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Buying Stock in an Athlete

By: CNN
By: CNN

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You can buy a stock that tracks a company and its earnings, so why not do the same with a star athlete?

A brand building company, Fantex Holdings, just filed with regulators to offer a new tracking stock: Arian Foster Convertible. That's a person. Arian foster is the pro bowl running back who plays for the Houston Texans and he's the first athlete to sign.

But wait a minute - stock in an athlete? How in the world would that work?

Simply put, the math works out like this: Foster gets a lump sum payment of $10 million. The investor gets 20% of future income derived from league contracts, endorsements, and appearance fees. Now the stock price is tied to the player's brand, and it will be up to Fantex to help build that brand.

The idea of buying into a "star" isn't new. In the late 1990's "Bowie Bonds" were created. They paid interest on revenues from a collection of 25 albums by the rock legend David Bowie.
But football is a contact sport. That means injuries could derail a players’ potential, which would certainly block a lucrative future in brand building. Risk is part of the game for investors interested in buying an athlete. For the player, this is a way to diversify and get some big money up front. Now Fantex is hoping to develop the business by signing additional players in football and even other sports. The company even has its sights on pop singers and Hollywood actors down the road.


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