Houston Texans running back Arian Foster is the first athlete to offer an IPO of himself through Fantex Holdings. (Jeff Gross/Getty Images)
A new company will launch an online marketplace on Thursday that will offer investors an opportunity to purchase shares of a professional athlete that fluctuate based on the value and performance of his or her brand, including such factors as playing contract, endorsements and appearance fees.
According to a report from the New York Times, Fantex Holdings will kick off its venture with an IPO for a minority stake in Houston Texans Pro Bowler Arian Foster. The offering for the 27-year-old running back is valued at approximately $10.5 million, which represents a 20 percent interest in his "future brand income," according to the report. Foster will receive $10 million and the rest will go toward the cost of the actual deal. His IPO will be marketed in the coming weeks, according to the report, with Fantex offering 1.06 million shares at $10 per share.
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Fantex co-founder and Chief Executive Officer Buck French, a graduate of West Point and Harvard Business School, said at a certain point, the company will look to expand to include IPOs for Hollywood actors and pop singers. He called Foster "a unique, multidimensional individual, a trailblazer" for his commitment to the venture. For now, French told the New York Times that it's an innovative way to bridge sports with business:
“Fantex is bringing sports and business together in a way never previously thought possible. We have built a powerful platform to help build the brands of athletes and celebrities.”
Fantex, which is backed by several Wall Street executives, makes its offerings available only to U.S. residents 18 years of age or older. The minimum investment is $50 but there are some restrictions; people with an annual income of $50,000 to $100,000 may only invest up to $7,500 in any given IPO, for example. Also, at least for the Foster IPO, no one can own more than 1 percent of the offering. If the demand does not meet the number of shares being offered, the deal could be cancelled. The investor can ultimately sell the stock at a higher price, but Fantex will take a 1 percent commission from both the buyer and seller of the deal.
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French said the idea was first conceived more than a decade ago by his co-founder, David Bernie, when he backed MVP.com, a sports e-commerce venture. French said he's directly discussed the venture with the NFLPA but has not been in contact with league executives. In his opinion, however, the league has no leverage over whether its players can sell a stake in his brand to outside investors.
French said the company currently has no plans to hold annual meetings or quarterly conference calls between one of its athletes and its stockholders to discuss, for example, how a player is progressing with the rehabbing of an injury.
"The offering is highly speculative and the securities involve a high degree of risk,” Fantex says in its marketing materials.SI Wire: Report: Less than 10 percent of NFL pink merchandise sales go toward cancer research