The Path to Full Employment and Equal Opportunity
January 2, 2014 in public
Everybody talks about two things these days. The first one is jobs. Where are they? How do we get them? What are the trends? What is the next big thing? The second topic is inequality. Not only income inequality but social inequality. Whatever happened to the middle class? What is the right level of government subsidies? Is everybody getting equal opportunities? Etc.
These are pretty important public policy issues. How do we create more jobs? How can we fix inequality? Can we accomplish both? Is that even possible?
It’s pretty simple actually. Your love for sports is what gets us on the path to full employment and equality.
But how? By creating a market for sports that does two things. First, the sports market will shatter the financial barrier for fans by creating new ways to make money based on sports. Second, it will arm you with the right tools, financial knowledge and awareness. The former leads to job creation and growth. The latter makes us equal and ensures we all have equal access to opportunities. This is a new world order, and we call it the New Sports Economy.
The destination is clear. A better future. A bigger pie that is more equally sliced. A world where any willing and hardworking person has a shot. The return of the American dream.
It is a long journey, however, so we also need some fuel to get there. Luckily, we’ve got lots of it. It actually existed for a long time. It is the collective energy already out there in each of you. It is your fanhood. Your deep love for sports.
If the destination is known and the source of energy already exists what are we missing? What we didn’t have until now is the vehicle that will get us there. What we need is a powerful train that runs on the love for sports. The sports markets we developed is that train.
Can we get on the path to full employment and equality in a different way? Can a different vehicle take us there? Not really. Even with the destination known, it is still an extremely long road from here to there. We would simply run out of gas. Sports is the only fuel that has a chance to get us there.
For our train to run, however, a supplemental source of energy is needed. Money. So, really, it’s the combination of sports and money that powers the train.
You may say “Wait a second. I’ve seen something similar before. It was a good looking car. People called it sports betting and it also ran on sports and money. It exploded right in front of my eyes. That won’t work. I’m out.”
We are the first ones to admit that sports and money is a dangerous combination that has produced many casualties before. But this really is a design issue. The power that could lead to explosions is exactly the same force that can make run things very well. Electricity, after all, could also kill you. But when controlled and properly used, it not only makes things run but also enlightens our world.
When it comes to financial products, our regulators essentially require one thing – a financial product has to serve the public. Kind of like public transportation. Its benefits should extend to not only individual utility but to the public at large.
Why is casino gambling not a financial product? Could that be a good vehicle to prosperity? No. The “gambling car” certainly turns heads. But it’s a pure entertainment vehicle that has no public utility. It is not safe either. It would sometimes explode harming the driver. As a result, the gambling cars were allowed to exist in isolated parking lots and did not become part of the financial traffic. Think Vegas.
Sports betting, as a vehicle, fares even worse. Like the gambling car, it is unsafe. But it suffers from an additional problem. It could get really fast. Even with traffic rules in place, the only thing that prevents a driver from going really fast is self-control. Cops cannot catch everything. The fast road to money often involved corruption in sports. Game fixing. Point shaving. Ignoring the rules, and worse, ethics, to make money. Playing God with sports and altering the outcome of the game. That mentality injures not only the driver but others. It also pollutes the air by harming the purity and risking the integrity of sports. Gambling is bad, but unless there is organized crime involved, the gambler mostly destroys himself. Sports betting destroys dreams.
How, then, does our proposed combination of sport and money work? What do our products look like?
Our lead product is like a stock that pays dividends if the team does well on-the-field.
Something that pays based on performance?
Yes, absolutely. It is good for the sports industry and for the public in general. It’s good for the sports industry because it acts as insurance for sports-related losses. It’s good for the public because unlike a sports bet, that just vanishes after the game with essentially no trail, it produces valuable price information that improves decision-making. These two aspects are what the regulators pay attention to, but our products would have been a failure had they not addressed the integrity issue. With our performance-based product, the trader gets only a minimal payment based on the outcome of the game. The rest is captured through price appreciation and future dividends. There is simply no incentive to cheat. No shortcuts. This market doesn’t pollute the air. It preserves the integrity of sports.
We are not delusional that this product will sail through. On the contrary, we expect formidable opposition and intense regulatory scrutiny. Nevertheless, we believe the love of sports will find a way.
Still, the choice is curious. Couldn’t we simply put out another sports finance product as the lead product, maybe one that is not based on performance?
