Texas Business Report: You Can Now Buy Stock in Arian Foster
Houston Texans fans have a new way to get invested their team. This week running back Arian Foster became the first professional athlete to go public in a new financial exchange that allows investors to buy and trade shares tied to an athlete’s future earnings, the New York Times reports. Founded by Wall Street and Silicon Valley veterans, Fantex Holdings has already received approval from securities regulators and will now begin selling 1.06 million shares to investors for $10 apiece.
The startup has agreed to pay Foster $10 million of the $10.6 million IPO. For his end of the bargain, the Pro Bowl running back will pay Fantex 20 percent of his future earnings, including “the value of his playing contracts, corporate endorsements and appearance fees,” according to the Times. The more Foster earns, the more the value of the shares increases—and Fantex will take a 1 percent cut from buyers and sellers in each trade.
The Bottom Line: While Foster’s financially minded fans may be excited about this news, the investment does carry a high risk. A major injury or decline in performance could torpedo the stock’s value, and unlike other publicly traded companies, “shareholders will not have a direct investment in Foster or any control over his brand,” the Times reports.
You Just Got Tolled
Moody’s Investors Service announced this week that it is downgrading the credit rating of the Madrid-based company that operates Texas State Highway 130. The decision to drop the rating five levels will affect about $1.1 billion in debt owed by Ferrovial SA, Businessweek reports. Moody’s said “the project will have insufficient cash to meet its debt service payments due in June,” due to slower than expected growth in traffic and revenue.
The Bottom Line: SH 130, a 40-mile toll road between San Antonio and Austin, has fallen short of revenue forecasts by 55 percent since it opened a year ago, according to Businessweek. Moody’s previously downgraded Ferrovial in April, prompting the company to reduce toll rates for large trucks and adding hundreds of roadside signs to encourage more drivers to use the road.
ADM HQ to DFW?
Dallas has emerged as a contender to become the new home of the headquarters of agricultural giant Archer Daniels Midland. Bloomberg News reported Monday that representatives from the company, which is currently based in Decatur, Illinois, visited Dallas and met with city officials last week to discuss options.
ADM is looking to relocate about 100 of its top corporate employees to a city with a major international airport, as it sells farm products and crops in more than 140 countries, according to Bloomberg. It is also considering Chicago, Minneapolis and Atlanta as potential sites for the global headquarters.
The Bottom Line: There’s no official word on what type of financial arrangement ADM might seek in Texas, but its executives recently asked Illinois legislators for more than $20 million in tax incentives if it moves to Chicago, according to the Dallas Morning News.
Winners of the Week: J.C. Penney, Home Depot, Toys ‘R’ Us
Three major retailers including Plano-based J.C. Penney won a lawsuit this week filed by a company that claims to have patented the technology behind the modern gift card. Alexsam Inc. was seeking a combined $250 million in royalties from JCP, Home Depot, and Toys ‘R’ Us, accusing them of violating patents that cover “systems to activate and recharge stored-value cards, such as gift and phone cards,” Businessweek reports.
A federal judge in Marshall refused to grant the company’s request to delay the trial’s October 22 start date, prompting it to drop the suit. Alexsam, which filed the patents in 1999 and 2001, has also unsuccessfully sued The Gap and Barnes & Noble on the same grounds.
Losers of the Week: Furlough-Fraught Farmers
Consequences of the government shutdown have rippled all the way out to Texas farms and ranches, which suffered financial setbacks as a result of federal services being cut off for more than two weeks. The biggest problem has been the lack of commodity price data usually supplied by the U.S. Department of Agriculture, which sellers of crops and livestock use as a key reference as the markets fluctuate—they were “flying blind” without it, the Texas Tribune reports.
Some government subsidies, low-cost loan programs, and other forms of assistance were also unavailable while federal agencies were shuttered. Negotiations over several policy measures that are in the works, including a new farm bill, have also been delayed, according to the Tribune.