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Originally Posted by DJ's left nut
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.
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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.