Future of cards? Player Stocks?

[ctbinvestments]

Y! SPORTS (http://sports.yahoo.com/blogs/nfl-shutdown-corner/now-literally-invest-athletes-arian-foster-stock-them-141923044--nfl.html)

Talk about risky...but could it be better than trying to track down rare player cards, etc? You could basically buy whatever amount in a player you wanted in seconds....and sell as well.

[jewcer2k5]

Ive seen this tried and failed so many times. Biggest bust was OneSeason.Com.

[hermanotarjeta]

Foster was a horrible choice for their initial offering.

This is so stupid. I would rather "invest" in a CEO of a big company and snatch a piece of their annual bonus instead, lol.

[dasiegel]

Ive also seen, this, my friend was in a baseball version of this a while ago and you invest in it like penny stocks. Such an interesting concept, never seemed to catch on. I enjoy cards because of the nostalgia and visual that comes with basically the same concept, but will keep my eyes open on stuff like this. KEVIN PLAWECKI .02 a share!!!

[OriginalWayOut]

Ive also seen, this, my friend was in a baseball version of this a while ago and you invest in it like penny stocks. Such an interesting concept, never seemed to catch on. I enjoy cards because of the nostalgia and visual that comes with basically the same concept, but will keep my eyes open on stuff like this. KEVIN PLAWECKI .02 a share!!!

This right here. Stocks are an interesting concept when it comes to player value, not to mention real-time trading while following a game during at-bats or key plays would be absolutely bonkers. But at the end of the day, I really like the physical aspect of collecting, preserving, selling, trading, etc.

[ctbinvestments]

This right here. Stocks are an interesting concept when it comes to player value, not to mention real-time trading while following a game during at-bats or key plays would be absolutely bonkers. But at the end of the day, I really like the physical aspect of collecting, preserving, selling, trading, etc.

I agree, I prefer the cards to this player "stock" possibility. Ofcourse how will the stock have value unless the player is sharing a portion of his earnings/endorsements/etc with the stock. Nobodys going to pay for a name with no real earnings...can someone say Enron.

[DSizzle31]

The time to buy stock in Foster was when he was an undrafted FA that the Texans signed. Why would anyone buy stock in him now that he is a RB that seems like his BEST days(he's still very good) are behind him. Seems like his value can only go down.

This concept is silly.

[SaveMeTheGum]

A friend of mine and I had this idea a few years back -- the problem we had was that if you are going to sell stock, there has to be something of value backing that stock (for instance, when you buy stock in a company, that company has assets that back the value of the stock). Otherwise you're just printing fake money that's not really worth anything. Then the "stock" you own is only worth what the market will bear because it has no intrinsic value -- then they would be exactly the same as sports cards.

[NeedChapmans]

In college; I developed a trading idea all the way to the point of figuring out the algorithms for trading and presenting it to the NCAA.

The idea was to release IPO's on college football players. Because a college player has to stay in college for at least 3 seasons before being drafted, I thought I could set up IPO's on high school athletes who have signed letters of intent to play for a particular school.

So for example, when Johnny Manziel signed is LOI with Texas A&M; I could release 10,000 shares of Manziel into the market. Those shares would be priced based on an alogrithm and when Manziel was drafted, whoever owned them would automatically have them changed into cash value. The cash value would be based on draft position (or if they became a free agent signee). So even offensive lineman and kickers could hold value in the long-term.

Seeing as we would release around 1,000 IPO's per season and there would only be around 300 total players drafted and signed; the logic behind making sure we did not take losses was sound. That being said 100% of the IPO's we took in would be paid out / all of the profits we planned would come from trading transaction fees during the season.

So for example, let's say Johnny was a high touted prospect; and we launched 10,000 shares at $50 a piece. If he is drafted #1 next year, that IPO would have cashed out at $300 per share. The difference in the $250 we stand to lose per share is made up from the IPO's who were not drafted (a players stock becomes worthless when they turn 30 years old and they have not been signed to any NFL contract). It didn't matter to us who was drafted #1 and who wasn't ... so long as we had enough interest to sell every share of all IPO's, the money was even at the end.

