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Thursday, October 31, 2013

San Francisco Start-Up Drafts 49er Vernon Davis for IPO Roster

Posted By on Thu, Oct 31, 2013 at 1:38 PM

click to enlarge davis_vernon_ci.jpg

In trying to assess the net worth of 49ers tight end Vernon Davis, consider this: When Davis isn't scoring touch-downs he's a hobbyist interior decorator, prodigious tweeter and successful bon vivant -- one of the few pro football players to rightfully earn the term "Renaissance Man" from a glossy publication.

Yet he's priced at significantly less than Texans running back Arian Foster. To the tune of about $6 million.

At least, that's what we'd glean from Davis' forthcoming IPO with local startup Fantex, which offers sports speculators a chance to purchase shares in the future earnings of their favorite pro athletes. Earlier this month, Fantex unveiled its inaugural contract, providing 27-year-old Foster a $10 million lump sum in exchange for 20 percent of his future earnings. Foster is currently on the market for $10 a share.

Davis, who has already played seven seasons with the Niners and signed a new six-year, $43 million contract in 2010, worked out a far more conservative deal with the startup. Fantex will pay $4 million for a 10 percent minority interest in all of his future brand income, provided it can drum up enough cash to purchase him. The famously talkative 49er has refrained from discussing their arrangement on social media, and a New York Times article notes that no SEC filing regarding Davis has yet been made.

A company spokeswoman says Fantex is currently (and, one might add, optimistically) revising its prospectus to include Davis alongside Foster.

While sociologists and market observers have cast doubt over Fantex's business model, warning that shareholders could be squandering their money if an athlete gets injured or embroiled in public scandal, company founder Buck French believes it will succeed both as a management broker and trading platform. Fantex effectively has two lines of income: An indeterminate amount of dollars harvested from an athlete's future earnings, and the money harvested from selling stocks in that athlete. Once the company adds more athletes to its portfolio, it hopes to create its own vibrant stock exchange -- and hopefully not just for pro football.

The conventional wisdom is that athletes are the winners in Fantex deals, given the likelihood that their contracts could be curtailed by unforeseen calamities. (Right around the time French announced the Foster deal, Foster injured his hamstring and sat out for a game against the Kansas City chiefs, which didn't bode well for shareholders.) But in both Foster's and Davis' case, that might not be true. Foster, after all, has a whole bandolier of endorsement deals, in addition his $20.75 million contract guarantee. The 20 percent he'll turn over to Fantex could far outstrip his one-time $10 million payment.

Similarly, Davis could pull a massive future income if he lasts as long as Atlanta Falcons tight end Tony Gonzalez, who is still playing after 17 seasons. Even 10 percent of that -- combined with whatever he earns in advertising and broadcasting -- would far dwarf his $4 million assessed price.

But Davis has a fairly diverse portfolio in his own right, including several potential income streams that Fantex can't touch. It would have to design a whole new trading platform if it wanted to buy stakes in his Jamba Juice franchise, for example. Or his charitable gifting app. Or his future earnings from interior decorating.

Granted, if Fantex chose to buy shares in interior decorators, it could develop a rich asset portfolio without ever looking beyond San Francisco.

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About The Author

Rachel Swan

Rachel Swan

Rachel Swan was a staff writer at SF Weekly from 2013 to 2015. In previous lives she was a music editor, IP hack, and tutor of Cal athletes.


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