Weird News: Vernon Davis stock to be offered

[threelittleturds]

Vernon Davis of San Francisco 49ers next to join Fantex Brokerage Services - ESPN

So, this company called Fantex Brokerage Services paid VD $4mil to get rights to 10 percent of his future earnings. They previously paid Adrian Foster $10mil to get 20 percent of his earnings.

I guess it would be just like investing in any other million dollar business, but it is just weird because the "business" is a player's future earnings? I dunno, it is just weird and creepy to me.

 

[Dodub]

Yeah I saw a story about Foster doing this, it doesn't sound completely legit to me...

 

[threelittleturds]

Yeah I saw a story about Foster doing this, it doesn't sound completely legit to me...

Right? It strikes me as borderline scammish too.

Just the numbers, I guess they are banking on VD making $40 mil from today until he dies. If you buy in and he makes $40 mil you break even, if his earnings exceed $40 mil you earn profit and obviously if he makes less than $40 mil you lose money? I'm not an expert in economics so correct me if I'm wrong. I've only taken a baby economics class in high school and an economics for engineers class in college.

 

[JDM]

Ignoring that 40 million until he dies would be 0 return, and there are some practically guaranteed options that do yield a return, yeah.

Why would VD do this? 10% of your earning from what appears to be any income whatsoever for the rest of your life for a measly 4mil? If he just used the money he has already made wisely, he could make more than enough over his lifetime to make that deal significantly negative for himself.

 

[dredinis21]

Is this simply his earnings as a football player or does this extend to his other income, i.e. UnderArmor, his artwork, etc.?

 

[JDM]

Fantex CEO Buck French told ESPN.com that the company will now have the rights to 10 percent of Davis' earnings, including his playing contract, endorsements and post career interests,

Looks like everything for the rest of his life,

 

[threelittleturds]

Ignoring that 40 million until he dies would be 0 return, and there are some practically guaranteed options that do yield a return, yeah.

Why would VD do this? 10% of your earning from what appears to be any income whatsoever for the rest of your life for a measly 4mil? If he just used the money he has already made wisely, he could make more than enough over his lifetime to make that deal significantly negative for himself.

Again, not an expert. VD in his prime earned a $42.7 million dollar contract. This vulture company seems to think people are stupid and those stupid investors will believe a Gronk type contract is coming VD's way( $55mil)??

If they are going to pay him $4 mil for 10 percent, and his biggest contract was $40 mil... they must be selling the idea that he will get a similar contract in 2016 at the age of 32? They wouldn't volunteer a loss. Right? Good luck to them on finding foolish investors. All of us who have been NFL fans for longer than a minute know that 32 year olds are not FA big shots. Reggie White at 31 doesn't count, that is the GOAT.

So, why would VD do this? Why not? He probably won't make another $40 mil and if he does... oh well, that is still a lot of money and after $40 mil he starts giving it away to people who believed in him, so, maybe he can take pride in that?

 

[clyde_carbon]

Right? It strikes me as borderline scammish too.

Just the numbers, I guess they are banking on VD making $40 mil from today until he dies. If you buy in and he makes $40 mil you break even, if his earnings exceed $40 mil you earn profit and obviously if he makes less than $40 mil you lose money? I'm not an expert in economics so correct me if I'm wrong. I've only taken a baby economics class in high school and an economics for engineers class in college.

Not a scam, and it's a perfectly legitimate (and smart if done correctly) business. Think of it like a mutual fund - a diversified portfolio of stocks (players). Some will lose, others will profit, and in the end, you're hoping to have a +ROI for the entire portfolio.

People at this firm obviously project Vernon Davis to make more than 40mil in his lifetime, and thus, they'll win on their investment. Why would Vernon Davis do it? The same reason why someone would open up a Cold Stone franchise. You get a 250,000 SBA Loan to start your franchise, but you'll be paying that company a royalty (about 6 percent usually) for the duration of your ownership. Vernon Davis thinks that he can use that 4mil to make more money for himself in the long-run than without it, even if he does have to give 10% of all of his profits back to this company.

It's an investment (or a gamble) from both parties.

 

[clyde_carbon]

And really that's such a simplistic form of it. There's SO much involved and there was probably a lot of math done by both parties to see if they would benefit from this. Vernon Davis wouldn't even begin to figure that stuff out, so he probably had his financial advisors look over the deal.