In my proposal, profits we're to be shared evenly between the NCAA, the school, the player and us (so 25% across the board for everyone). After a lot of back and forth with everyone's attorney's and the NCAA; it died ultimately because the NCAA felt it could be corrupted. Even though we showed them air tight programming; mathematics and reasoning (individual player performance and draft position are safe from throwing games and collusion), it was not meant to be.

Thought it was solid; wish I could have made it happen.

[SaveMeTheGum]

In my proposal, profits we're to be shared evenly between the NCAA, the school, the player and us (so 25% across the board for everyone). After a lot of back and forth with everyone's attorney's and the NCAA; it died ultimately because the NCAA felt it could be corrupted. Even though we showed them air tight programming; mathematics and reasoning (individual player performance and draft position are safe from throwing games and collusion), it was not meant to be.

Thought it was solid; wish I could have made it happen.

That's funny that the NCAA pretends to be concerned about corruption.

Awesome idea though!!!

[StraWMyerS]

This doesn't make sense. Cards are limited and supply/demand driven. Not to mention you get the visual appeal and collectability. Also less regulation and insider knowledge is not only legal but encouraged! Why fix what ain't broken? Just a better market all around IMO

[ctbinvestments]

A friend of mine and I had this idea a few years back -- the problem we had was that if you are going to sell stock, there has to be something of value backing that stock (for instance, when you buy stock in a company, that company has assets that back the value of the stock). Otherwise you're just printing fake money that's not really worth anything. Then the "stock" you own is only worth what the market will bear because it has no intrinsic value -- then they would be exactly the same as sports cards.

I agree this seems crazy to me but with all of the sports fans in america I can see it as a possibility. I would have major questions in regards to how it could be worth anything more than the original investment. The only way a player stock can have earnings growth would be if the athlete agrees to share his/her earnings/endorsements/etc with the stock. I could see a scenario where a newly drafted player (especially a minor league baseball player who wasn't a top draft pick) would agree to such a deal in return for a certain percentage of the "stock sell price". For example the player might get $2 per $10 worth of shares sold up front and when/if a big contract/endorsements come the player had agreed to give the stock a certain percentage of that. This would create valuation and earnings for the stock.

[SaveMeTheGum]

I agree this seems crazy to me but with all of the sports fans in america I can see it as a possibility. I would have major questions in regards to how it could be worth anything more than the original investment. The only way a player stock can have earnings growth would be if the athlete agrees to share his/her earnings/endorsements/etc with the stock. I could see a scenario where a newly drafted player (especially a minor league baseball player who wasn't a top draft pick) would agree to such a deal in return for a certain percentage of the "stock sell price". For example the player might get $2 per $10 worth of shares sold up front and when/if a big contract/endorsements come the player had agreed to give the stock a certain percentage of that. This would create valuation and earnings for the stock.

Right, by owning stock, you own a small piece of a company -- so with this, do you own a small piece of the player -- or more accurately -- the players future earnings. If so, this could be looked as a mini-paternity suites =)

[sbfinley]

Can't see this being exceedingly popular or viable in the future IMO. I've seen this attempted before on several levels, but this is different as it directly corresponds to the athlete's earnings. Buying this "stock" is basically the equivalent of a salaried advance except for the fact the this advance will not recouped entirely upfront (as in 99% of advance instances) but as a percentage overtime. Secondly, there is absolutely no liquidity in this "stock". It can only be bought and sold on their website which requires not only the perpetuation of a NFL running back's career but also that of the company. (Ie. If scott trade goes bankrupt, your Apple shares are still valid and can be transferred to whatever new brokerage you desire. Not in this case.) The fact that you are "investing" in a singular athlete in itself is also economically irresponsible when it is tied to future earning. Any of a million things can arise that could jeopardize future earning not only on the field but off it as well. Not so in the case of a corporation that can easily replace a underperforming CEO or failed line of product.

[XL5]

Right, by owning stock, you own a small piece of a company -- so with this, do you own a small piece of the player -- or more accurately -- the players future earnings. If so, this could be looked as a mini-paternity suites =)
You don't own a piece of the player or his future earnings. You just "track" it. It's a terrible investment. You're investing, if you'd call it, that in Fantex. Nothing more.


