April 12, 2019 | Professor Victoria L. Schwartz‘s article, “The Celebrity Stock Market” (SSRN) has been published in the U.C. Davis Law Review [52 UC Davis Law Review 2033 (2019)]. The article considers ways to address the challenges raised by human equity trading markets.
Abstract of “The Celebrity Stock Market”
Seemingly ripped off the pages of dystopian novels, companies have experimented with celebrity stock markets — human equity trading markets in which investors can purchase “stock” in aspiring athletes, entertainers, and other celebrities and receive a share in the celebrity’s future income. An “IPO” provides the aspiring celebrity with a large up-front payment in exchange for foregoing a percentage of future earnings, thus sharing both the risk and rewards of future successes with investors. Most prominently Fantex, commonly referred to as the athlete stock exchange, entered into contractual deals with nearly a dozen NFL players paying them an upfront, one-time fee in the millions of dollars. In exchange, the company received a set percentage of the athlete’s future earnings both on and off the field forever. Fantex then held an IPO for tracking stocks in its share of the athlete’s future income, which investors could buy and sell like traditional stock. Although Fantex did not succeed, its serious attempt to expand beyond athletes to include other aspiring entertainment celebrities demonstrates the need to address the many legal and ethical challenges raised by celebrity stock markets. This Article first identifies the legal and societal conditions that have combined to make celebrity stock markets a serious possibility going forward. It then considers the various concerns celebrity stock markets trigger, including privacy sorting concerns not yet addressed in the literature. Ultimately, it concludes that these legitimate concerns do not make celebrity stock markets demonstrably worse than alternative systems for funding aspiring celebrities. The Article thus proposes implementing some contractual limitations on celebrity stock markets designed to minimize the most serious concerns with such markets, rather than banning them entirely.