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Equity shares in everything
If the new Internet venture succeeds, it will be a whole new ballgame for the gambling-driven pastime of fantasy sports, which already has up to 20 million players.
ProTrade, which opened for business yesterday, will treat professional athletes like stocks to be bought and sold, initially in a theoretical currency. Cash prizes will be awarded to the most successful investors.
The value of a blue-chip quarterback such as Peyton Manning of the Indianapolis Colts will be determined by a community of traders competing to identify players most likely to contribute to the success of their real-life teams.
In this bottom-line approach to sports, teams are known as investment portfolios and the real-life athletes get their own ticker symbols. Manning's symbol is PMANN...
ProTrade initially will be confined to trading NFL players, but the San Mateo, Calif., company expects to add the NBA and Major League Baseball after working out licensing agreements.
Is it real money?
At the outset, basically for the first half of the NFL season, no actual money will be exchanged in ProTrade's market; each participant will get a virtual stake of 25,000 coins to invest.
But capitalism will fuel the market's activity, with weekly prizes awarded to the portfolios with the best investment returns. Later this year, traders will be allowed to create their own competitive leagues and set their own entry fees, with a $5 minimum per entrant.
ProTrade will hold all the entry fees in escrow and then distribute jackpots, minus a 2 percent to 3 percent commission, to league participants who generate the best investment return. ProTrade hopes to make money from those commissions and advertising on the site.
Here is the story. Comments are open, in case you know more about this than I do. I like this part of the story:
Former San Francisco 49ers tight end Brent Jones, a member of ProTrade's advisory board, believes most players will stay away from the site.
"There are a lot of guys out there who aren't going to want to see what they're really worth," he said.
Posted by Tyler Cowen on September 21, 2005 at 07:29 AM in Sports | Permalink
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Comments
Two of the founders of of ProTrade are developers of SABRmetric style statistics for Pro Football and NBA
Basketball. The former is Aaron Schatz who runs www.footballoutsiders.com, and the latter is Roland Beech
at www.82games.com. They both do fantastic work at their respective sites. I think this is a great idea
and could be a force in fantasy sports. The one thing that makes me a bit skeptical is that a somewhat
similar service has existed before at smallworld.com, which appears to now be owned by the Sporting News.
Smallworld was never terribly fun to play. But ProTrade looks a lot better, and Smallworld didn't
distribute prizes or money. And, after all, people respond to incentives.
Posted by: PaulNoonan at Sep 21, 2005 9:30:55 AM
This doesn't sound too different from what
Rotisserie baseball players have been doing
for years. There are already several
sophisticated market analysts
out there -- see http://www.usatoday.com/sports/sagarin/majors05.htm, for one.
Posted by: mobile at Sep 21, 2005 9:55:38 AM
How on earth would you assess the contribution of each player to an NFL team's overall record?
Even if you knew what form the production function should take, what variables do you use to attribute a touchdown pass to the receiver and the quarterback and the blockers?
How do you measure the marginal physical (or revenue) product of linemen?
Sabremetrics has worked with baseball because the statistics are reasonably (though not completely) independent. But the complementarities in football are extreme. The result will be little more than rotisserie leagues that focus on statistics that may be vaguely related to marginal products.
Posted by: The Eclectic Econoclast at Sep 21, 2005 11:08:01 AM
Individual linemen are difficult. However, as a unit (link: http://www.footballoutsiders.com/stats/ol.php):
Teams are ranked according to Adjusted Line Yards. Based on regression analysis, the Adjusted Line Yards formula takes all running back carries and assigns responsibility to the offensive line based on the following percentages:
Losses: 120% value
0-4 Yards: 100% value
5-10 Yards: 50% value
11+ Yards: 0% value
These numbers are then adjusted based on down, distance, situation, and opponent, and normalized so that the league average for Adjusted Line Yards per carry is the same as the league average for RB yards per carry (in 2004, 4.19). These stats are explained further here.
The following stats are not adjusted for opponent:
RB Yards: Yards per carry by that team's running backs, according to standard NFL numbers.
10+ Yards: Percentage of a team's rushing yards more than 10 yards past the line of scrimmage. Represents yardage not reflected in Adjusted Line Yards stat.
Power Success: Percentage of runs on third or fourth down, two yards or less to go, that achieved a first down or touchdown. Also includes runs on first-and-goal or second-and-goal from the two-yard line or closer. This is the only statistic on this page that includes quarterbacks.
Stuffed: Percentage of runs that result in (on first down) zero or negative gain or (on second through fourth down) less than one-fourth the yards needed for another first down. Since being stuffed is bad, teams are ranked from stuffed least often (#1) to most often (#32).
Here is a link explaining some SABR style football stats:
http://www.footballoutsiders.com/methods.php
Posted by: PaulNoonan at Sep 21, 2005 11:19:13 AM
"How on earth would you assess the contribution of each player to an NFL team's overall record?"
I think the idea of ProTrade is they don't care how you do it but the idea is "the market" will somehow, eventually figure it out. Even if the "how" is never made explicit and no one really understands it.
Posted by: Justus at Sep 21, 2005 12:01:43 PM
This sounds a lot like some sites that were around in at least the late 90s - WallStreetSports.com (which was bought by Sandbox.com, whose purchase by SportsLine.com failed). There's a been few other incarnations of it, like http://www.allsportsmarket.com/ and the Cantor-Fitzgerald affiliated entertainment version, Hollywood Stock Exchange - http://www.hsx.com/
Posted by: Brian at Sep 21, 2005 12:05:49 PM
Brian: I remember Wallstreetsports.com.
It was a good site, but the market only adjusted once a day. This allowed for arbitrage (good for me since I did eventually win a few prizes). Any newer league will have to reconcile this with a more modern trading system.
Posted by: Dan at Sep 21, 2005 1:14:11 PM
How are they going to get past the legal-mumbo-jumbo w/regard to Player's rights and the Major sports Unions--- I heard a week or so ago that the NFLPA is trying to go after online fantasy leagues, to get a cut of the pie.
Posted by: doinkicarus at Sep 21, 2005 1:44:15 PM
I wonder if players could/would use the site as a way to hedge the risks associated with their own careers. You could buy short in yourself to reduce your overall "portfolio" risk.
Posted by: Kendall at Sep 21, 2005 5:57:44 PM
I think that for the NFL at least, they seem to have full player approval, because on every page with an NFL player they have the logo for the player's association. So I guess they got them to go along with it.
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