Sports Biz with Darren Rovell

Real Sports Investments: Selling Shares Of MLB Players?

Randy Newsom, a founder of Real Sports Investments

Golfers, tennis players and horses have always been sold to syndicates in order to raise money. But baseball players? What happens today could influence whether we'll ever get a chance to buy a piece of a baseball player.

You see today, Mike McGirr, one of the founders of Real Sports Investments, will be meeting with representatives of both Major League Baseball and the union to talk about his company, which aims to sell shares of athletes. The company got a ton of attention a couple months ago when one of its founders, Randy Newsom, a Tufts economics graduate and Double-A pitcher in the Cleveland Indians organization, decided to become the guinea pig.

Newsom agreed to sell four percent of his future earnings--determined to be $50,000. He quickly sold 1,800 shares at $20 apiece before officials from Major League Baseball and the union begin to grow concerned about the plan. The company smartly decided to return the money to the investors and set up a meeting with MLB and union officials, which is happening today.

We went down to spring training to talk to Randy Newsom about the business plan.

Darren: How did this idea come about?

Randy: I was sitting in the Arizona Fall League with a bunch of my teammates and we were just talking about things. A pitcher on the other team was pitching and he was pitching really well. He’s a good pitcher and some people think he’s really underrated. At least we did because we watched how good he was. And we said, “This guy's going to be a big time big leaguer.” And so we were talking and somebody was saying how people go underrated and I wish I could get in on the ground floor of this pitcher at the time. And I thought about it and I thought about the risk that we face as baseball players and you know the financial unknowns that are there and so we came up with the idea sort of hatched in the bullpen of an Arizona Fall League game

Darren: What was your plan to tell the world about this?

Randy: Well, we planned on keeping it somewhat small and not advertising at all. I talked to a college class and they got very excited about it. I talked to a couple of baseball researchers and they got very excited about it. And then the buzz spread through message boards and through the chat rooms and the next thing you know our site, which was barely up a week, started getting hits.

Darren: Then all of a sudden you had a ton of investors just buying you up.

Randy: We really thought this was going to be a gradual process. Once I realized that this market was even bigger than we had dreamed, that the fans were just so overwhelming, so nice and so supportive, I said this has to be done perfectly so we can make sure the fans, players, Major League Baseball everything is represented perfectly. So I said let's pause this, let's meet with major league baseball, let's meet with everybody we have to make sure everybody is on the same page and they’ve been great.

Darren: How many minor leaguers were willing to sell stock in themselves?

Randy: We don't want to give actual numbers. We wanted to keep it confidential.

Darren: So why would they get involved here?

Randy: It could be anything from buying a house to a little breathing room. There’s a lot of players out there with families. There’s a lot of players out there with kids and wives and they make the most of what they have, but I understand that $50,000 to a minor leaguer sometimes could be a ton.

Darren: What was $50,000 going to mean to you?

Randy: One of the things I wanted to do was attend one of these off-season training institutes. I hadn’t picked one out specifically yet, but I see a lot for the players that come back and they’re ready for the long-haul. Major League Baseball and Minor League Baseball -- those seasons are long and you want to be at your best at all times to help you team win and so I wanted to put it into my training.

Darren: If your company does proceed, what's the max amount a player could sell of himself?

Randy: We set a max for our players at five percent. We put in a lot of safeguards. We didn’t let too many people put too much in – I think the most anyone could buy of me was .25 percent of overall. We were trying to be very careful in terms of safeguards because we want this just to be about bringing fans in on a smaller level. We don't want this to be about money to a point where people are expecting this to be just an investment vehicle. If people are investing economically, we don't even want them. We want people who are fans of baseball or fans of players. Those are people we are looking to target.

Darren: Did the SEC ever get involved?

Randy: We talked to plenty of security experts. We were one of those square peg-round hole scenarios where there were lot of exemptions and nobody was sure how we fit. So we wanted to see, so we talked to them. We've gone through the appropriate channels. They said they couldn't comment because they didn't know. Nobody complained about anything and that's when they usually rule on stuff. But for the most part, we were told that the $50,000 amount seemed to be below a lot of the thresholds.

We'll give you an update when we can on the status of Real Sports Investments and the meeting with Major League Baseball and the union.

Selling Stock in Yourself

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