Sunday was a bad day for Fantex, the fledgling company promoting initial public offerings of National Football League stars.
First, media reports surfaced that Fantex’s first I.P.O. prospect, the Houston Texans running back Arian Foster, is expected to have back surgery that will end his season. Then, the company’s second client, the San Francisco 49ers tight end Vernon Davis, left his game in the first half after suffering a concussion and did not return.
Fantex acknowledged that the chance of injury was a significant risk when it unveiled its innovative new business last month. The company is primarily a sports marketing and management firm that signs athletes and takes a stake in their future earnings, including playing contracts and brand endorsements.
But to fund the payments for those stakes, Fantex has created stocks that it hopes to sell to the public. These stocks are intended to track the athletes’ economic performance. Ultimately, the company wants to build an exchange that will allow small investors to buy and sell interests in the earnings of not only football players, but also other athletes and entertainers.
While investors can register with Fantex on its website, the company is not yet accepting orders for the I.P.O.’s. Cornell French, the co-founder and chief executive of Fantex, had said the company hoped to begin to take reservations for the Foster deal next week, but thus far, it is still not open for business.
A Fantex spokesman declined to comment until after the Texans announced details about Mr. Foster’s future.
The start-up’s business model has raised eyebrows on Wall Street and in the sports industry. Some market commentators have raised red flags about the Fantex deals. Not only do they say that an injury could cut short a player’s career and earnings potential, but also highlight the deal’s complex structure.
Investors will receive a so-called tracking stock in Arian Foster’s or Vernon Davis’s brand. But unlike owners of a common stock, who have a claim on a company’s future earnings, investors in the Foster or Davis deals will have no actual interest in the player’s future earnings. The tracking stocks are merely intended to benefit from the athlete’s economic performance, but there is no guarantee that they will. Nor is there any guarantee of a dividend.
People familiar with Fantex’s business model say that the company is targeting sports fans who are willing to part with a small amount of money so they can have more than a just a rooting interest in their favorite player. The minimum investment is just $10.
In the case of Mr. Foster, Fantex is selling about $10 million in stock to pay Mr. Foster for a 20 percent interest in his future income. It plans to sell about $4 million in shares to buy 10 percent of Mr. Davis’s future earnings. If demand for the tracking stocks is insufficient, the company may cancel the deals.
Mr. Foster’s and Mr. Davis’s physical ailments are not the company’s only setbacks.
Fantex had hoped to offer its first deals at the start of the N.F.L. season, in part to avoid the possibility of an injury. But the review process by Wall Street regulators, especially at the Financial Industry Regulatory Authority, or Finra, took longer than anticipated, which held up the company’s debut.
