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SBD/October 17, 2013/FinancePrint All
S.F.-based sports technology startup Fantex this morning filed an S-1 with the SEC to conduct an IPO. The company has struck a deal with Texans RB Arian Foster in which it will pay Foster $10M for a 20% interest in his future brand income, defined as his future football-related earnings on and off the field. Fantex will then create a publicly traded tracking stock linked to Fantex' investment in that minority interest. The concept, in effect a real-world version of stock-oriented fantasy games such as the former ProTrade, also bears some similarity to other celebrity securities such as the "Bowie Bonds" from rock star David Bowie. Such celebrity-oriented financial structures have had a checkered history, but Fantex execs said the latest venture will help unlock additional economic value around athletes. The company is in talks to have other players besides Foster join the venture. "We think there will be a lot of interest in fans wanting to invest in an athlete's brand, and it's all real," said Fantex co-Founder & CEO Buck French. The planned IPO is for $10.55M. Fantex struck the Foster deal with his business manager, Humble Lukanga. Fantex, which raised $13M in venture funding earlier this year, has Pro Football HOFer and Broncos Exec VP/Football Operations John Elway and former NBAer Kerry Kittles among its board members and advisors (Eric Fisher, Staff Writer).
IPO COMING IN NEAR FUTURE: In N.Y., Lattman & Eder report Fantex will market the Foster IPO "in the coming weeks, offering 1.06 million shares at $10 a share." No single person can own more than 1%, "ensuring that it's available to a number of investors." If the demand is "less than the number of shares being offered, Fantex may cancel the deal." However, if it is successful, Foster's tracking stock "will then trade exclusively on an exchange operated by Fantex." The stock likely will increase in value if Foster "raises his earnings potential with standout on-the-field performance or increased corporate sponsorships." Fantex will make a 1% commission "from both the buyer and seller" on stock trades. It is unknown what the NFL or other pro leagues "will think of Fantex." French said that while the company "had discussed its business model with the NFL players' union, it has not spoken with league officials." He added that Fantex believes the NFL "has no say over whether a player can sell a stake in his brand to outside investors." Lattman & Eder note it is not known if there are "other athletes on the sidelines awaiting their turn at an IPO" (NYTIMES.com, 10/17).