ProTrade’-s Jeff Ma:
[…] The book Moneyball was a great inspiration for starting PROTRADE. Mike Kerns (who is the real brains behind the PROTRADE idea) and I both read Moneyball and felt it changed our lives. Conceptually PROTRADE began as a way for players to trade athlete like they were stocks. The problem with that concept is it poses the question asked above: what’s the underlying value of the athlete? We launched with a very complicated “earnings” system that took into account how much a player helped his team win (the ultimate value of a player according to Moneyball) but had to abandon that due to its complicated nature for sports fans. Instead we shifted to an “earnings” system based on traditional statistics that everyone follows. So what our market is now is a predictive market based on one year “earnings” for athletes and teams. These “earnings” are based on traditional stats that fans follow already like home runs, or touchdowns or wins. As for the larger questions that people have posed above, I wonder if sports fans really know less about athletes than they do about publicly traded companies. If you compare the amount of information I know about Tiger Woods, Barry Bonds, Tom Brady to that of Larry Page, Meg Whitman or Bill Gates, I’d have to say I know a lot more about the former group but maybe that’s because I co-founded a [company] based in sports. Finally I challenge the notion that our sports financial instrument has less underlying value than say a weather derivative. Futures and commodities are often simply “bets” about whether an instrument is over or under valued by the market.
Previous: ProTrade = The Jock Exchange, the first public stock market that trades in professional athletes??.