 

[JDM]

Again, not an expert. VD in his prime earned a $42.7 million dollar contract. This vulture company seems to think people are stupid and those stupid investors will believe a Gronk type contract is coming VD's way( $55mil)??

If they are going to pay him $4 mil for 10 percent, and his biggest contract was $40 mil... they must be selling the idea that he will get a similar contract in 2016 at the age of 32? They wouldn't volunteer a loss. Right? Good luck to them on finding foolish investors. All of us who have been NFL fans for longer than a minute know that 32 year olds are not FA big shots. Reggie White at 31 doesn't count, that is the GOAT.

So, why would VD do this? Why not? He probably won't make another $40 mil and if he does... oh well, that is still a lot of money and after $40 mil he starts giving it away to people who believed in him, so, maybe he can take pride in that?

It's not just salary, though. It's endorsements and any other investments or income he makes as well, for the rest of his life, it appears.

It would take very poor financial management to not make far more than this with the money he has already made.

 

[clyde_carbon]

It's not just salary, though. It's endorsements and any other investments or income he makes as well, for the rest of his life, it appears.

It would take very poor financial management to not make far more than this with the money he has already made.

If Vernon Davis turns that 4mil into 200mil, is that a good deal for him?

 

[JDM]

If Vernon Davis turns that 4mil into 200mil, is that a good deal for him?

How much has he already made over his career?

He should have plenty of capital to work with and this deal is still really stupid.

 

[JDM]

I would bet Davis will end up on the long list of players who goes broke fairly quickly after his career is over.

 

[clyde_carbon]

How much has he already made over his career?

He should have plenty of capital to work with and this deal is still really stupid.

He's a not a billionaire. It's hard to say how much he's exactly made, but say he's made (after tax) 20mil. That 4mil is 20% of what he's made so far in the NFL. If he thinks he can invest and turn that 4mil into enough money to get the 10% he'd have to give this firm off of his incomes AND more into his own pocket, then it's a good deal for him. Again, it depends and what he does with it.

Why do companies offer shares for people to buy and promise them a return and/or dividends? Because they can use that money to make MORE money to cover for those dividends and returns and then some.

 

[JDM]

And there are other ways to secure money for that extra capital investment than 10% of all earnings off of everything forever. This reeks of Vernon being taken advantage of, although it will cancel out because he likely won't invest the money in the first place.

 

[threelittleturds]

And really that's such a simplistic form of it. There's SO much involved and there was probably a lot of math done by both parties to see if they would benefit from this. Vernon Davis wouldn't even begin to figure that stuff out, so he probably had his financial advisors look over the deal.

The math is win-win for VD. If he doesn't make $40 mil he wins. If he makes more than that he still wins by having a very nice income and he doesn't "pay" unless he makes upwards of $40 mil. I'd take that risk all day every day from his standpoint. I, as an investor, wouldn't bet on him making another $40 mil though.

 

[purguy12]

He will be the 2nd player to do this. Foster was the first.

 

[Flyingiguana]

do we have shareholder meetings where we can discuss his lifestyle and spending habits?

 

[spacedoodoopistol]

3rd party ownership is somewhat common in soccer, though the mechanics are different because the investors get to cash in not on salary, but when the players are bought and sold. But hardly creepy, its been going on for a while and these guys generate enough money to be considered investable businesses.

 

[jakea31]

And there are other ways to secure money for that extra capital investment than 10% of all earnings off of everything forever. This reeks of Vernon being taken advantage of, although it will cancel out because he likely won't invest the money in the first place.

I cannot help but notice this comment. Do you think Vernon is just another dumb jock that spends his money on a lavish lifestyle? If he were to become broke it would be caused by his investments, not lack thereof.

Here are a few projects he has opened up in the past two years:

Gallery 85 | Santana Row
49ers Vernon Davis partners with Jamba Juice | Sports Business Digest
San Francisco 49ers ? Niner Insider Blog ? SFGate.com » Vernon Davis to launch interior design company
http://hear.ceoblognation.com/2013/10/24/nfl-player-vernon-davis-yiftee-partner-support-arts/

I agree with Clyde that he probably plans to take the $4 million to invest in other ventures. He has already done so with his earnings.