Invest in a Sports Star

Financial innovation. Financial engineering. They have become very negative terms ever since the crash of 2008. And yet, not all financial innovation is bad (obviously). Recently, I read about an interesting instance of such innovation.

Every time you hear of the astronomical earnings of a Virat Kohli, have you wished that you could invest in a sports star? The way you do in stocks? In such a system, investing in the star would entitle you to a fraction of all future earnings of that player both on and off the field. Yes, that means a share of his/her endorsements too!

Ok, but why would any sports star agree to such a deal? Two words: risk reduction. Imagine you’re a player who is on the rise. You know that, even though you are talented, a lot of things can go wrong in the future. So to de-risk things, in return for handing over the above mentioned share of your future earnings, you get a lump sum upfront payment from those investors today. Guaranteed. Money you don’t have to return no matter what happens.

An American company, Fantex, has created just a system with some baseball players.

Just imagine, if you had invested in Sakshi or Sindhu before the Olympics, you’d be entitled to a share of the 5.16 crore and 13.6 crore bonanzas awarded to them!

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