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Fantasy Football, playing for keeps; Fans could buy a piece of their favourite player.

What if you could actually invest in your fantasy football team?  Would you put your own money behind your star striker?

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Across the pond this is exactly what is happening in the United States. A company called Fantex is offering fans the chance to buy a percentage of a player’s future earnings. The first athlete to sign up with Fantex is NFL running back Arian Foster of the Houston Texans. In exchange for $10 million Fantex will get 20% of the three-time Pro Bowl running back’s future earnings. Fantex is trading stock linked to the “value and performance of the brand”. The payment is conditional on Fantex selling 1,055,000 shares at $10 per per share. No individual can buy more than 1% of the shares, which amounts to $105,000. Take out Foster’s $10 million and the remaining $550,000 pays for the underwriters and other expenses.

So let’s look at it from two perspectives; what’s in it for the fans and what’s in it for the player? For the fans the idea of investing in your favourite player sounds like every boyhood dream but if we look past the thin veneer of the all singing and dancing website and glossy prospectus what are fans actually investing in? Fantex state:-

Holders of shares of Fantex Series Arian Foster will not have an ownership interest in our Adrian Foster Brand, or any of our affiliated entities. Rather, investors in our Fantex Series Arian Foster will be our common stockholders

What fans would be investing in would be Fantex the brokerage. Despite buying a direct stake in Fantex, as the offering states, they would get no voting power or representation. All actual distributions are at the discretion of Fantex who will be taking a 5% cut. And what if Arian Foster were to be hit with a season ending injury? Well, that’s exactly what has happened, surgery on his back if you are interested! So the deal is on hold, in any event money will not exchange hands until the 1,055,000 shares are sold.

And the player what is in it for him? If we take the example of Arian Foster he due to get a lump sum of $10 million. Not many would argue with seeing their bank account bumped up with such a lofty sum. But are these athletes selling their souls to the devil? Like Keanu Keeves in a Devil’s Advocate, is the sum of $10 million compensation enough for 20% of all future earnings going directly to Fantex for life. Granted Fantex would have a vested interest in the athlete but international superstar athletes are always looking for ways to avoid paying tax so why would they tie themselves into a deal where they pay 20% to a third party for the rest of their days?

The closest example in Premiership football was the 3rd Party ownership saga involving Carlos Tevez and Javier Mascherano. West Ham United made the remarkable signings of Tevez and Mascherano in August 2006 after the pair impressed on the world stage in Germany, playing for their native Argentina. The story unfolded that the pair were not actually registered to the Hammers rather that they were loaned and they were actually still “owned” by offshore companies based in tax havens. Tevez was owned by MSI and Just Sports Inc and Mascherano was owned by Mystere Services and Global Soccer Agencies.

As the UK follows the American way from endless repeats of the sitcom Friends to the fast food eateries of Colonel Saunders and Ronald MacDonald will our Premiership footballers be targeted by the same sports stock market utopia? Fantex has setup its own proprietary exchange so if fans wish to buy or sell shares, you guessed it fans will be liable for a brokerage commission payable to Fantex too! The question remains would such a scheme even get off the ground. The rules, regulations and restrictions of the Football Association would need to be examined closely following the outright ban on 3rd party ownership in English football. Could a time arise that players directly or indirectly may start investing in up and coming youth players in order to receive a percentage of that player’s future earnings?

If you want further advice on the legitimacy of financial schemes do not hesitate to contact one of our team. For the time being we recommend you stick to Fantasy Football in your work league!

John Hendrie – Sports Consultant

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