From the the other thread:
http://www.blowoutcards.com/forums/off-topic/600644-soon-you-will-able-buy-real-stock-real-athletes.html


Holders of shares of a tracking stock will have no direct investment in the business or assets attributed to the brand contract, associated brand or athlete. Rather an investment in a tracking stock will represent an ownership interest in Fantex, Inc. as a whole.

The stock "tracks" the performance of the athlete's brand. You don't own part of his brand.

https://fantex.com/how-it-works

[xbignick]

Arian Foster's Personal Stock Offering Sounds Like #@#@#@#@#@#@#@#@ (http://regressing.deadspin.com/arian-fosters-personal-stock-offering-sounds-like-bull-1447360031/@kylenw)

" If demand is less than the number of shares being offered, Fantex may cancel the deal."

"Then, the investor can try to sell his shares at a higher price." Doesn't seem like a very promising comment, lol.

" The initial offering (IPO) is only putting about $1 million up for grabs, and if it turns out that no one wants it, Fantex can (will) bail on the whole thing. Because the way the deal works, Fantex is essentially buying $10 million worth of "stock" from Foster himself, who remains a nominal majority shareholder, and then selling that off to fans. And Fantex appears to want no part of holding onto that stock itself—which should probably tell you something."

"Foster would make up some of that in the value of being the public face of fans owning players' endorsements, but really it's an insurance policy—risk management in the case that his assets and earning potential dry up tomorrow, due to catastrophic injury or him Michael Vicking himself or whatever else. It's not unlike how poker players will sell off a percentage of their final earnings in a tournament before the tournament's over, locking in a profit."

I won't be going anywhere near this as it currently stands.

[mcgoo2]

If this isn't a supply/demand thing and it isn't backed by Foster's estate, who pays out if he does well? Insurers?

[XL5]

If this isn't a supply/demand thing and it isn't backed by Foster's estate, who pays out if he does well? Insurers?

People who buy the stock from you. There is no payout, you only get what someone else is willing to pay your for your shares.

[Gordo]

A friend of mine and I had this idea a few years back -- the problem we had was that if you are going to sell stock, there has to be something of value backing that stock (for instance, when you buy stock in a company, that company has assets that back the value of the stock). Otherwise you're just printing fake money that's not really worth anything. Then the "stock" you own is only worth what the market will bear because it has no intrinsic value -- then they would be exactly the same as sports cards.

Bingo. Derivatives. Derivative (finance) - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Derivative_%28finance%29)


Edit: Watch the documentary Inside Job. Explains the housing market crash and derivatives. If you aren't a horror movie fan, don't watch.

[mcgoo2]

People who buy the stock from you. There is no payout, you only get what someone else is willing to pay your for your shares.

So it is just demand driven with nothing backing its value? Why would that demand exist in the first place?

If they aren't supported by anything, you're basically just investing in Fantex with this Foster tie-in a way to appeal to sports gamblers. Foster's financial success will mean nothing if nobody cares about Fantex a couple years down the road.

[Gordo]

X loans money to everyone and their mother. X doesn't care if customer can pay back the loan or not. They know that Y (Y=big credit unions or what have you) will buy the debt back pennies to the dollar to make it look like they have a large sum of money owed to them. X is no longer responsible for money at that point. They sold out. They made a profit or got their money back at worst.

The fact is X loaned money to people that would be repeat guests on the Jerry Springer Show. Y knows this and buys it up. To create derivatives. Fake market. Jerry springer show candidates will not pay back what they owe. They sell it to Z (us, the peons) under the premise that if they get paid back you make money. But the odds of making money are nil to none cuz toothless Joe isn't going to get a good paying job anytime soon to pay back debts. Even if Joe did get a good job, what are the odds he'll pay unless forced? How many goverment fund sucking cretins are there out there in the USA? Too many to kill, not enough bullets. Think about it.

[dasiegel]

No no no, this is a great idea, you guys all start buying stock in Prince Fielder and I'll stick to cards or Oscar Taveras... guys this is good stuff, don't wait for the market boom!

[j20s]

Anyone who thinks this is a good idea doesn't even understand how stocks work. I read the article, and I must be missing something that the people behind this company don't realize that there is an inherent, real value associated with stock prices, whereas this is entirely artificial, rendering it useless. I didn't spend an hour analyzing the article, but someone please tell me I missed something.

