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Mewhort to be traded — on the stock exchange
Investors can bank on his earnings
BY DAVID BRIGGS
BLADE SPORTS WRITER
http://www.toledoblade.com/local/2015/07/12/Mewhort-to-be-traded-nbsp-on-the-stock-exchange.html
Marathon Oil (MRO). McDonald’s (MCD). ... Mewhort Inc. (JKMTL)?
A glance at the stock ticker may soon inspire a double take.
That’s because Indianapolis Colts offensive lineman and St. John’s Jesuit graduate Jack Mewhort is about to be traded — and with nary a bag to pack.
In a quirky intersection of the worlds of sports and finance, a California start-up has created an exchange that allows fans to invest in the future earnings of a growing roster of NFL players.
Mr. Mewhort is its latest bet, with an initial public offering through Fantex Brokerage Services of 268,100 shares of stock in the second-year pro at $10 each.
The IPO closed on Thursday. Trading will begin soon.
“We think he has a lot of potential,” Fantex Chief Executive Officer Buck French said.
Banking on Jack Mewhort hardly represents the first unusual investment opportunity.
Investors may recall a similar concept from the 1990s, when a banker issued bonds tied to the fortunes of David Bowie.
The Bowie Bonds paid an interest rate of 7.9 percent on the current and future revenues of the rock star’s 25 albums recorded before 1990.
But never before has Wall Street mixed this way with the ultimate speculative market of professional sports.
Mr. Mewhort is the sixth athlete to join Fantex for the ride, following San Francisco 49ers tight end Vernon Davis, Buffalo Bills quarterback E.J. Manuel, St. Louis Rams defensive tackle Michael Brockers, Cincinnati Bengals wide receiver Mohamed Sanu, and Chicago Bears receiver Alshon Jeffery.
Neither Mr. Mewhort nor his family could comment on the deal because of the quiet period surrounding an IPO mandated by federal regulators.
How it works
Fantex will pay the Colts lineman a one-time amount of $2.52 million — significant insurance in a league where the average career lasts less than four years and contracts are not guaranteed.
In exchange, Fantex receives 10 percent of Mr. Mewhort’s future income, which includes all money from his contracts, bonuses, endorsements, and post-career work.
The stock is valued based on a projection that Mr. Mewhort will make $58.8 million over his lifetime, detailed extensively in a 58-page prospectus filed with the Securities and Exchange Commission.
Fantex culled a data set of all 396 offensive linemen drafted between 1993 and 2013 down to the 13 deemed most comparable to Mr. Mewhort — ranging from former Detroit Lions center Dominic Raiola to ex-Cleveland Browns guard Eric Steinbach. From that, the company predicts Mr. Mewhort will play for nine more seasons, making the remainder of his current four-year, $3.57 million contract before cashing in big after the 2017 season. Fantex foresees a six-year, $55.9 million deal with an $11.5 million signing bonus. (Keep in mind that only the bonus is guaranteed.)
http://www.toledoblade.com/image/2015/07/11/800x_b1_cCM_z/14-Sep-14-501328481AT00254-Indianapol.jpg
Jack Mewhort started 15 games in Indianapolis last season. The former St. John’s Jesuit lineman is now responsible for protecting star quarterback Andrew Luck.
Of course, for all of their soothsaying powers, the best-laid formulas are still just spitting out a guess.
Injuries could detour Mr. Mewhort’s career. Or maybe he moves from guard to left tackle — the position he played at Ohio State — or deploys his charisma and smarts as a television analyst, and the $58.8 million valuation becomes a bargain.
No one knows.
Risk and reward
That’s why the athletes and Fantex share the risk and reward, though most analysts say the deal favors the player.
While Mr. Mewhort receives a hefty up-front payment, the investor is guaranteed little.
Shareholders are not investing directly in the player but in Fantex and the perceived brand value of its contract with the athlete. As Mr. Mewhort pays Fantex over time, Mr. French said he expects 85 percent of that money will go to stockholders as dividends. But the dividends are not assured. Nor do investors have any legal right to Mr. Mewhort’s earnings.
So far, Fantex has little track record. Its five current player stocks are listed from $5.70 per share for the struggling E.J. Manuel to $13 for Mohamed Sanu, who enjoyed a breakout season in Cincinnati last year. Only the company’s first successful offering — a sale of 421,000 shares in stock of Vernon Davis in April, 2014 — has paid a dividend, yielding $1.50 per share.
