When Athletes IPO

Remember the jock exchange that Michael Lewis wrote about in the first issue of Portfolio? The idea was that an exchange could be set up where the assets traded were not shares in companies but rather shares in athletes. Well, it hasn't happened yet – and if Formula One star Lewis Hamilton has any say in the matter, it might not happen at all. For why bother with the ghetto of a jock exchange when you can simply list yourself directly on a major stock exchange? Cole Moreton reports:

The 22-year-old is apparently considering floating himself on the stockmarket...
His father, Anthony, and specialist advisers are considering a range of business moves. In one remarkable plan, a new company would be set up with the driver as both its major asset and shareholder – and sell off 10 per cent of its stock on the London stock exchange for about $100m.
That would give him a lump sum now – before he has a chance to crash his car at high speed, lose his nerve or go off the rails as a result of the luxurious new life he can enjoy as a superstar.

The results of England's experiment in listing football clubs were, to put it mildly, unspectacular; most of them have been delisted by now. But at least a football club can last indefinitely; stock in an individual athlete, by contrast, is by definition a wasting asset. Investors would buy it not in the hope of capital gains, but rather to reap as much in the way of dividends as possible before the athlete in question's career came to an end. While most stocks hold out at least the potential of massive upside, then, an athlete's stock would probably have more downside than upside. Which would make it a good investment only for the most sophisticated of investors.