Want to Lose Money? Invest in Athletes

quicklist: curated
quote: “On Thursday, Fantex Holdings will announce the opening of a marketplace for investors to buy and sell interests in professional athletes.”
their: New York Times
their_title:Want a Piece of a Star Athlete? Now, You Really Can Buy One
their_url:http://dealbook.nytimes.com/2013/10/17/want-a-piece-of-a-star-athlete-now-you-really-can-buy-one/?smid=tw-dealbook&seid=auto&_r=0
their_copy:It will have its debut with an initial public offering for a minority stake in Arian Foster, the Pro Bowl running back of the Houston Texans. Buying shares in the deal will give investors an interest in a stock linked to Mr. Foster’s future economic success, which includes the value of his playing contracts, endorsements and appearance fees.
their_CTA: Read the full story here at NYTimes.com

our_copy: Ever think, “Gee, I have too much money. Isn’t there was something I could invest in where it was relatively likely I could literally lose all of it!?” Well, you’re in luck! The New York Times reported today that Fantex Holdings, a startup backed by Silicon Valley, Wall Street and Very Important Sports People, announced a really questionable plan to combine public interest in fantasy football with Wall Street.

The plan: allow the general public to purchase minority stakes in athletes, starting with an IPO for Arian Foster, filed today with the SEC. The Times articles does a good job demonstrating how the investing strategy would work, the history of Fantex Holdings and the complexity of the operation.

But the bottom line is that investing in an athlete is a pretty terrible idea. You’re investing in a person, and anything could happen to a person! Consider Arian Foster himself. Last year, he seemed like a pretty great option, setting Texans records throughout his first season.

Direct from Arian Foster’s S-1, reasons you should not invest in Arian Foster:

“Investment in our company is highly speculative because it entails substantial upfront cost and significant risk that we may never become commercially viable. We have not generated any revenue to date, and our parent has incurred significant expenses on our behalf.”

“For the six months ended June 30, 2013 and year ended December 31, 2012, we reported a net loss of approximately $1.7 million and approximately $1.1 million, respectively, and had accumulated losses since inception of approximately $2.8 million.”

“If Arian Foster, or any other individuals with whom we may contract in the future, fail to make payments in amounts we expect, or at all, we may never become profitable.”

Oh yeah, and from Fantex marketing material, from the last graph of the NYTimes piece:

“The offering is highly speculative and the securities involve a high degree of risk,” Fantex says in its marketing materials. “Investing in a Fantex Inc. tracking stock should only be considered by persons who can afford the loss of their entire investment.”

So yeah, terrible idea.

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