Originally Posted by raybec 4 (Post 17089423)

It seems less of an NIL issue and more of a usury issue. I am not sure what they used his name/likeness for to make it an NIL agreement as much as it is just a loan.

Originally Posted by DJ's left nut (Post 17089431)

Usury is difficult to argue when there's no guaranteed return.

But most of the time usury becomes a thing north of 17% or so. Some states are lower but maybe 15%?

I mean you're doubling every 4 years at 17%, give or take. So that 400k becomes 1.75 million by 2030. With no guarantee of any second contract, how can you call it usurious when you may not even get a 15% ROR over the useful life of the deal?

It requires a lot of speculation and contract law LOATHES speculation.

Originally Posted by DJ's left nut (Post 17089414)

You'll go down a business licensure rabbithole that I simply can't speak to at that point.

The contract terms will almost certainly contain a choice of law provision asserting any dispute will be governed by the law of X state (almost certainly not Florida). Now the other side of that coin is likely to be that there may be requirements to conduct business in Florida (i.e. registration requirements) that in some way invalidate those choice of law provisions - hard to say.

But I would think that a company that's in a position to pay an athlete $400K (and lets not act like that's not a pretty goddamn massive number for a college athlete that maybust out altogether) would also have the financial backing to make pretty sure they're on firm legal footing.

This is a contract offered in 2022 with an NIL statute passed in 2020. They had a couple years to make sure they had their ducks in a row.

I'm not gonna say 'oh poor Dexter' on this one - the guy got more money than many folks will see in their lifetimes. With the time value of money, this company will essentially break even over his rookie deal (That $430K with interest rates being what they are will double pretty easily over about 6 years) and there are precisely ZERO guarantees past that. And there were no guarantees BEFORE that rookie deal when the contract was offered.

It's the 2nd contract where there's any real return and in the meantime it's essentially an unsecured loan for nearly half a million.

Honestly, that's a business practice that, the math says, will not work over any prolonged period of time. It would take 2 or 3 bad investments to put a company like that underwater.

Originally Posted by Rain Man (Post 17089440)

I recognize that he could have blown out his back or been killed by a rampaging circus elephant in 2022 and this would be worth nothing to the company, but on my first sniff this seems to be someone who's good at math defrauding someone who's bad at math.

First, I assume the company would find a way to insure against the contract being worth nothing. Even if that costs them 25 percent of the investment, then their maximum risk is about $100,000.

Then it's just a matter of grading his likely draft slot, and I think players are sent those from the league every year. There's obviously guessing and wiggle room there, but the company can easily build a model around that of expected value by looking at contract amounts and expected career lengths.

As it stands now, the company will start turning a profit in Year 2 of the guy's career. If you're a guy being graded as a second-round pick, my hunch is that you're almost certain to have a career that's longer than two years. This seems like a no-brainer win for the company and almost a no-brainer loss for ol' Gervon.

I'd want to look up contract amounts and career lengths before investing, but my first reaction is that I would gladly do this for every second-round draft pick in the league and then go relax on my yacht.

I suspect that Gervon is not good at math and is not good at delayed gratification, and that company took advantage of those facts.

Originally Posted by GloucesterChief (Post 17089454)

I believe these types of contracts are common for prospective MLB players in Latin America.

Originally Posted by DJ's left nut (Post 17089462)

He's a defensive tackle - they don't go top 2 rounds very often. As for Dexter, I had him as a 3rd rounder and I think most did; the 2nd round contract is a happy accident.

Let's say Dexter is not Gervon Dexter but rather "Gervon Dexter, LLC". How is this different than a company that needs startup capital and sells 25% of its ownership interest for seed money to get off the ground?

That's the entire foundation of the VC industry. And a TON of venture capitalists lose their ass.

The deal's worth almost exactly a million bucks to the lender. Over the first 4 years of that deal (5 years from the date of the loan) it's almost EXACTLY a 15% rate of return. And that's with a floor of zero and a likely top 15% set of outcomes that have you below a high 2nd round pick.

It it a deal that may work out really poorly for Dexter? Oh yeah - no question. Does it get to 'unconscionable'? I don't see it. Through 2 years of his rookie deal (3 years from the date of the loan) they'd be about break-even from a 10% rate of return on that same $430K.

A 'loss' or a 'win' isn't illegal. You're free to make bad deals in this world, just as that guy who sold his 10% share in Microsoft for a few thousand bucks way back when did. Happens all the time.

Don't get me wrong - there's a long tail, but the guy can be out of the league at any point and essentially zero floor. This guy didn't get a ham sandwich and suit - the guy asked for, and received, damn near a half-million dollars.

He's no angel in all this.

Originally Posted by Shiver Me Timbers (Post 17089531)

Bet Mr Dexter actually does not have any of his 436k left. Now he wants out of the deal.
sounds about right

Originally Posted by mr. tegu (Post 17089550)

Why would this company give him any money at all if not for the exact reason to make money on that investment in the future?

Originally Posted by HC_Chief (Post 17089565)

JFC do contracts mean nothing anymore?
Dipshits sign paperwork without reading it, or understanding it (get a ****ing lawyer to review it... it costs very little to do so), then play victim when they are held accountable to the contract they signed.

Boo ****ing hoo. :grr: