Fantex Selling Stock in Andrew Heaney’s Future Earnings
Fans of Major League Baseball have long held an emotional investment in favorite players and teams, spending time and money on the sport and receiving widely varying emotional returns depending on results. If Fantex and Los Angeles Angels starter Andrew Heaney get their way, fans and investors will soon be able to invest in the future earnings of the Angels left-hander. Heaney and Fantex, a company that has previously struck similar deals with multiple NFL players, have agreed to a contract that will pay Heaney $3.34 million in exchange for “10 percent of all future earnings related to his brand, including player contracts, corporate endorsements and appearance fees,” according to Ken Rosenthal. A deal like this will attempt to provide pre-arbitration players like Heaney a form of insurance against future injury or a downgrade in performance without signing a team-friendly contract that keeps players from free agency. While this concept has been around for quite some time, in practice, these deals are still in their infancy and come with some drawbacks.
Almost two years ago, Fantex made news by announcing an agreement with star running back Arian Foster of the Houston Texans. The deal, similar to the one for Heaney, would have paid Foster $10 million in exchange for 20% of Foster’s future earnings. Before the parties could follow through on the deal, Foster was injured and the IPO never got off the ground. The deals with Fantex are subject to getting enough investors to pay for the initial guarantee to the players. For Heaney to get paid, enough investors must first meet the IPO amount, in this case $3.34 million.
In some ways, this model may look like a long-term version of daily fantasy games, where fans can put forth a relatively small sum of money in the hopes that a player will play well and provide a return on the money they have deposited. I spoke with Fantex co-founder and CEO Buck French about the potential comparisons and he was quick to refute them, stating that they do not consider themselves in the same market. “[Daily fantasy sports] is totally different. It’s not investing. Either you win or you lose… A single game outcome will determine whether you win or lose.” French cited a Wall Street Journal article stating that 1.3% of daily fantasy players win 91% of the profits in the first half of the MLB season. French said that, in Fantex, people “invest in future cash flow stream and collect dividends. They aren’t trying to beat out a whole bunch of people.”