[ctbinvestments]

Anyone who thinks this is a good idea doesn't even understand how stocks work. I read the article, and I must be missing something that the people behind this company don't realize that there is an inherent, real value associated with stock prices, whereas this is entirely artificial, rendering it useless. I didn't spend an hour analyzing the article, but someone please tell me I missed something.

No I agree, I don't see anyway anyone could make any money doing this...eventually you would end up with 0.

[XL5]

Bingo. Derivatives. Derivative (finance) - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Derivative_%28finance%29)


Edit: Watch the documentary Inside Job. Explains the housing market crash and derivatives. If you aren't a horror movie fan, don't watch.

Derivatives are insurance. If you use them as investments, you are gambling.

[j20s]

I read that the company bought 20% of Foster's future earnings for $10m, in which case the idea is at least value backed, however I still think it is exceptionally dumb. Really, fantasy players tend to be lower income, less investment/$ inclined, whereas those buying/selling stocks in the same way have much more money/have a clue. It's like trying to do a full wine menu at a sports bar because it works at a fancy restaurant.

[tjforce]

So here's my understanding of how this works: Fantex enters into a agreement in which they get 20% of Arian Foster's current and future brand income, including contracts, endorsements and post career brand related earnings. In return, Arian Foster gets $10 million upfront. 95% of the brand income Fantex gets will be allocated towards Arian Foster's specific brand, with the remaining 5% going to Fantex holdings' common stock pool.

Now, what the shares that you and I can buy into does not give us rights to the brand income generated by the contact with Foster. Instead, what we get is a stock that is made to track the performance of the contract between Foster and Fantex. Really, we would be owning a piece of Fantex. The idea is, if Foster earns more money on his own it will increase cash flows to Fantex. By essentially owning a piece of Fantex tied to Foster's contract, we should see a rise in value. Vice Versa is Foster gets a career ending injury and can never play again.

Here are my issues with this system.
1.The tracking stock we get has no direct ties to cash flows, and Fantex reserves the right, but not the obligation to pay out dividends.
2. Liquidity risk

When coupled together, these two issues are huge. Without a guaranteed dividend we have no sure way to the cash flows of the contract, so our only real value is the market value of the stock, which may not reflect its intrinsic value. Since this platform has never traded before, it is impossible to know how easy it will be to buy or sell.

Now, imagine that we did have rights to the cash flows via dividends (and why not, it's not like these cash flow can be reinvested into the Arian Foster Brand). Then this would get pretty fun.

Fosters contract over the next 4 years is as follows:
2013: 5.25 MM 2014: 5.75 MM 2015: 6.0 MM 2016: 6.5 MM

So using the 10 year treasury as a discount rate (for lack of a better metric) we can compute the present value of the cash flows from his football contract:

PV= $997,500+ $1,038,438+ $1,056,437 + $1,115,798= $4,208,173

We also get a piece of his endorsements:
2013: $343,875 2014: $343,875

PV= $65,336 + $63,699= $129,035

Divide the present values by the 1,055,000 shares that will be issued and we get a stock value of $4.11 per share.

But this is where it gets fuzzy. This value is based upon his current contract, which is not guaranteed. Also, we would need to estimate future earnings beyond for his NFL contract beyond 2016 and for endorsements beyond 2014.

So what would we need for Arian Foster to be worth $10 a share? By my calculations, if Arian could play all the way through his current contract, then sign a 6 year deal worth $36 million, while at the same time growing his endorsement income by 3% per year, this stock would be worth $10.03.

That is, if we were the ones getting the cash flows through dividends.

[j20s]

tj, I think you're in depth posted was wasted on the forum but I liked it.

[tjforce]

Lol, I'm glad you appreciated it. I actually had fun putting it together over breakfast, since I hadn't even heard about the company before.

It just goes to show that it really is a neat idea for the player and the company Fantex to enter into an agreement like this.

Just imagine how fun this could be if they signed younger prospects whose career earnings could end up being 2 million or 200 million. How would a Johnny Manziel be priced? Imagine owning him and seeing your value rise or fall on draft day based on when he got picked.

This would actually have potential if they ever gave us access to the cash generated by these contracts.