Millions of people across the world complain about how much professional athletes make on a daily basis. The average person has a hard time fathoming how someone could get paid $20 million a year to hit a baseball or shoot a basketball. Why can’t we have some of that money? That’s how a lot of people think, and thanks to Houston Texans running back Arian Foster that could soon be possible.
According to ESPN.com’s Darren Rovell, a company called Fantex Brokerage Services announced on Thursday that it is planning to create an opportunity where fans can invest in stock that is directly related to the performance of a professional athlete’s brand. The first athlete that the public will be able to buy stock in is Foster.
Foster has reportedly agreed to a deal with Fantex where the company pays him $10 million in exchange for a 20% stake in his future income — both on and off the field. Fans who buy stock in Foster will be investing in his business value. As we know, athletes who perform well on the field are more likely to profit from endorsements and other business opportunities. Should that happen with Foster, for example, his stock might go up. If he somehow became an ineffective player and lost his starting job, the opposite might happen.
“Fantex is bringing sports and business together in a way never previously thought possible,” company CEO Buck French told ESPN 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.”
Fantex will pay Foster $10 million now and can collect 20% of his earnings going forward. The company is currently taking reservations and could be selling Foster stock publicly by next month.
This obviously raises a ton of questions that only a financial expert could answer adequately. Will athletes be willing to give up a portion of their future income early in their careers, essentially making them the equivalent of a start-up company? As French pointed out to Rovell, some athletes would even be a good investment later in their careers because of post-retirement business ventures and endorsements. Brett Favre and Wrangler come to mind.
We expect to hear much more about this in the coming months.Google+