Fans who bought shares of ultimately worthless stock in the Green Bay Packers can soon devote their discretionary income to something that actually could carry a return on their investment.
According to the Associated Press, a new company plans to sell stock for a future stake in the earnings of pro athletes.
The first major player to strike a deal with Fantex is Texans running back Arian Foster, who will get $10 million in exchange for 20 percent of his future football earnings and all other income generated by his football career, including broadcasting jobs. (I wonder what Dick Vitale would call that arrangement?)
Fantex hopes to sell one million shares of Arian Foster at $10 apiece in order to raise the money necessary to pay Foster. The shares then will be bought and sold on a trading platform created by Fantex.
Fantex presumably will make money on the transactions, as well as any shares it decides to hold in certain players if Fantex believes that they bought a stake in the player’s rights at a favorable rate.
For the player, it’s basically a loan that could, in theory, be repaid multiple times over, based on the quality and longevity of the player’s career. For those who play in the NFL for a decade and then spend 25 years in broadcasting or coaching, 20 percent of all earnings will be evaporating years after the money received up front has been spent.
But it’s also an insurance policy of sorts, paid in advance, for players who could see their careers evaporate quickly due to injury, scandal, or ineffectiveness.
The reality is that, for each transaction, chances are someone will be getting screwed. Either the player will end up paying back way too much money over time, or the investors will bank on someone who ends up being a bust — or who decides to retire sooner than everyone anticipated. (And Foster seems like a player who could be inclined to follow in the footsteps of men like Jim Brown, Barry Sanders, and Robert Smith, each of whom walked away with gas in the tank.)
Making the situation even more odd is that Broncos executive V.P. of football operations is a member of Fantex’s parent company, Fantex Holdings. Which opens a potential can of worms for the league office, given that Fantex will be acquiring a financial stake in the careers of men who play for other teams.
So while we’ve given Fantex a little free advertising by writing about this unusual proposition, there’s something about it that makes me very uncomfortable.
Enhancing the potential for discomfort is the question of whether the approach can or should apply to college athletes. If they can buy insurance against career-ending or career-limiting injuries while in school, why shouldn’t they be able to sell a chunk of their perceived future value now in order to bank some of the money they’ll eventually make?
Whether or not it’s permitted in college, look for plenty of players to sell their rights at a young age in exchange for an accelerated payday — and then to spend the next 15 to 20 years (or more) regretting an impulsive decision made in order to get rich more quickly.