Sports fans, more often than not, are crazy. We spend hundreds upon hundreds of dollars on sports gear, autographs and tickets without batting an eye. We scream and yell at the television, and form fantasy leagues just so we can find new ways to root for specific players. So it would only seem logical that the company Fantex has recently started offering trading stock in Houston Texans running back Arian Foster. For a mere $10, you can now own a piece of a professional athlete — a piece of his future income, that is.
At first, I questioned the ethical nature of this idea. To my knowledge, this is the first time that investors can invest in a person. A living, breathing human being. Some people may invest in a company because of an owner or CEO — e.g. Mark Zuckerberg — but at the end of the day, it is Facebook Inc. not Zuckerberg Inc. that they are investing in.
Fantex brokerage services made the decision that they would pay running back Arian Foster $10 million in exchange for 20 percent of all future NFL-related earning including contracts and endorsements. It seems almost absurd. If I want to support a company I have stock in, I can buy its products. If I want to support Arian Foster, there’s no product to buy; I can only root for him and hope he cashes in a nice, expensive contract in a few years.
However, there’s something to this new trading stock plan that is being overlooked. Trading stock in a professional athlete opens up a whole new market of possibilities. If sports fans are willing to pay money for fantasy leagues, nose-bleed game tickets or silly memorabilia, why wouldn’t they be willing to buy stock in their favorite sports star? Hell, I don’t care if Tom Brady is 36 years old; if Fantex offered stock in him today I’d snatch it up as fast as I could. The question is will other players be willing to follow in Arian Foster’s footsteps. Could there be RG3, Kevin Durant or Peyton Manning stock too? There certainly is a market waiting to be explored or exploited.
Many writers have already stated that buying Arian Foster stock may be risky or flat-out dumb because of the numerous risks involved. I am going to have to agree with them. Even though people invest in stupid things sometimes, it’s better, for now, to stay away from Arian Foster stock, simply because it is a bad investment. Arian Foster is 27 years old and in the second year of a five-year $43.5 million contract. This means he won’t have any sort of lucrative contract for three more years, and by then he’ll be 30 years old. Unlike quarterbacks or kickers, running backs get too banged up to play till they’re 35 or 40, often retiring much sooner. So by no means is Arian Foster stock any type of blue chip or long-term investment.
The risks don’t end there. Arian Foster could, at any moment, go down with a serious injury, further jeopardizing his future income. It just so happens that Foster just got injured in his game this past week. Another complication is that there simply may not be enough investors to accumulate the $10 million to pay Arian Foster, and the stock may be dropped altogether.
I recognize that there are risks to buying any sort of stock, especially after the 2008 financial crisis. Yet the chances of Arian Foster getting injured or retiring in the next five years or so are much greater than the chances of a high-end company like Target or Proctor and Gamble going out of business in that same time period. A physical company’s stock is constantly changing whereas a professional athlete’s may only change a handful of times in his/her career based on new contracts or endorsements.
Despite injuries, retirement or possible intervention by the NFL, there are ways that professional athletes may be profitable. If Fantex is smart, they will go after rookies for their next project. Rookies like Jadeveon Clowney and De’Anthony Thomas have endless potential for future contracts, and 20 percent of their future earnings would be worth much more than $10 million. These stocks would probably cost more than $10 per share, but this would be countered by the potential for lucrative, long-term contract and endorsements.
As long as we’re staying on the prospect of investing in people, I think the most profitable alternative to professional athletes would be celebrities. No injuries, more long-term, and more chances to cash in big. My Leonardo DiCaprio stock wouldn’t stop growing. I can dream, but the reality is most celebrities are probably above selling their souls to the Fantex stock industry. For now, it’s only Arian Foster, and I can only hope that one day Tom Brady’s or other influential athletes’ stock will become available.
Jared Fogel is a Viewpoint columnist for The Cavalier Daily.
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