“There is a lot of skepticism, and I think rightfully so,” said Darren Heitner, a Miami-based sports attorney who has written about Fantex. “You’re investing in tracking stock — not actually investing in the athletes themselves — and it’s based on the concept of brand value, which is created by the makers of Fantex.”
A good bet
Mr. French sees the novel stocks as anything but a novelty, selling the securities as a smart way to round out a portfolio. Fantex hopes to soon expand its player offerings beyond football.
“When you think about traditional equities or bonds, they’re highly correlated to macroeconomic risks happening out there,” said Mr. French, who co-founded Fantex. “Greece nearing bankruptcy, the China market crashes, all those impact traditional stock and bond. The securities that we’re creating, the cash flows that we’re acquiring, those risks have zero to do with the cash flows of the professional athletes. ... Versus a traditional business that has much more sensitivity to the macroeconomic trends out there, it’s a great way to further diversify a portfolio. You want different risks.”
Mr. French views Mr. Mewhort as a good bet.
An All-American left tackle at Ohio State, Mr. Mewhort enjoyed a strong rookie season with the Colts. He started 16 games last year — 15 at left guard, one at right tackle — and is expected to remain an anchor on an Indianapolis team with championship dreams. The Colts fell one game short of a trip to the Super Bowl in January.
Mr. Mewhort is an unlikely candidate to be derailed by the perils of fame and riches. At Ohio State, coach Urban Meyer called the former Buckeyes captain one of the most dedicated workers of his career.
“I’m very excited,” said Mr. Mewhort, speaking generally on the upcoming season recently. “You can feel it in the air around here. Guys know the opportunity that we have. It’s all about discipline, it’s all about hard work, and going into camp and doing things the right way.
“I'm still a young player, and I know I still have a lot to prove. I just want to show my teammates that I’m supposed to be here. No matter what my job is, I need to do it at a high level.”
Off the field, Mr. Mewhort has taken steps to build his profile, including a unique foray onto the pages of this week’s ESPN the Magazine. He and two Colts teammates recently bared all for the magazine’s annual Body Issue.
“We think he’s had a great start to his career, and we think he has a lot of potential to be successful,” Mr. French said. “He’s got a great personality where we think he has post-career potential as well.”
In other words, Mr. Mewhort’s stock is on the rise.
Investors can bank on his earnings
BY DAVID BRIGGS
BLADE SPORTS WRITER
http://www.toledoblade.com/local/2015/07/12/Mewhort-to-be-traded-nbsp-on-the-stock-exchange.html
Marathon Oil (MRO). McDonald’s (MCD). ... Mewhort Inc. (JKMTL)?
A glance at the stock ticker may soon inspire a double take.
That’s because Indianapolis Colts offensive lineman and St. John’s Jesuit graduate Jack Mewhort is about to be traded — and with nary a bag to pack.
In a quirky intersection of the worlds of sports and finance, a California start-up has created an exchange that allows fans to invest in the future earnings of a growing roster of NFL players.
Mr. Mewhort is its latest bet, with an initial public offering through Fantex Brokerage Services of 268,100 shares of stock in the second-year pro at $10 each.
The IPO closed on Thursday. Trading will begin soon.
“We think he has a lot of potential,” Fantex Chief Executive Officer Buck French said.
Banking on Jack Mewhort hardly represents the first unusual investment opportunity.
Investors may recall a similar concept from the 1990s, when a banker issued bonds tied to the fortunes of David Bowie.
The Bowie Bonds paid an interest rate of 7.9 percent on the current and future revenues of the rock star’s 25 albums recorded before 1990.
But never before has Wall Street mixed this way with the ultimate speculative market of professional sports.
Mr. Mewhort is the sixth athlete to join Fantex for the ride, following San Francisco 49ers tight end Vernon Davis, Buffalo Bills quarterback E.J. Manuel, St. Louis Rams defensive tackle Michael Brockers, Cincinnati Bengals wide receiver Mohamed Sanu, and Chicago Bears receiver Alshon Jeffery.
Neither Mr. Mewhort nor his family could comment on the deal because of the quiet period surrounding an IPO mandated by federal regulators.
How it works
Fantex will pay the Colts lineman a one-time amount of $2.52 million — significant insurance in a league where the average career lasts less than four years and contracts are not guaranteed.
In exchange, Fantex receives 10 percent of Mr. Mewhort’s future income, which includes all money from his contracts, bonuses, endorsements, and post-career work.
