Basically, he has partnered with a company to sell $10.5m worth of shares in his future performance. He gets $10m of that, but he then 20% of his future earnings go to shareholders. Think of it as an insurance policy in case he has a serious injury next week.
At first I just thought this was a cool idea and was going to move on, but then I thought, "Could something like this be the solution to paying student athletes?"
What if student athletes were allowed to setup their own company in their name. They work with a company like Fantex to setup the details of the IPO for the player/company. Companies like EA then pay the dividends to the company. Even without money from companies like EA, the player probably has enough money from the IPO to make it through college. As money is deposited into the company, 20% gets distributed to shareholders. The player can then withdraw a limited amount of money each year per NCAA rules before they are deemed "professional". Maybe that means that the scholarship and earnings can only total $65k/year or something like that. Once the player graduates or leaves school for any reason, he is free to withdraw money as he pleases.
A couple of things that would make this work, I think:
- It makes a player's decision to come back for another year easier if they know that they have some money waiting for them either way.
- While 3* athletes might not get $10m in an IPO, they could still set one up as a freshman and people might gamble on some of them to hopefully get large returns by selling stock later when they become starters or when the player makes it to the pros and starts sending dividends to the investors. Imagine having bought stock in an unknown Mike Hart and then selling his stock after his Junior year. You could have made a lot of money off of the prospect
What does everyone think about this idea?