Taking Fantasy Sports to the Next Level: Investing in Real Players

[Migrant Redbird]

An outfit called Real Sports Investments is now offering investors the opportunity to invest in the future earnings of baseball players.

How does it work?

In order to buy shares of a professional athlete, you need to become a member and agree to the terms and conditions that apply.

After you become a member, you are permitted to purchase shares of a professional athlete.

When you purchase a share, you become an owner of a small percentage of that athletes future contract.

If the player who you own shares in makes it to the major leagues, you will get paid when the player gets paid. RSI will either increase your account or send you a check for the percentage you own in that athlete.

The goal and vision of RSI is to provide a liquid market for investors to buy and sell shares. Imagine owning shares in a young promising athlete who has a terrific year right before their contract is up for negotiation. Shares in that athlete will increase because that athlete's future potential earnings will have increased.

You can buy 4% of a player's future ML earnings for $50K, which is pretty close to what his agent will be getting. If $50K is too much, a $20 bill will get you a 0.0016% share.

According to RSI, the "break even point" in a $50K investment is when the player earns a total of $1.25M in major league salary. In other words, if the guy can hang around for 3-4 years, your investment would come out equal or ahead. (I'm ignoring the time value of your investment because RSI does and I'm too lazy to open up a spreadsheet and brush up on the Present Value formulas.)

It appears that Indians AA pitcher, Randy Newsom, is the only player which RSI currently has under contract. He was part of the Coco Crisp trade and his minor league record is here. Newsom is a relief pitcher, so I doubt if the odds of him reaching the majors are all that high. So far, it apears that 181 $20 shares of Newsom have been sold, for a total of $3620 invested.

A $20 share of Erik Bedard would pay you back $96 to $128 this season, based upon his arbitration figures. Your original investment would have been recovered 2-3 years ago and his first FA contract might net you somewhere in the 4000 percent range ROI.

It will be interesting to see if this takes off. I wouldn't mind picking out a couple of lower minor league prospects I like and popping $20 down on each of them -- players I can think of right now that I might have done this for while they were at the AA level of the Cards farm system include Jack Wilson and Coco Crisp. Of course, I think that Wilson and Crisp were quite a bit better prospects when they were at AA than this Newsom character.