As of Monday, Vernon Davis becomes a commodity. Literally.
Per multiple reports, Fantex will open the market for trading Vernon Davis shares on Monday. This means that 421,000 “shares” of stock in the 49ers tight end have been sold, at $10 each. It also means that Davis will receive $4 million in exchange for 10 percent of all future football-related earnings.
Whether the price goes up (it may) or down (inevitably, it will), Fantex makes money by facilitating the transactions.
Jake Mann of The Motley Fool recently looked at whether it makes sense to “invest” in the 30-year-old Pro Bowler. Mann’s lukewarm-at-best assessment assumes Davis will make $7 million per year through age 37, which as anyone who understands the economics of aging non-franchise quarterbacks knows is a stretch.
We continue to be uncomfortable with the entire process. Every athlete has a shelf life, which means that a group of investors inevitably will end up buying something that at some point becomes worthless.
The players could end up regretting the short-term influx of cash, too, via consequences ranging from lawsuits brought by investors who lose money to tax evasion charges arising from efforts to shield future income (from, for example, autograph signings) from the Fantex umbrella.