Fantasy soccer for big spenders

Amy Scott Oct 31, 2006

KAI RYSSDAL: We try not to offer direct investment advice on this program. But here’s sort of an unusual tip. He’s 17 years old, weighs about 150 pounds, and some think he could be soccer’s next David Beckham. Theo Walcott plays for the British soccer team Arsenal. And two new hedge funds over there have plans to make a lot of money on players like him. Marketplace’s Amy Scott reports.

AMY SCOTT: When a soccer player gets traded in Europe, the new team has to pay the old team a transfer fee. Bloomberg news reports that two new hedge funds want a piece of the action. They plan to buy stakes in young players’ contracts. When a player transfers to another team, the hedge fund would take a cut.

Steven Cohen hosts the radio show World Soccer Daily. In the last few years, he says, transfer fees have sky-rocketed. This year they totaled a record $627 million in the U.K. Cohen says that’s mostly because of a man named Roman Abramovich. He owns England’s Chelsea Football Club.

STEVEN COHEN: He took this transfer market and just blew it away. Essentially, if he wanted a player, he went and got him and just said, “how much do you want?” He’s just so rich that it didn’t really matter.

It did matter to less-affluent teams. Cohen says an infusion of hedge fund money could help them compete for better players.

Some worry the quest for profit might conflict with the athletes’ best-interests. And investors risk losing their jerseys. Simon Chadwick teaches sports business at the University of London.

SIMON CHADWICK: Players’ playing careers do end. They get injuries, they have to retire early. And so it’s not a guaranteed return.

But hedge funds are in the business of offsetting risk. Fund manager and former Manchester City defender Ray Ranson told Bloomberg he plans to insure his players.

I’m Amy Scott for Marketplace.

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