If the corporate veil distinguishes a corporation as a legal person separate from the shareholders in said corporation, what do you call it when an individual exists as an investment opportunity as an IPO like a company? The transfer of legal characteristics to corporations is multifaceted issue with positive and negatives that is subject to significant conjecture. In a bit of a flip of this action, a story from a few months ago caught my attention where the concept of transferring characteristics of a corporation to an individual was proposed.
In this particular case it involves a running back for the Houston Texans in the NFL, Arian Foster. An IPO was proposed where individuals could invest in the future earnings of this athlete. In layman’s terms the IPO goes something like this, a company would pay $10 million to the athlete in return for a 20% stake in the athlete’s future earnings. The company would then turn around and sell that 20% stake to individual investors who garner their investment return based on the athlete’s future income. I am not qualified to conduct an in depth financial analysis of this investment and the actual merit of the investment has been discussed elsewhere and is easily found. Suffice it to say that you would be considering the health of the athlete, their potential earnings for the remainder of their career and their post football career prospects. However, what I found interesting about the story is the role reversal of the assigning of individual legal rights to a corporation, whereby an individual takes on the aspects of a corporation in terms of an investment opportunity. As a post-script shortly after this plan was announced the player’s season was ended due to an injury and there has been little activity on the front since that occurred. The company involved did announce plans to pursue a similar venture with another football player.
There are various considerations with such a venture but taking it beyond the specific concerns with investing in athletes are there other areas where such an idea could be utilized? Just spitballin’ here, but there has been much in the news lately about young people having difficulties entering the workforce and specifically having to take low or no paying internships. It is a bit outlandish but could young people entering the workforce launch a similar venture when beginning their career with a bit of seed money (so-to-speak) to enable them to get established? A bit of a twist on the practice of micro credit loans.