The stock is valued based on a projection that Mr. Mewhort will make $58.8 million over his lifetime, detailed extensively in a 58-page prospectus filed with the Securities and Exchange Commission.
Fantex culled a data set of all 396 offensive linemen drafted between 1993 and 2013 down to the 13 deemed most comparable to Mr. Mewhort — ranging from former Detroit Lions center Dominic Raiola to ex-Cleveland Browns guard Eric Steinbach. From that, the company predicts Mr. Mewhort will play for nine more seasons, making the remainder of his current four-year, $3.57 million contract before cashing in big after the 2017 season. Fantex foresees a six-year, $55.9 million deal with an $11.5 million signing bonus. (Keep in mind that only the bonus is guaranteed.)
http://www.toledoblade.com/image/2015/07/11/800x_b1_cCM_z/14-Sep-14-501328481AT00254-Indianapol.jpg
Jack Mewhort started 15 games in Indianapolis last season. The former St. John’s Jesuit lineman is now responsible for protecting star quarterback Andrew Luck.
Of course, for all of their soothsaying powers, the best-laid formulas are still just spitting out a guess.
Injuries could detour Mr. Mewhort’s career. Or maybe he moves from guard to left tackle — the position he played at Ohio State — or deploys his charisma and smarts as a television analyst, and the $58.8 million valuation becomes a bargain.
No one knows.
Risk and reward
That’s why the athletes and Fantex share the risk and reward, though most analysts say the deal favors the player.
While Mr. Mewhort receives a hefty up-front payment, the investor is guaranteed little.
Shareholders are not investing directly in the player but in Fantex and the perceived brand value of its contract with the athlete. As Mr. Mewhort pays Fantex over time, Mr. French said he expects 85 percent of that money will go to stockholders as dividends. But the dividends are not assured. Nor do investors have any legal right to Mr. Mewhort’s earnings.
So far, Fantex has little track record. Its five current player stocks are listed from $5.70 per share for the struggling E.J. Manuel to $13 for Mohamed Sanu, who enjoyed a breakout season in Cincinnati last year. Only the company’s first successful offering — a sale of 421,000 shares in stock of Vernon Davis in April, 2014 — has paid a dividend, yielding $1.50 per share.
“There is a lot of skepticism, and I think rightfully so,” said Darren Heitner, a Miami-based sports attorney who has written about Fantex. “You’re investing in tracking stock — not actually investing in the athletes themselves — and it’s based on the concept of brand value, which is created by the makers of Fantex.”
A good bet
Mr. French sees the novel stocks as anything but a novelty, selling the securities as a smart way to round out a portfolio. Fantex hopes to soon expand its player offerings beyond football.
“When you think about traditional equities or bonds, they’re highly correlated to macroeconomic risks happening out there,” said Mr. French, who co-founded Fantex. “Greece nearing bankruptcy, the China market crashes, all those impact traditional stock and bond. The securities that we’re creating, the cash flows that we’re acquiring, those risks have zero to do with the cash flows of the professional athletes. ... Versus a traditional business that has much more sensitivity to the macroeconomic trends out there, it’s a great way to further diversify a portfolio. You want different risks.”
Mr. French views Mr. Mewhort as a good bet.
An All-American left tackle at Ohio State, Mr. Mewhort enjoyed a strong rookie season with the Colts. He started 16 games last year — 15 at left guard, one at right tackle — and is expected to remain an anchor on an Indianapolis team with championship dreams. The Colts fell one game short of a trip to the Super Bowl in January.
Mr. Mewhort is an unlikely candidate to be derailed by the perils of fame and riches. At Ohio State, coach Urban Meyer called the former Buckeyes captain one of the most dedicated workers of his career.
“I’m very excited,” said Mr. Mewhort, speaking generally on the upcoming season recently. “You can feel it in the air around here. Guys know the opportunity that we have. It’s all about discipline, it’s all about hard work, and going into camp and doing things the right way.
“I'm still a young player, and I know I still have a lot to prove. I just want to show my teammates that I’m supposed to be here. No matter what my job is, I need to do it at a high level.”
Off the field, Mr. Mewhort has taken steps to build his profile, including a unique foray onto the pages of this week’s ESPN the Magazine. He and two Colts teammates recently bared all for the magazine’s annual Body Issue.
“We think he’s had a great start to his career, and we think he has a lot of potential to be successful,” Mr. French said. “He’s got a great personality where we think he has post-career potential as well.”
In other words, Mr. Mewhort’s stock is on the rise.
