Kevin Compton, star VC at Kleiner, Perkins, has invested personally in a venture more closely related to the NHL than EAI… Protrade appears to be a market that tracks prices set by the house, based on detailed models of “player performance” — the game (of skill) is to track that synthetic index, it seems.
This is well short of gambling, I’d wager :)
New Net venture: Sports stock mart
Online startup to trade ‘shares’ in pro athletes
Benny Evangelista, Chronicle Staff Writer
Monday, September 19, 2005
Sports fans may soon be wondering whether their “shares” in 49ers quarterback Tim Rattay are falling or whether they should add Raiders wide receiver Randy Moss to their portfolio.
That’s because a San Mateo startup called Protrade Inc., which has key backing from well-known sports figures such as Brent Jones, Jeff Moorad, Bill Walsh and Jerry West, plans to launch an online venture that assigns a value to pro athletes as though they were publicly traded companies.”It’s much more similar to a sports stock market than a fantasy sports league,” said Protrade co-founder Mike Kerns. The other co-founder is Jeff Ma, onetime member of the infamous team of blackjack players from the Massachusetts Institute of Technology, which devised ways to beat Las Vegas casinos.
Kerns and Ma plan to open the firm’s Web site, at www.protrade.com, to the public today.
Fantasy sports are now a major hobby for an estimated 32 million people whose average household income is about $89,000. Fantasy sports leagues typically use a scoring system based on the statistics of players in sports such as football, baseball and basketball.
But Kerns and Ma have developed a more intricate system to determine a pro athlete’s value based on performance during different game situations and contribution to a team’s wins or losses. The analysis also takes into account factors that could affect performance, such as trade rumors, injuries, contract holdouts, coaching changes and arrests for crimes.
Protrade members can then watch the value of players in their portfolio rise or fall, deciding, like a day trader, whether to buy low or sell high. Registration is free, and Protrade members start with 25,000 “coins” to buy shares of athletes for their portfolio, competing against other traders in contests with prizes such as cash or autographed footballs.
Protrade hopes to generate revenue by charging entry fees starting at $5 for special “challenges.”
For example, five traders can compete against each other by picking only quarterbacks, with the winner being the one who earns the most dividend points from his or her portfolio after four weeks. Eventually, the company hopes to generate advertising revenue as membership grows.
The company has licenses with the NFL Players Association and will start with football trading, hoping to add baseball, basketball and hockey next year.
Mike McGuire, research director for Gartner Industry Advisory Services, said Protrade has the potential to build on the already large audience of fantasy sports players and appeal to a new market of fans drawn to its Wall Street-style valuations.
“You get to see real feedback about how on-field performance affects valuation,” McGuire said.
Kerns, who grew up in Palo Alto, is a former chief of staff at Steinberg & Moorad Sports Management, where he met Moorad, a former sports agent and now the chairman and general partner of baseball’s Arizona Diamondbacks, who became Protrade’s first investor.
The other primary investor is Kevin Compton, principal owner of hockey’s San Jose Sharks and partner in the powerhouse Silicon Valley investment firm Kleiner Perkins Caufield & Byers.
Former San Francisco 49ers tight end Brent Jones is also an investor and listed as company adviser along with former 49ers coach Bill Walsh and Memphis Grizzlies president Jerry West.
Ma, a onetime trader on the Chicago Board of Options Exchange, was the real-life main character in Ben Mezrich’s best seller “Bringing Down the House,” which tells how an underground blackjack team of MIT students devised methods to beat the odds at casinos. In the book, Ma’s name was changed to Kevin Lewis.