SAN FRANCISCO (AP) - At least a few investors are rooting for San Francisco 49er tight end Vernon Davis to have a lucrative career.
An unusual stock tied to Davis‘ earning potential gained $2 to close at $12 Monday in its trading debut. Only 496 of the 421,100 shares sold in the initial public offering by San Francisco startup Fantex Inc. traded Monday.
This marks the first time a stock has been linked to the performance of a professional athlete, a risky concept that highlights the confluence of sports and business.
Skeptics ridicule the Davis tracking stock as a ploy that preys upon the passions of sports fans.
“If you are a serious investor, you can’t be putting a lot of money in this,” said Ron Heller, a former NFL tight end who now runs his own investment firm, Peritus Asset Management. “You are probably not going to get much money out of it, unless you can sell it to someone dumber than you.”
Davis is prohibited from publicly discussing his tracking stock until late May.
Fantex estimates Davis will need to land a contract worth about $33 million to justify the investment in his career. The company is in line to receive $1.2 million to $1.4 million from its share of Davis‘ earnings under his current 49er contract, according to regulatory filings.
Heller, who played for the 49ers and two other teams before his NFL career ended in 1992, doubts the 49ers or other teams will be willing to pay Davis that much in 2016, when he will be 32 - an age at which most football players are retired.
The average NFL career lasts just three years, although stars usually play a lot longer. After analyzing the longevity of 212 other tight ends from 1990 through 2010, Fantex concluded Davis should be able to play for a total of nearly 14 years.
Completing the IPO wasn’t easy. French started drumming up interest in February, when he traveled to 12 cities across the U.S. in an old bus that former NFL broadcaster John Madden used to ride to his assignments.