Langley Gets $3 Million To Be Golf's First "Athlete Trading Stock"

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Here I thought the sign of Wall Street geekdom having too much time and money peaked when they discovered high-frequency trading. Or ruining my favorite baseball team.

But reading from Yahoo's Daniel Roberts about Fantex's athlete trading stocks suggests that there is a stranger and even deeper misunderstanding of sports than I first feared.

PGA Tour player Scott Langley is Fantex's first pro golfer, inked for an upfront fee of $3.06 million, payable if they sell shares in Langley, in exchange for the privilege of 15% of his earnings. Here's how it works, according to Roberts:

The company pays every athlete it signs a one-time, upfront lump sum in return for a percentage of the athlete's future brand income—all future income tied to the athlete's brand, whether it's from the sport or from business outside of it. (That includes, for example, money from endorsement deals, fast-food franchising, speaking engagements, TV appearances and more.) In Langley's case, Fantex is paying Langley $3.06 million in return for 15% of his future brand income. Fantex raises that fee from the IPO process; if it fails to sell enough shares of the athlete in the offering, it can't pay him. It has successly brought all six of its attempted offerings public, but it had to cancel the offering of Arian Foster, who was planned to be its first stock. Foster is a bigger star than any of the athletes Fantex has brought public, but he was sidelined by a back injury shortly after Fantex announced the deal.