Will athletes ever be traded like stocks? That question was posed to me on a panel yesterday on "The Call." I've been wondering this since the inception of ProTrade, an awesome virtual market that does the same thing in the online fantasy world. But I think things picked up steamed when, in the inaugural issue of Portfolio Magazine, much respected writer Michael Lewis of "Moneyball" fame penned the most extensive piece on the subject. Lewis' story didn't reach any conclusion, but I have. This will never, ever happen.
Here is why:
1. In order for this to work, athletes can't be traded based on their performances, as ProTrade currently works. They have to be traded based on their actual value and real return to investors. In order for this to happen, athletes have to be willing to give up an equity stake in themselves. Any accomplished athlete has no motivation to do this.
2. There aren't as many parents as you would think who are willing to sell stock in their kids. Part of the reward of making it is the huge financial prize. If that will be lessened significantly because of investors, the journey isn't as worth it.
3. If the idea of buying shares in a young golfer makes sense, the regulatory bodies are never going to be able to monitor the flow of information enough. There's no world more hyped than the sports world. There's no world with more misinformation and deception. There's no way rules can ever be made to keep this in control.
4. The market simply isn't big enough. So Tiger Woods might earn $1.5 billion in his entire career, including endorsements. But most top athletes will make between $200 million and $350 million over 20 years. What kind of market cap is that? Even the top athletes are at best bulletin board material.
Video is my recap of last night's NFL opener.