BUFFALO’S BUSINESS
Call a foul on basketball investment?
David Robinson
Updated: 07/06/08 6:44 AM
There’s a new stock in town, from a company that wants to bring a minor league basketball team to Buffalo and broadcast the league’s games in China. But this is one stock that’s got no game — at least not yet.
The company, NexxNow Inc., is a start-up with a highly speculative business plan whose success hinges on winning the rights from China to broadcast minor league basketball games there over the Internet, TV and mobile devices.
The company has indirect ties to Thaddeus A. (Todd) Wier Jr., who pleaded guilty to securities fraud charges in 1998 for his role in defrauding investors in risky ventures through companies called Domestic Capital and TAW Securities. It was one of the biggest investment fraud cases in local history.
Wier, until April, was the chief executive officer of NexxNow’s predecessor company. Wier still owns more than 9 percent of the stock in NexxNow, and another company that he owns, Market Vision Consulting, has a deal that pays $150,000 a year, plus stock, to provide public relations and management advisory services to NexxNow.
Wier’s daughter, Brittany, a 21-yearold who graduated from Buffalo State College in May, owns 39 percent of the company and serves as NexxNow’s director of business development, receiving a $54,000 annual salary.
“I’d like to think I’ve learned from my mistakes,” Todd Wier says. “I was guilty of being aggressive. I was guilty of not possessing the knowledge needed to put together that kind of capital. Guilty of lying, cheating and stealing? Never.”
“If I could turn back the hands of time,” Wier says, “I would know how to structure a deal so an investor has a better shot.”
NexxNow plans to field a team — the NexxNow Dragons — this winter in the Premier Basketball League with a roster of American and Chinese players to increase its appeal in China. The Dragons, which are set to play their home games at Erie Community College’s Flickinger Center, won’t be the only minor league basketball team in town. They’ll also have to compete for local fans with the scheduled return of the Buffalo Sharks to the American Basketball Association.
With NexxNow, Wier talks of the huge audience that could be tapped in basketball-hungry China, possibly generating $10 million in ad revenues per game, or up to $240 million a year. The company has a deal with the Premier Basketball League to distribute its games in China, but that will happen only if it can reach a separate deal with the Chinese government, which is far from a sure thing.
“It’s a start-up and development-stage company. It’s got lofty goals and it feels like it can reach its goals,” Wier says.
If it gets that Chinese contract, Wier says NexxNow’s stock could “go vertical” and pay off big for early investors. But even he agrees that, for now, it’s a high-risk, speculative investment. Still, NexxNow hopes to raise “a couple of million” in extra capital by selling stock to “accredited investors” through a private placement.
With more than 8,000 diversified mutual funds to choose from, and thousands more stocks in established and profitable businesses, why invest in this?
“I’d be very wary,” says Richard K. Schroeder, a certified financial planner at Schroeder, Braxton & Vogt, an Amherst money management firm. “This is a pure gamble and the deck is stacked in favor of the house.”
Anthony J. Ogorek, who runs Ogorek Wealth Management in Amherst, agrees. “These are leagues you haven’t heard of,” he says. “Should you invest? Not unless you need tax losses.”
Will NexxNow succeed? Only time will tell.
But at this point, the only smart way to put money into NexxNow is to buy a ticket to one of the Dragons games.
