO named after Houston Texans running back Arian Foster. To kick start the new company, Fantex paid Foster $10 million, in exchange for a 20% share of Foster’s future earnings on and off the field for the rest of his life. Fantex is banking on Foster having a huge upside and will work with the player to enhance the value of his “brand.” To recoup its investment, Fantex is banking on football fans and other investors who want a piece of the action.
It’s a simple idea, in theory, and makes you wonder why it’s never been tried before. Well, it turns out that a simple idea in theory is quite complicated in execution, and carries substantial risks for all parties. It also turns out that something similar has been tried before, and failed.