With the popularity of fantasy sports on the rise, it is the mission of one company to remove the fantasy by mating traditional market investing with the careers of professional athletes. Minor league baseball pitching prospect Randy Newsom and his recently founded Real Sports Investments (RSI) are hoping that investing in an athlete’s future may mean big payouts for investors and athletes alike.
His idea is simple: allow minor league baseball prospects to sell shares of their future contracts to investors. However well that prospect manages to do in their baseball career—specifically how large a contract they receive if they reach the major leagues—thus pays out a dividend to investors.
As of now, Newsom, a 25-year-old class AA middle reliever with the Cleveland Indians organization, is his company’s only available stock. Investors act as the judges of how volatile his market and potentially others’ markets could be.
![filekey=|1579| align=|left| caption=|Athlete investments will likely be more fun than lucrative| alt=|Athlete investments can be volatile and may never be a serious investment opportunity|]Newsom is offering up to 4 percent of his future major league earnings to interested investors. RSI sees the potential investment as insurance for minor league players with unsteady incomes and uncertain futures. In the event of career-ending injury, or if the player simply never ascends to the major leagues, investors will see nothing in return. However, if Newsom were to quit within the first two years of his contract or be banned because of performance-enhancing drugs, investors would be re-paid with interest.
Investing in athletes is a volatile market and will most likely become more of an entertaining activity, like betting on a horse race, than a serious investment market. That being said, what could an investment in a player such as Newsom yield?
Why not take a look at some of the numbers? Here are some of Newsom’s pitching statistics, according to his official biography on RSI’s web site: "In 2007, Randy had a dominating 1.50 ERA in Advanced A Kinston. He was quickly promoted to AA and was selected to the Eastern League All-Star Game in July. For the season Randy went 4-1 with 18 saves and an outstanding 3.12 ERA as a closer for the Southern Division Champion Akron Aeros."
Another notable number is what Newsom can earn by selling 4 percent of his future earnings today. "A total of 2,500 shares will be offered, netting the pitcher $50,000 if they all get sold," according to Slate.
While it is impossible to predict the sort of contract Newsom might earn in the major leagues, a comparison to Chad Bradford, a proven major league middle relief pitcher with a guaranteed contract of $10.5 million, could help investors come up with a ballpark figure for their potential returns. "That would give the $20 shares a present value of $29," according to Slate.
In order to break even on $20 per share, Newsom would have to make the major league minimum of $400,000 a year for more than five years.
Although at 25 years old Newsom could be a long shot to make quality money in the major leagues, the idea of investing in him or other ballplayers could give minor league baseball a popularity boost because investors would have extra incentive to monitor the careers of those in whom they have invested. It could also mean big things for trading shares; if Newsom were coming off an All-Star season and his stock was at a record high, investors could sell it off and earn reap the rewards if they had bought shares when he was still an unknown.
Many seasoned investors may not place any money on long-shot odds on little-known minor league baseball players but for fantasy sports league veterans, this could be an evolution in following pro sports stars. While RSI reports they are in talks with other athletes to join their business, Newsom remains their only product. At this time no other participating athletes have been announced.
RSI is a believer that once people get involved in its investment process, fantasy sports will be merely an afterthought. For now, investors who are interested in the business or in purchasing a piece of Newsom can check out RSI for more information.
In this article
- Alternative Investment
- athelete investment
- athlete shares
- baseball players
- buying athlete shares
- cleveland indians
- fantasy baseball
- fantasy basketball
- fantasy football
- fantasy sports
- investing in athletes
- major league baseball
- major league contracts
- major leagues
- minor league baseball
- minor leagues
- professional athletes
- professional baseball
- professional sports
- randy newsom
- sports investments
- unconventional investments