Indians Minor Leaguer Newsom Selling Himself Off For $20/Share

I’ve seen this story in several different places today, a fact that would normally cause me to turn tail and find something else to write about, but it was just too good to pass up.

It starts simply enough: Randy Newsom is a 25-year-old pitcher for the Cleveland Indians’ AA affiliate in Akron, OH.  Originally signed by the Boston Red Sox, he was sent to Cleveland as part of the Coco Crisp trade in 2006 and enjoyed a career year last season, finishing 4-2 with 18 saves and a 2.80 ERA between two minor league levels.

As prospects go, Newsom isn’t special.  He was undrafted out of Tufts University, is 25 years old and has never pitched above the AA level, and was recently rated the 50th best prospect in the Indians farm system by one web site.  According to that same site, however, he’s got a few of things going for him – a submarine pitching style, brains, and guts, to name three – that suggest it might not be ridiculous to think that he’ll be standing on the mound at Jacobs Field Progressive Field by the end of the 2008 season.

Why does this matter?  Because Newsom is currently selling the rights to 4% of his future earnings (if he makes the major leagues) for $50,000.  Interested parties have until February 1 to purchase shares of Randy for $20 apiece, each of which entitles the buyer to .0016% of Newsom’s future earnings should he ever reach the major leagues.

I don’t know for sure how minor league contracts work when a player is called up to the majors, but let’s assume that Newsom goes to spring training next month, impresses somebody, and makes the Indians’ Opening Day roster.  I’m going to assume that he will then be given a contract for the $390,000 major league minimum.  If the above 4% is based off of his gross pay, then a full season would entitle one shareholder to a whopping $6.24 of his 2008 salary, with a maximum of about $15,000 total being paid out.  As noted here, the break even point for this endeavor is career earnings of $1.25 million, which he would likely reach in his third season.

According to the Real Sports Investments web site that has been set up for Newsom, 181 shares have currently been sold.

Player Profile (Real Sports Investments) 
Markets in Everything – Relief Pitcher Earnings (Marginal Revolution)
An Easy Way to Earn an MLB Salary (Shakedownsports)
You, Too, Can Invest In A 25-Year-Old Pitcher (Deadspin)

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2 responses to this post.

  1. […] OMDQ wrote a fantastic post today on “Indians Minor Leaguer Newsom Selling Himself Off For $20/Share”Here’s ONLY a quick extractI’ve seen this story in several different places today, a fact that would normally cause me to turn tail and find something else to write about, but it was just too good to pass up. It starts simply enough: Randy Newsom is a 25-year-old … […]

    Reply

  2. […] the expected career value of the person more than the annual percentage payment. This is like the minor league baseball player that recently wanted to do this very thing so he could practice instead of working two side […]

    Reply

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