I just stumbled into this article: http://fortune.com/2015/03/31/athlete-stock-exchange-fantex/ To me, it doesn't sound like a great option for investor. Anything can happen to athletes [injuries for example could make it impossible for them to earn any money] and as they age, no one will be willing to pay them as much as they earned when they were younger and at their prime. So when Fantex claims that investors will get a percentage of the athletes earnings for a lifetime they they are prevaricating. Is investing in athlete stocks an investment or something worse than gambling?
It's an investment alright... I've actually looked into it quite a bit since most of their athletes are in the NFL. (which I follow like a crazy person) Anyway, there is a lot more than just sports income, mainly the advertising one is interesting since certain professional athletes are making multiple times their sports earnings from being in ads. But yes it's a very risky investment indeed and I'm not ready to put my cash into these things.
Not something I'd fool with myself. One thing pro and even college athletes here are doing is taking out insurance policies on themselves that are supposed to pay them a certain amount of money if they get injured and are unable to play. Personally, I'm just not big on throwing my money at things related to pro sports, musicians, rappers, hollyweird productions, entertainer types, etc. Too much can go wrong, too many shady and flaky people, too much ego and other emotions, too little brains, etc.
investing is gambling. Even if you just buy US bonds, you are still gambling that the US won´t default on them. You buy an oil company, you are gambling they won´t have some type of spill. You invest in a pharm, you are gambling they get approval.. The question isn´t if it is gambling or not, the question is if the upside to the bet is worth the risk. To me the answer would be no, because it is all about advertising income, and that just has too many forks in the road before you get to it, starting with injuries, right down to teams. You sign the world´s best receiver, and give him a bad QB, and he is never going to be a national media figure.
Any form of investing can be a gamble, and when it comes to something like this, investing in people, then it's an even bigger risk in my opinion. The pro footballers for an example, aren't exactly trustworthy are they and you might be making a steady profit for his performance on the pitch, then wake up and watch the morning news to find out he's been caught taking drugs or arrested for DUI and before you know it your facing a massive loss and no chance to get that money back.
If you are into alternative investing and sports like could be a good play, identifying players who will make it and make you a return without physically/mentally/emotionally breaking down is tough. I'm not into either so this would certainly not be for me. Not only do players get hurt, but becoming rich at 20 years old also has its downsides. How many of these players end up getting into trouble with the law or developing problems.
Well let's be honest here... for some other types of sports.. I might be interested. Say ice hockey where the players are (in general) well behaving guys and the sport, though having a lot of contact, usually doesn't lead to career ending injuries. And it's more about having an eye for the game than simple things like speed... so you still find 40 year olds playing at the top level. But NFL? Where something like 70 to 80% of the players are stupid enough to waste all they have on big houses and then go bankrupt after their career of 5 years is over? That 70 to 80% bankrupt rate is real. And the average career lenght for most positions is below 10 years.
Yeah, any investment carries risk. But the levels of risk can vary greatly, as can the risk/reward ratio. Some assume that risk and reward are absolutely 100% correlated, but that's not anywhere near true.
That is the crux of investing in a nutshell, you find situations where the risk/reward ratio is out of whack and exploit it in your favor. For normal investing, my first card is always PEG, which is simply companies that are growing much faster than their PE would lead you to believe. The problem with this type of sports betting is that it is very binary and it goes south fast without any warning. You buy Dez Bryant, and next thing you know he is missing 8 games with an injury, only to come back and have to play with a 3rd string QB. And of course, then you have to worry about DUIs or them blowing their hands off with fireworks 300lbs guys who get paid to run full speed into other 300lbs guys are not going to be the smartest guys in the world. Golfers? yea. go Tiger
Eh, no thanks. I don't care for professional sports or most mainstream entertainment anyway. But the risks on this could be really bad. What happens if an athlete has a career-end injury on game one? Investment down the toilet.
