- Journal Archives
- Volume 16
- Volume 15
- Volume 14
- Volume 13
- Volume 12
- Volume 11
- Volume 10
- Volume 9
- Volume 8
- Volume 7
- Volume 6
- Volume 5
- Volume 4
- Volume 3
- Volume 2
- Volume 1
This week Fantex announced the newest public investment option made possible by the JOBS Act of 2012 [PDF]: stock in professional athletes. Arian Foster of the Houston Texans will be the first athlete to sell shares of his future earnings to the public. According to the Prospectus filed with the SEC on October 17, Fantex will offer 1,055,000 shares of “Fantex Series Arian Foster” at an initial price of $10 per share.
It is easy to understand why Fantex chose Foster the its first athlete stock series. At 27 years old, Foster is a three-time Pro Bowl running back with a broad fan base and several endorsement contracts. He has also begun to appear in other markets, like the television series Hawaii Five-O and upcoming movie Draft Day. Foster also seems like a stable investment: unlike other notable sports figures, he is not known for personal drama off the field.
Investment in athletes, often through management and promotional contracts, is not uncommon. The investor gives the athlete guidance or opportunities in exchange for a portion of the athlete’s income. In the past, the chance to invest in athlete has been limited to those with the money or power to develop direct access to him or her. But Fantex will change that by giving shareholders direct access to Foster’s income, right?
Not really. In fact, the price of the Foster stock will not be directly tied to his income, because shareholders will not really own a share of Foster. Instead they will own shares in Fantex, and Fantex will own a 20% interest in Foster’s future earnings. Shareholders will not even have collective control over the board of Fantex because the stock structure of the company vests 99% of the voting rights in a parent company. But shareholders can take some solace in the fact that the Fantex board has no more control over Foster than they do: Fantex cannot require Foster to “take any actions to attract or maintain or otherwise generate brand income.”
These details are not spelled out when a potential purchaser clicks “sign up for Fantex” with the intention of purchasing Foster stock. To their credit, Fantex does state that it “is not a direct investment in that athlete or brand contract” in the stock description. But that does not alleviate the concern that inexperienced investors will purchase Foster stock based simply on name recognition without understanding the risks.
The Foster stock’s initial public offering will demonstrate some of the concerns with the JOBS Act of 2012: reduced information for investors and the allowance of general advertising and solicitation. But it also highlights one of the Act’s goals: to give small investors access to more diverse investment options. Without many other test cases, the success of the JOBS Act may be measured in part by the performance of the Foster stock. We just have to wait and see.
Recent Blog Posts
- Controlling the Uncontrollable: UK Taking the Driver’s Seat in Driverless Car Technology
- Obama’s Cybersecurity Executive Order: Private Sector Must Help Police the “Wild West”
- Qualcomm Settlement May Reconfigure the Smartphone Market in China
- Who Rightfully Owns the Village People’s YMCA?
- Internet Elections Regulation: Another Pie in the Partisan Food Fight?
- Great Artists Steal? A Music Theory Thought Experiment & a Worry about the Litigation of Popular Music
Tagsadvertising antitrust Apple books career celebrities contracts copyright copyright infringement courts creative content criminal law entertainment Facebook FCC film/television financial First Amendment games Google government intellectual property internet JETLaw journalism lawsuits legislation media medicine Monday Morning JETLawg music NFL patents privacy progress publicity rights radio social networking sports Supreme Court of the United States (SCOTUS) technology telecommunications trademarks Twitter U.S. Constitution