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Houston Texans running back Arian Foster reaches forward for a first down after being tackled by New England Patriots cornerback Aqib Talib (31) during the second half of an AFC divisional playoff NFL football game in Foxborough, Mass., Sunday, Jan. 13, 2013.Charles Krupa/The Associated Press

Don't believe the hype. There are some glaring red flags in a new company's proposal to sell stock in professional sports players.

Last week, Fantex Inc. filed the legal documents necessary to take fantasy sports to a new level by allowing people to invest in athletes. Their proposal aims to raise $10-million (U.S.) by getting people to invest in Arian Foster, the star running back for the Houston Texans of the National Football League.

At its core, the plan is quite simple: Arian Foster gets a $10-million cheque up front, in exchange for 20 per cent of his future earnings on everything from his NFL contract to endorsements to broadcasting.

Some people thought the idea was unique. Others thought it was outlandish. Many thought it was silly. But it was hard to form an opinion because much of the media coverage was pretty superficial. Felix Salmon did a good job looking at some of the structural problems, but there haven't been many thorough readings of the prospectus.*

Inside it, there are some major warning signs. Chiefly, the deal is being marketed as an investment in Arian Foster. And initially, it is. But over the long-term Fantex will invest in many more players, and if they end up being busts while Mr. Foster does well, all of those losses are netted out against the gains from Mr. Foster's revenue.

"Investors in our Fantex Series Arian Foster are investing in Fantex and not in the brand contract or Arian Foster," the prospectus said. In short, anyone who puts money in will invest in their whole roster of players.

Investors "will share on a pro rata basis (calculated based on attributable income) the burden of any non-performing brand contracts… and the economic performance of our Fantex Series Arian Foster will be dependent, in part, upon the aggregate financial performance of Fantex," the prospectus stated.

Investing in a single player is also a dangerous strategy. Even if you could invest in Mr. Foster alone, you'd still be nervous because his value is highly unpredictable. Fantex admitted that 75 per cent of his "brand income" is "derived from anticipated future contracts that do not exist as of the date of this prospectus, such as future endorsements, playing contracts and/or additional brand generating income from coaching, broadcasting or the like." 75 per cent.

Mr. Foster also doesn't have much in the way of future earnings. His endorsements only add up to $687,750, and he's two years into a five year contract. Fantex fully admits that he needs to sign another contract at the end of it to really make money for investors, and he needs more endorsements that that pay him "in amounts that are significantly in excess of compensation that he has had."

Not to mention what happens if he gets a serious, possibly career-ending injury. Just read this Grantland piece on running back Chris Johnson to learn how quickly running backs can go bust in the NFL – even if they aren't banged up. (Sadly, Chris Johnson is my starting running back in fantasy football this year.)

As for shareholder control, investors don't have much of it. The way Fantex is structured, the company will control all of the voting stock; Fantex will have free rein to determine which players they want to sign next. Investors will simply be paid dividends along the way – if they're lucky.

Take it from me: the fantasy football you're already playing is a much safer bet.

*Hat tip to the Colts fan who convinced me to read the prospectus. I'm sure he's happy after last night's win.

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