{"id":2109,"date":"2013-11-05T15:09:21","date_gmt":"2013-11-05T15:09:21","guid":{"rendered":"http:\/\/ncjolt.org\/?p=2109"},"modified":"2020-06-04T20:53:58","modified_gmt":"2020-06-04T20:53:58","slug":"in-offering-stock-in-professional-athletes-fantex-has-legal-hurdles-to-clear","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/in-offering-stock-in-professional-athletes-fantex-has-legal-hurdles-to-clear\/","title":{"rendered":"In Offering Stock in Professional Athletes, Fantex Has Legal Hurdles to Clear"},"content":{"rendered":"

Tuesday, November 5, 2013, by Christian Landreth
\nEven though a back injury<\/a> has prevented Houston Texans running back Arian Foster<\/a> from making news for his on-field performance in recent weeks, he has remained in the headlines for his latest off-field business venture.
\nFoster has partnered with Fantex Brokerage Services<\/a>, which bills itself as \u201c[t]he first registered trading platform that lets you buy and sell stock linked to the value and performance of a pro athlete brand.\u201d Essentially, Fantex plans to serve as a trading platform where investors can buy shares in a truly unique type of company \u2013 a professional athlete.
\nFantex has planned an Initial Public Offering<\/a> in which it will make 1,055,000 shares of stock available, at a price of ten dollars per share.\u00a0 Fantex is paying Foster $10 million<\/a> in exchange for a 20% stake in Foster\u2019s future earnings, including contracts, endorsements, and other related business revenues. In theory, if Foster does well on the field, and companies decide to use Foster as an endorser for their products, or he is rewarded in bonuses from the Texans, Foster\u2019s stock will go up.
\nFantex also announced this week that it had reached a similar agreement<\/a> with San Francisco 49ers tight end Vernon Davis.<\/p>\n

From a legal perspective, trading stock in NFL players raises some serious questions.<\/p><\/blockquote>\n

From a legal perspective, trading stock in NFL players raises some serious questions. The biggest may be the offering\u2019s availability throughout the country. Because Fantex is not a nationally recognized trading platform, filing<\/a> with the Securities Exchange Commission is only the first hurdle for Fantex to clear before potential investors can buy stock in Foster.
\nIn addition to national securities laws, every state has \u201cBlue Sky Laws<\/a>\u201d that regulate the sale of securities within their borders. It remains to be seen which states, if any, will allow trading of the Foster stock. While Fantex CEO Buck French feels confident that a majority of states<\/a> will permit sale and trading, he recently stated that\u00a0\u201c[m]y guess is that there are states that will not allow our trading to happen.\u201d
\nIf states do decide to allow this rare type of trading, a host of other legal issues remain that Fantex may be forced to tackle. David Lariviere has outlined<\/a> a few of the potential legal questions, including:<\/p>\n