Athlete tracking stock company Fantex intends to allow you to purchase and sell a security linked to 10 separate professional athletes. Earlier today, it filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission. If approved, you may soon be able to trade “FXSP” on the NASDAQ Capital Market .
A total of 10 athletes, across 2 sports and at a various sections of their careers are to be tied to the anticipated ticker symbol. They are Vernon Davis, Alshon Jeffery, Mohamed Sanu, Jack Mewhort, Ryan Shazier, Kendall Wright, Andrew Heaney, Terrence Williams, Michael Brockers and EJ Manuel.
Tight end Vernon Davis #80 of the Denver Broncos may become part of a 10-athlete stock for purchase/sale on NASDAQ. (Photo by Justin Edmonds/Getty Images)
Each athlete will have a different weighting attached to his athlete brand contract, which will total 100% for the purpose of the contemplated FXSP stock. The largest weight will be held by Chicago Bears wide receiver Jeffery (19%); the smallest weight is attached to Broncos tight end Davis (3%).
“Our six completed IPOs paved the way to unlocking an asset class previously closed to the capital markets,” said Fantex, Inc. CEO and co-founder Buck French. “By bundling multiple tracking stocks into a single, NASDAQ-listed security, we believe Fantex is providing the next evolution for those looking to invest in the business of professional sports.”
As of right now, individuals can buy and sell individual athlete tracking stocks on the Fantex marketplace connected to Davis, Jeffery, Mewhort, Sanu and Brockers.
An Initial Public Offering for Wright is listed as “Coming Soon.” According to Fantex, the previously filed registration statement filed for Wright will be withdrawn, as the new “Fantex Sports Portfolio 1 Units,” such named as those connected to the proposed NASDAQ stock, contain the Wright offering therein.
Historically, Fantex has purchased 10% interests in athletes’ “brand incomes” in exchange for a specific amount of guaranteed money. For instance, under the terms of Fantex’s brand contract with Indianapolis Colts offensive lineman Mewhort, Fantex acquired a 10% interest in his brand income for $2.52 million. Fantex expects Mewhort to earn $58.8 million in gross lifetime brand income, most of which is expected to be earned from an estimated 9 years of future NFL salaries and bonuses (in addition to a slight amount of money from off-field income).
Brand income is defined within the contracts that Fantex creates with players. Generally, it includes income generated from current team contracts, expected future on-field income, certain endorsements and appearance fees. Potential post-career activities are sometimes included in the formula as well.
Acquisitions of brand income are often contingent on Fantex obtaining financing necessary to pay the stated purchase price.
UBS Investment Bank will be the lead underwriter for Fantex’s mission to list FXSP on NASDAQ. It serves as the sole book-running manager for the proposed offering.
Darren Heitner is a lawyer and the Founder of South Florida-based HEITNER LEGAL, P.L.L.C., which has a focus on Sports Law and Entertainment Law.
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