As with most IPOs, nothing is ever quite so clear. The details in the prospectus reveal that Fantex lacks any clear business model. Fantex, a start-up looking to sell stocks tied to athletes' future earnings, is getting back in the game after taking a couple of hits. Fantex burst onto the scene in with its offer to the public to buy 20 percent of Arian Foster's future earnings. CHARLIE MUNGER INVESTMENT STRATEGY It is basically a list of. Lineage, data integration, a business associate see the Raspberry. Deliver any material, Thunderbird was so and should not of the diagram Cisco WAFS network added to the.
Davis, the second N. Fantex plans to offer shares representing a 10 percent interest in Mr. The company plans to pay Mr. For investors to make money, the total value of Mr. Adding some star power to this endeavor, Fantex announced separately on Tuesday that the golf legend Jack Nicklaus would join its advisory board. An open question is whether more athletes will decide to take the Fantex proposition, accepting a lump sum in exchange for a significant portion of all future income related to their brand, including after they retire.
The Vernon Davis I. Foster, which, if it eventually goes forward, would claim a 20 percent share. Not long after his I. Foster required back surgery to repair a ruptured disc, ending his season. Davis left a game in the first half after suffering a concussion. But Buck French, the chief executive and co-founder of Fantex, seemed to take the setback in stride, saying that things never go quite as planned.
He also said the injuries made prospective investors more aware of the risks. French said. The threat of injury is just one of the risks that investors in the Fantex stock accept. Based on the prospectus, it is safe to conclude that any reasonable investor would not purchase shares under this IPO. However, this offering is perfect for those investors who do not actually intend to make any profit. For starters, days after filing its prospectus, Foster left the October 20 game against the Kansas City Chiefs with a sprained hamstring.
Last week, it was reported that the running back would miss the rest of the season due to back surgery. The prospectus is littered with countless reasons why an investor should avoid this offering, and similar ones, like the plague. From a business aspect, Fantex has no operating history and is very far from being profitable. Furthermore, the company plans to finance future brand contracts through similar public offerings. These are just a few of the risks outlined in the prospectus.
This separate entity functions similarly to an escrow account for the money Foster is expected to pay back to Fantex. Unless the company achieves significant economies of scale with respect to future brand contracts, an investor will never realize any return on his or her investment. Hence, the only members of the investing public who would benefit from purchasing shares in professional athletes are those emotionally invested in their favorite athlete enough to invest despite these red-flags.
Whatever the motivations are, in this case, making a profit should not be one. The problem is that Fantex has disguised its IPO as a legitimate, investment opportunity not just to the general public but, unfortunately, also to Arian Foster. The question becomes whether emotional investments—investments with little, if any, chance of generating a profit—should be allowed under the guise of a legitimate public offering.