San Francisco 49ers tight end Vernon Davis continues to expand his potential business opportunities as he is now selling stock in himself. Davis has joined on with Fantex, following in the path of Houston Texans running back Arian Foster. Under the terms of the deal, Fantex is paying Vernon Davis $4 million for a 10 percent interest in his brand. This deal is contingent upon Fantex obtaining the necessary financing to pay Davis the $4 million. That basically means they will issue stock and hope to get enough purchases to raise that money.
As I understand it, you are actually purchasing a part of Fantex, but you would be trading a Vernon Davis "tracking" stock. You would only be able to trade that VD stock on Fantex's proprietary exchange. The shares are not yet available for purchase. Earlier this month, Fantex announced a similar deal with Arian Foster for $10 million. Fantex will begin taking reservations on Arian Foster tracking stock next week, with hopes that trading begins in late November. That would seem to indicate it will be a little bit of time before Vernon's stock is officially available.
The whole thing strikes me as a little bit odd given the limited trading opportunities. The company lists some of the risks of these purchases, and one in particular strikes me as a bit glaring:
Fantex, Inc's board of directors may, in its sole discretion, elect to convert any of Fantex, Inc's tracking series into Fantex, Inc's platform common stock, thereby changing the nature of an investor's investment and possibly diluting an investor's economic interest in Fantex, Inc. or creating market uncertainty regarding the nature of the investment, any of which could result in a loss in value to holders of Fantex, Inc's tracking series.
So basically, you would have the player tracking stock, but it could be converted to basic common stock in Fantex. The fun "investment" in Vernon Davis or Arian Foster would become just plain ol' Fantex Common Stock. Feel the excitement!
Grantland had a great article yesterday discussing "Arian Foster stock", the history of investing in celebrities and the many issues involved. They have a useful sidebar explaining what would happen if certain events related to Foster occur.