Back in late October, word came out that 49ers tight end Vernon Davis had joined up with Fantex to offer stock in his personal brand. Fantex is paying Vernon Davis $4 million for a 10 percent interest in his brand. In order to pay that $4 million, they are offering up 421,100 shares of "Vernon Davis" at $10 per share.
The value in this will come as Vernon Davis continues his career, on and off the field. As I understand it, the price of the stock can gain and lose value based on what Vernon is doing through his playing and post-playing career. If he signs a huge new contract anytime soon, that's a big boost on that value. If he retires and then signs a deal with a major network to serve as a commentator, more value. His current Jamba Juices are not a part of this, but if he opens any new Jamba Juice stores, that's more value. Of course, if he is arrested, or he struggles to find certain post-career earnings opportunities, the value could go down.
Trading of the stock will only be available at Fantex.com. There will be early questions of liquidity, but Fantex has to be hoping people gain interest and see the value of investing in athletes. As more athletes are added to their market place, more value could be found.
You can get in on the IPO over at Fantex.com. There is plenty of fine-print to this, but one of the more important bits would be this:
Fantex Vernon Davis is intended to track and reflect the separate economic performance of the brand contract that Fantex, Inc. has signed with Vernon Davis. However, holders of shares of Fantex Vernon Davis will have no direct investment in that brand contract, associated tracking series brand or Vernon Davis. Rather, an investment in Fantex Vernon Davis will represent an ownership interest in Fantex, Inc. as a whole, which will expose holders to additional risks associated with any other tracking stock that Fantex, Inc. may establish and issue in the future. Fantex cannot assure you as to the development or liquidity of any trading market for the Fantex Vernon Davis tracking stock.
This offering is highly speculative and the securities involve a high degree of risk. Investing in shares of Fantex Vernon Davis should only be considered by persons who can afford the loss of their entire investment.
Arian Foster was the first person to get in on this idea of a personal IPO, but due to his injury Fantex is postponing his IPO. That makes Vernon Davis the first. If you think there is something to be gained by this, you can invest in some shares of Vernon. Fantex's goal is to establish a market for all sorts of athletes.
If you want to learn more about this, Fantex is going on a road show to promote the IPO. They've acquired an old Madden cruiser, and will make appearances in San Jose's Santana Row, followed by stops in Los Angeles, Denver, Chicago, Boston and New York. If you're in one of those cities, Fantex CEO Buck French will be in town to answer any of your questions.
In traditional IPOs, the company wants big institutions investing in the company. With these player IPOs, Fantex is going after individuals who bring a passion and advocacy to the brand. The idea being that if a player has a huge following, he might be more likely to get offers for endorsements and post-career opportunities. Having this road show with individuals rather than banking institutions and the like could potentially help push this.