We spent many years discussing that. We are fully aware that our performance-based product may be perceived as gambling so we questioned whether it is fit enough to be our lead product. But if you really think about our destination of full employment and equality, this is the only product that could ever work as the lead product. In other words, if our train represents various sports markets and products, our locomotive must be the performance-based product.
Why? The answer is financial illiteracy. Finance has evolved so much, so fast, that most of our nation fell behind. Unnecessary debt, bad financial decisions, and not being good with money is a big reason why there is unemployment, inequality, and lack of social mobility. The efforts to combat financial illiteracy exist, but they are incomplete at best. The problem is not lack of goodwill but the size and pervasiveness of the issue. Financial illiteracy is cancer. It cannot be cured with educational band aids and painkillers. The solution needs to be bold. We need to develop the cure for cancer. Our performance-based product is that cure.
We can see that puzzled look on your face. You are still suspicious, aren’t you? You realize that the regulatory hurdles must be jumped over for this contract even to trade. But even if that happens, how in the world will that create jobs and equality?
Well, once the first contract trades, something magical will happen…
Sports trading is certainly not a get rich quick scheme. Like any other trading environment, some people will make money and some will lose. Can an informed trader with good judgment make money? Yes, but there will be far more opportunities on the business side. Data analytics. Asset management. New apps. Education. Technology. Media. Advertising. Analysis and commentary. An entirely new ecosystem around sports trading that creates new ways of making money. A genuine opportunity to follow your passion and make it your job.
How many sports fans do we have in this country? Answer: more than total number of people employed. If just 1% of them follow their passion to a sports job, we will make a significant dent in unemployment.
But… there is a catch. In order to make money, regardless of whether you are a trader or you create a business around sports trading, you need to understand trading, dividends, buying, selling, stocks, splits, arbitrage, market efficiency, market anomalies, portfolio diversification and risk. You will observe how markets react to information. You will see how expectations may have already been priced in. You will understand how markets work.
To the lucky few, it comes naturally. They are wired to understand these difficult concepts. They may learn it in school and digest it even if all they hear is technical abstractions and Greek letters. The rest of us (90%? higher?) needs to see it, touch it, spend time with it, and stay with it. Intimidation is the biggest enemy of the desire to learn.
As you start building your SportsfolioTM, you will not be intimidated anymore. You will have the desire to learn.
No, any financial product would not get us on the path. Heck, even any sports-based financial product wouldn’t get us on the path. It has to be a familiar place. Something that doesn’t intimidate. Something we all know and understand. Something we love. A performance-based product does the trick. Nothing else will.
So…once the contract starts trading, our locomotive would start making some noise. New businesses will come to life. New jobs will be created. Finance will expand into Main Street. As we all learn more, we will have better access to broader opportunities. We will know more and start making sounder financial decisions.
But this is just the beginning…
Our second product, the car behind the locomotive, if you will, is essentially a formula that tracks, roughly, how much a team is worth. It produces a higher number when the team is in good shape, financially. Think attendance, TV ratings and other factors that make a team prosper. This formula does not track game outcomes.
This is another sports product. It can be traded through futures pending regulatory approval. Like our first product, it serves the sports industry and public at large through price information and risk management. No pollution with this one, either. No integrity issues. No manipulation.
The first product tells us what the public’s sports vote is regarding success on-the-field. The second one does the same for success off-the-field. Oh, and they both tell us which teams and leagues are more popular, measuring “popularity” from slightly different angles. Together, they measure everything that needs to be measured in the sports world.
Having both products on the market has many other benefits as well. Investors can diversify, not only within sports assets, but across. There could be multiple regulators watching over, making the markets more stable. Certainly more jobs. An educated workforce. More knowledge and awareness. Less intimidation of finance. All of which would mean that new passengers will get on our train, we’ll start getting closer to full employment and equality.
A powerful train is hard to stop. Which works for us because we don’t want it to stop until it picks up as many people as it can, and then gets all of us to our destination. Over time, the train itself will get longer by the addition of new cars, each car representing another financial innovation. We may add a few more ourselves. Robert Shiller, the recent Nobel Laureate in economics, has quite a few good ideas. There will be many others. Innovation breeds innovation after all. With each addition, the train will get more powerful and its capacity will continue to increase, picking up more people at each station and humming through to the destination.
One thing will never change though. The train will continue to be powered by your love for sports.
Long live the New Sports Economy.