An exciting new asset class for America's pension funds and college endowments to consider
Today's NRC Handelsblad has an article outlining a recent change in fortunes (for the better) at Rotterdam's Feyenoord soccer club. One of the reasons is a new program called "Talent Pool" (they failed to come up with a proper Dutch name for it) which allowed outside investors to buy a stake in the transfer rights of seven young players. Soccer teams usually exchange players in cash transfers instead of the trades prevalent in most U.S. sports. Reports the NRC (translation mine):
For 250,000 euros each, a number of investors could sign up to share 25% of the proceeds of future transfers. In this manner Feyenoord generated six million euros. Interest in the Talent Pool was such a success that Feyenoord is now working on a second pool that should bring in about five million euros.
This sounded vaguely familiar to me, and a bit of googling confirmed that Feyenoord did not originate the idea. Argentina's Boca Juniors did, in 1997, with a transfer-rights fund that actually traded on the Buenos Aires exchange for four years. The WSJ had a story last year about a Lisbon hedge-fund manager who buys and sells the rights to promising Portuguese soccer players. A couple of funds were launched in the UK last year to do the same.
So I can't decide: Is this burgeoning trade in human flesh the creepiest thing in the world, or an entirely appropriate way to spread the risks and rewards of a volatile business?
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1
Your obsession with my country has so far been quite amusing, but why write about Feyenoord when there are so many more interesting teams to write about, like Ajax? It makes no sense.
Actually, this trade in human flesh is not that special. Usually clubs "own" a player for several years through an employment contract. If the player wants to leave, his new employer must buy out the contract. There are clubs that earn most of their income this way; buying cheap and selling at a profit is a good business of you can consistently spot talent before others can. In Holland, SC Heerenveen is a good example of this.
BTW, the human flesh in this business enter these contracts willingly and are extremely well rewarded. In Dutch first division, one of the smaller European competitions, AVERAGE wages are about $500.000 a year, with top players earning 5 times that. Wages in England, Spain and Italy are much, much higher still. So perhaps it is creepy, but few players complain.
What do average NFL-players make?
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2
I'm actually a bit of an Ajax fan, and definitely not a Feyenoorder. But I'm a slave to what the NRC chooses to cover. The innovation isn't that teams are buying and selling players but that this activity has been moving onto financial markets. But yeah, the players are well paid, albeit for often-short careers.
As of 2005, according to USA Today, the average NFLer made $1.4 million.
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