When wearing your favorite pro athletes' jersey just isn't enough, you put your money where your mouth is and invest in their brand ... right? At least, that's what a new publicly traded security would allow you to do.
A company tied to contracts with multiple professional athletes filed for initial public offering (IPO) Monday, according to San Francisco-based brand-building company, Fantex. The stock, listed on the NASDAQ as "FXSP," would allow holders to invest in the earnings of 10 football and baseball players at a "variety of career stages."
Here's how it works: Fantex selects an athlete based on his or her athletic performance, appearance, history and personal story, and overall public image, including social media.
It then generates cash flow through a minority stake of athletes' contracts, endorsements and appearance fees, as well as potential "post-career activities" such as broadcasting, it said. Fantex helps athletes make more money through "mentoring and network/audience development," according to the IPO filing.
The new stock is a weighted portfolio of 10 "tracking stocks," one for each athlete.
"By bundling multiple tracking stocks into a single, NASDAQ-listed security, we believe Fantex is providing the next evolution for those looking to invest in the business of professional sports," CEO and co-founder Buck French said in a statement.
So far, the stock follows the future earnings of nine NFL players, including St. Louis Rams' Michael Brockers, Denver Broncos' Vernon Davis, Tennessee Titans' Kendall Wright, Dallas Cowboys' Terrance Williams, Chicago Bears' Alshon Jeffery, Buffalo Bills' EJ Manuel, Indianapolis Colts' Jack Mewhort, Cincinnati Bengals' Mohamed Sanu, and Pittsburgh Steelers player Ryan Shazier. It also includes MLB player Andrew Heaney of the Los Angeles Angels of Anaheim.
The IPO filing details the terms of the contracts given to each athlete by Fantex, which typically entitle the company to 10 percent or more of the athlete's earnings after a certain date in exchange for a one-time cash payout of around $3-5 million.
For the years ended Dec. 31, 2014, and 2013, Fantex reported a net loss of approximately $6.3 million and $3.6 million, respectively, the filing said. Fantex is proposing an aggregate offering price of almost $29.5 million from the IPO, according to a prospectus filed with the SEC.