Darren Rovell | ESPN.com
For years, private investors have quietly backed up-and-coming boxers, tennis players, horses and golfers, but now the public is getting a chance to really own a piece of an athlete.
On Thursday, a company called Fantex Brokerage Services announced its intention to allow fans to invest in stock related to the performance of an athlete’s brand.
The company said its initial public offering will be for Houston Texans running back Arian Foster. Fantex is paying Foster $10 million for a 20 percent stake in his future income, including contracts, endorsements and other related business revenue. The company will begin taking reservations in the next two weeks and could be selling shares of Foster in as soon as a month depending on demand and progress with the Securities & Exchange Commission.
It’s much like fantasy sports, except fans will be trading on Foster’s business value. If he does well on the field and companies become more interested in Foster as an endorser, his stock might go up. Fans can then buy and sell shares, with Fantex taking a commission. The company says it is hoping to acquire a future stake in athletes but does not have any other deals finalized at this time.
“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.”
French told ESPN.com that the company would collect 20 percent of what Foster makes going forward, including money made from the five-year contract with the Texans he signed last season that guaranteed him $20.7 million. Foster also will make money on his endorsement deals with Under Armour and Fuse Science, and he recently acquired a stake in chia bar company Health Warrior.
Some think that Fantex’s success could depend on how many athletes are willing to give up a piece of their future income as well as how early in a career Fantex can secure a deal. French disagrees with the latter, saying there are some athletes that would be good to invest in in their post-career businesses.
Athletes who have had investors buy a stake in their future income include boxer Sugar Ray Leonard and golfer Rich Beem. The most famous investors in horse racing are likely the group of every-day people who owned Funny Cide, which won the 2003 Kentucky Derby and Preakness.
- ESPN.com’s sports business reporter since 2012; previously at ESPN from 2000-06
- Appears on SportsCenter, ESPN Radio, ESPN.com and with ABC News
- Formerly worked as analyst at CNBC