Sports Biz with Darren Rovell

On Beckham, Player "Stocks, Madden: Your Emails


Lots of catching up to do on your mail, as I’ve been on the road for the while and haven’t been that good in checking it.

The first note comes from Nathaniel Wydra, who wanted to talk about my insistence that a real life player stock exchange couldn’t happen

"It could work if the exchange signs a ton of young talent. Looking at minor league baseball, for example, a player might want to sell 20 percent of himself today to insure against never panning out. Take Bill Pulsipher for example (my apologies for all Mets references). When he was a hot-shot minor league pitcher, he might have been smart enough to "sell" himself then as an insurance policy against never actually being decent. Of course, for every bust, there is a boom. Mike Piazza, the 65th rounder selected solely because his dad was friends with Tommy Lasorda, might have figured he's better off selling himself for whatever he could get at the time. When he makes the majors, his investors pick up some of that money for their initial investment. What are regular investors, after all, but scouts looking for the next big thing where others see nothing?

Truth be told, even established players might want to sell out. I'm sure Juan Encarnacion wishes he did. He'll never earn another penny of MLB salary, but had he gotten some of his future potential earnings up front, he wouldn't have to worry as much. Of course, he's got other things on his mind right now, but it was just an example. What about Michael Vick? Pacman?

You bring up the disinformation that sport encourages and the difficulty regulating it. There is tons of deception in regulated markets, from backdating stock options to Enron. It happens, and will be taken into account when prices are paid. Regulations to protect investors will be put in anyway, as they should be, but frankly it might not matter. Maybe people value a full Jason Giambi career at $100 million, but are only willing to pay out $90 million because they believe there's a 10% chance he'll be banned from the game. Here is where liquidity and the Efficient Market Hypothesis come in. All data and all perceived data will be accounted for.

Finally, you mention the size of the markets. Even Tiger's "Market Cap" pales in comparison to that of Exxon. True, there's no denying that. But that doesn't mean the market isn't viable. It simply means it will be small. It could serve as just another outlet of investment. It doesn't have to replace the current markets, simply to complement them. Everyone made fun of the idea that mortgages could be traded. When that much money is flowing, I assure you, smart people will find a way to efficiently exploit it."

It’s interesting how the David Beckham negative sentiment is picking up. On Aug. 13,I asked if the Beckham experiment was bad for the MLS. Only 21 percent of people (still a pretty big number) said it was. But after Beckham’s recent injury, that number climbed to 49 percent in just over two weeks. Well, I knew the soccer fans would still come after me with all their passion. Here’s a good sampling:

Mark Peters writes:
"Are you just trying to incite us soccer fans with all of your misinformation and lies? Can you seriously say that two months into a five-year deal that the Becks "experiment" is a failure? He has played 312 minutes with the galaxy scored a goal and had four assists. Not bad considering at no point was he at 100 percent.

Now, obviously the injuries have dampened a lot of the momentum that could have been for the league. There is no denying that. The league hurt itself there in choosing to market Becks and Becks alone when there are other compelling personalities and talented new players in the league this year as well. Blanco, Angel, Altidore, Schelotto, and Toja are all players that - while you as someone who has no interest in soccer may not know -- are all the kinds of players that will help convert the millions of soccer fans in this country to MLS fans. If the league continues to forge ahead and look to sign good international players and occasionally splash the money on a really big name, it will bring in a lot of these soccer fans- and converting the people that already "hate" soccer won't even be an issue."

John Marisco says:
"Having played soccer for the majority of my life, in college and experiencing first hand what MLS is like at preseason for 2 1/2 weeks with the Colorado Rapids, I had to read the article.

Beckham is not a guy that's going to beat three guys and delicately curl a ball back post to beat the keeper from 20 yards out. He simply does not have that "magic" (although he could, but it would be rare). Too many Americans have come to expect this type of performance from Beckham, but alas they know absolutely nothing about who he is as a player and what his limitations are.

It is also extremely unreasonable to expect Beckham to make the number of appearances he has thus far. The MLS schedule is ridiculous and players are forced to play in way more games, in a short period of time, then they should otherwise. A player like Beckham, and other high profile European players, would never even consider playing the number of matches he has thus far given the short time period. It's unlikely that Europeans who play for their countries would ever play a club match the next night, or be expected to.

It's not about saving soccer in this country, but about growing it. Our top flight professional league is less than 15 years old, which is mere infancy compared to the other storied leagues around the world. Beckham will add more interest in this country and the young players who play the game will continue to grow"

Then there’s my FedEx Cup math. I said the $10 million annuity was worth roughly $4 million to Tiger Woods and Phil Mickelson. Others had it differently.

From Frank Yoshida:
"The real calculation you should be looking at is how much $10 million 25 or 30 years from now is worth today, that is, the Net Present Value of $10 million in 2038. Assuming a conservative 5% discount rate, that puts that $10 million pot somewhere in the $2-3 million range (25-30 years). Not quite the $4 million you suggest, but close."

And from Dean Danielson:
"If you take a $10 million future value and discount it back 30 years utilizing an 8 percent hurdle rate, the prize is worth $993,777 in present day dollars. Not nearly as impressive as some stand alone tournaments."

Finally, one reader wrote in with a faster way--um, even though she’s cheating--to get those rings in Madden ’08. As you might recall, in a previous post, one reader had written in that it would take about 67 hours to get a ring:

“It took me 30 mins to an hour to get all 5 rings completed. The easiest thing to do is go to Franchise mode, select every team as your team, simulate the season over and over. You will get points for leading every NFL category since you're every team, and therefore going up 1/5 or 2/5 a level on your ring. Got to the end of the 5th in about an hour."

Questions?  Comments?

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