Mercados en todo

by on November 18, 2010 at 1:13 pm in Books, Sports | Permalink

Investors from the United States believe they have found an exotic new prospect: Latin American baseball players, some as young as 13 and many from impoverished families.

Recognizing that major league teams are offering multimillion-dollar contracts to some teenage prospects, the investors are either financing upstart Dominican trainers, known as buscones, or building their own academies. In exchange, the investors are guaranteed significant returns – sometimes as much as 50 percent of their players’ bonuses – when they sign with major league teams. Agents in the United States typically receive 5 percent.

The full story is here and for the pointer I thank J.C. Bradbury, who has a new book out The Hot Stove: Understanding Baseball's Second Season.

Gustavo November 18, 2010 at 10:04 am

well, that's exactly what European investors have been doing in soccer for many years (since the 90s) ..check on Messi's biography

Jack November 18, 2010 at 10:40 am

@Kevin Postlewaite, also what about artists? Another example of a low-probability, high-payoff situation. Why isn't there a formal system to invest in them? Are adverse selection and moral hazard too important? Anecdotal knowledge suggests banks are not willing to extend artists useful lines of credit.

Jim November 18, 2010 at 1:06 pm

How dare these imperialistic Americans go to a dirt-poor country like the DR, invest millions, and teach children to play better baseball!

Have they run out of countries to bomb, or something?

Jay November 18, 2010 at 2:19 pm

I'm sure Elizabeth Warren has the powers to intervene as Consumer Financial Protection czar.

dirk November 18, 2010 at 4:19 pm

robbbbbb,

what i mean is investing in high-school age kids vs. college age kids.

you aren't fielding a young MLB team with high-school age kids — and determining which ones will turn out to be stars is a crap shoot. at least, that's the current sabermetrics wisdom i've read. you can tell a lot about the potential of college players from their stats, very little from watching high-schoolers play against each other.

that said, there are plenty of MLB clubs still living in the dark ages and willing to use too many resources to try to find teenage stars, but one would expect those inefficiencies to iron out over time and the days of paying multi-million dollar contracts for bags of flour to end soon.

anonymous November 18, 2010 at 9:48 pm

Jack and Kevin,

One difference is that radiologists or artists can work for anyone in any country, which makes it hard for investors to collect their cut from employers who never signed up for the scheme and from talent who decide after the fact that they'd rather keep all the money for themselves. Major League Baseball, on the other hand, is a monopsony purchaser of million-dollar ballplaying talent, so if they're on board then investors can be reassured.

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