Moneyball: Investing in Latino Baseball Futures

by Ryan Almodovar

The lights are off, the seats are empty, the bats are quiet, and if you’re like me, you’re already waiting for the return of baseball in the spring. I do my best to keep myself occupied in the mean time; tracking prospects playing fall ball, watching front office moves, and of course, keeping abreast of trade rumors (I still can’t believe Jeter hasn’t signed). I happened to come across an article from the New York Times amongst the baseball news, not about trades, but about a hot new investment that many well-to-do experts are getting into. They’re not investing in derivatives or loans, but in the futures market. Not the financial futures market – but the futures of Latin American baseball prospects.

The process itself is simple enough. An investor will pay a scout to scope out local talent from all parts of Central America, South America, and the Caribbean—especially the Dominican Republic and Puerto Rico. Once a player has been identified, the scout approaches him with a contract on behalf of the investor. The investor acts as a benefactor for the young ball player; buying equipment, providing room and board, and paying fees necessary for education and various baseball academies and camps. Over time, the player develops and if he plays well enough, he’ll get drafted to an MLB team. At this point, the player is then able to pay back the investor for his kindness…with up to 50% of his initial signing bonus. So for the cost of tuition or rent, which is cut-rate when compared to American standards, American investors can make anywhere from $50,000 up to several million dollars (Cuban fireballer signed for $30 million with Cincinnati last year.)

This process, while potentially lucrative, may be one of the worst developments not just for baseball, but perhaps an embarrassing setback in the development and use of Latinos in major league baseball.  Latinos currently make up around 29% of the league, hailing from places such as the Dominican Republic, Puerto Rico, Cuba, Mexico, Venezuela, Colombia, and many more locations around the Caribbean and South America. MLB does make a concerted effort to establish camps and academies for these prospective ballplayers, with the goal of providing an education and as a means of judging talent.

By privatizing the way these players are selected and drafted, it undermines any kind of equality that the MLB is trying to place into the system. There are literally thousands of prospects looking for a shot, so there shouldn’t be preferential treatment just given to those who are the biggest and the fastest. It’s often hard to judge a player’s worth based on how he looks or performs in a few scouting situations – so the best players are often not even drafted. There is nothing illegal about this practice, but the MLB should look into taking steps to limit this kind of “investment” and further place their own policies in programs; the Latino presence in baseball depends on it.

Source

New Exotic Investment: Latin Baseball Futures

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Ryan Almodovar, Contributor

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Disclaimer: The views and opinions expressed in this article are solely those of the author and should not be understood to be shared by Being Latino, Inc.

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5 Responses to “Moneyball: Investing in Latino Baseball Futures”

  1. I’ve never heard of this. This is very interesting, thank you for the post.

    I hope the MLB org does take measure to control this sort of”investment.”

  2. I am a huge baseball fan but I really wish MLB would require a college education, like other sports. I can’t stand to see kids in DR & PR ignoring their education because of a dream. Only a fraction of those, who even get a shot, actually “make it.”
    Baseball is a business although for fans it’s not; fans are emotionally invested. That’s the way it should stay.

    • Most MLB training facilities are kind of set up like small colleges. They have dorms, dining halls, etc, and do their best with education, although it’s obviously not geared for that.

      It would probably be in the MLB’s best interest to expand education, because like I said, from a player evaluation standpoint, its better to see how a player does over time, not if he looks like a ‘natural’. They could provide better education and at the same time, better evaluate the kind of contract they want to offer.

  3. These players are very overpaid in my opinion. Jeter should be ashamed of himself holding out on a contract amounting to most of us working folks would only dream of having that type of money. Sadly it’s all about the money. People are obsessed with money, material things, trying to live above their means even people who you can tell can’t afford these things like clothing, bags, electronics, etc. they try so hard to be something they’re not it’s pathetic. They should provide education and alternatives since not everyone is selected to play in the leagues. Even baseball players themselves own businesses and have other things to fall back on. We all should have a back plan since it’s a relatively short career to begin with and if you get injured even shorter. I guess this is why a hot dog and soda cost $10 so we can pay their ridiculous salaries.

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