Fantex IPO tied to 49er star wins fans in debut

Published on NewsOK Modified: April 28, 2014 at 7:14 pm •  Published: April 28, 2014
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SAN FRANCISCO (AP) — At least a few investors are rooting for San Francisco 49er tight end Vernon Davis to have a lucrative career.

An unusual stock tied to Davis' earning potential gained $2 to close at $12 Monday in its trading debut. Only 496 of the 421,100 shares sold in the initial public offering by San Francisco startup Fantex Inc. traded Monday.

The stock's 20 percent gain represents a vote of confidence in Davis, an eight-year veteran who has emerged as one of the best tight ends in the National Football League.

This marks the first time a stock has been linked to the performance of a professional athlete, a risky concept that highlights the confluence of sports and business.

"We think it's historic, not just from a sports perspective, but from a finance perspective, too," Fantex CEO Buck French said in an interview.

Skeptics ridicule the Davis tracking stock as a ploy that preys upon the passions of sports fans.

"If you are a serious investor, you can't be putting a lot of money in this," said Ron Heller, a former NFL tight end who now runs his own investment firm, Peritus Asset Management. "You are probably not going to get much money out of it, unless you can sell it to someone dumber than you."

Davis is prohibited from publicly discussing his tracking stock until late May.

Fantex is paying $4 million to Davis in exchange for 10 percent of his income from football and endorsements. The payment came from the IPO proceeds.

Davis, 30, will need to sign a big contract after his current deal with the 49ers expires in 2015 for his Fantex deal to pay off for investors.

Fantex estimates Davis will need to land a contract worth about $33 million to justify the investment in his career. The company is in line to receive $1.2 million to $1.4 million from its share of Davis' earnings under his current 49er contract, according to regulatory filings.

Heller, who played for the 49ers and two other teams before his NFL career ended in 1992, doubts the 49ers or other teams will be willing to pay Davis that much in 2016, when he will be 32 — an age at which most football players are retired.



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