Prediction markets in everything, Brazilian soccer player edition

by on July 20, 2008 at 11:36 am in Sports | Permalink

It could be a fantasy football draft in any office in America –
only these trades are real. This is the office of Traffic, a Brazilian
company leading a new, and controversial, wave of investment in
Brazilian soccer.

Armed with 20 million reals of their own
money (about $12 million) and another 20 million reals they hope to get
from investors, Traffic is buying up contracts of young soccer players
all over Brazil. They then lend the players to teams, who pay the
players a salary and also allow them to showcase their talents. If they
are recruited by a big European team, Traffic and its partners reap the
largest share of the transfer fee. (The player, as usual, gets any
signing bonus, and an often hefty salary.)

“Instead of investing
in the stock market or real estate,” Julio Mariz, Traffic’s president,
said, “these people are investing in buying the economic rights to
football players."

Here is the full story and thanks to Hunter Amor Williams for the pointer; here is Hunter’s beer blog.

chug July 20, 2008 at 12:43 pm

Wish I could invest in young Brazilian football players; excellent football is played there.

The Brazilians play “beautiful football,” which is why the national teams are known as the Samba Boys and the Samba Girls.

Anonymous July 20, 2008 at 2:45 pm

And not recent either. Just think about Lionel Messi and several others.

Here in Bolivia, my godson’s mother bought her son’s playing rights when he was eight years old – now he is eleven. In the short run, to avoid problems when going from one team to another. And in the long one, probably to sell them. This is very common.

Tomé July 20, 2008 at 3:12 pm

Sorry for the terrible spelling

I wasn’t paying any attention when I wrote it =T

Sune July 20, 2008 at 6:15 pm

So traffic offers a decent income in return for the slight probability of a player being transfered for a huge amount. That probably helps spread out income from wealthy succesful players to the ones that dont make it?

Timothy July 21, 2008 at 1:41 am

Of course smaller clubs in Europe and elsewhere do much the same thing, buying up talented youngsters, training them and hoping that some will excel and be bought by richer clubs. Surely in Brazil there are principal/agent issues: a club which does not own the player has less incentive to train them well, to give them playing time in games, to protect them from injury etc. Brazilian clubs, which as a whole are notoriously mismanged, probably lack the financial stability and access to credit which would allow them to take these risks themselves, the way that even small European clubs can.

soccer nerd July 21, 2008 at 10:10 am

Its amazing how many great brazilian soccer players there are.

Are you a soccer nerd? Test your knowledge.
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