Buy Tiger, sell Dolphins on new sports stock market
Michael Sroka dreamed up a day-trading website for sports fans while still in high school, and the concept will finally come to fruition with the launch of OneSeason.com.
The website, scheduled to debut on Wednesday, offers U.S. fans the chance to buy shares in such athletes as basketball star LeBron James and golfer Tiger Woods. The aim is to make a profit from trades, much like investors do when betting on the stocks of General Electric Co or Cisco Systems Inc.
At OneSeason, users can trade real money based on the performance of athletes, teams, leagues and other sports personalities. The idea came to Sroka, 27, at his Winnetka, Illinois, high school.
"Daydreaming in my economics classroom, I mashed together my two favorite things, which were sports and trading," he told Reuters in a telephone interview.
Designed to appeal to sports fans, investors and gamblers, OneSeason allows users to build a portfolio -- the company prefers "sportfolio" -- of shares in athletes.
The shares, called "synthetic ownership interests," are delineated with ticker symbols, just like real stocks. So Los Angeles Lakers all-star guard Kobe Bryant will have shares with the ticker "KOBE" when issued.
The value of those shares is determined by market demand influenced by onfield play, off-field behavior, fan opinion and future prospects, Sroka said. While OneSeason represents a first, it comes as Internet users grow comfortable with dealing in intangible assets.
"People have become much more comfortable with virtual goods and digital assets," Sroka added. "In the past five years, people have also become much more comfortable with financial transactions online."
The San Francisco company will earn interest on the money in its accounts, as well as a 1 percent commission on all trades, Sroka said. There will be no advertising.
Annual revenue could hit $50 million to $100 million if OneSeason reaches 3 million users after a few years, Sroka said, adding he sees quick profits with modest traction. The ultimate potential for the website is far greater than the $800 million fantasy sports industry, he added.
"If successful, you'd have an exchange trading more issues than the New York Stock Exchange and Nasdaq combined," said Phil Drayer, chief executive of Dallas investment firm Kalydus Management, which provided Sroka with $250,000 in start-up capital. "I see the marketplace being enormous."
OneSeason's plan is to launch in the United States, using athletes from professional football, basketball, baseball and hockey, as well as college football and basketball. It will add global sports like soccer, cricket and rugby as it expands overseas.
Also layered onto the site are elements of news, statistics and social networking.
Athletes won't benefit from trading in their names, Sroka said, citing a U.S. Supreme Court decision that bolstered the free-speech right of any company to use the names and performance statistics of famous athletes.
With an open platform, Sroka and his backers expect a community to spring up around the website. They envision a time when users will sell analyst reports, establish brokerage services in order to short stocks and create mutual funds made up of players' shares.
OneSeason, so named because users can trade any player's shares year round without being limited by a sport's calendar season, opens with trading in several players, and at least three IPOs, or Initial Player Offerings, planned daily.
Which athlete, team, league, sports agent or other sports personality is listed will be based on user demand.
The timing of the launch may not be the best, however, given a growing crisis in the U.S. financial sector and real stock markets over the last two weeks. But Sroka is confident his website will find its audience.
"The outlook for reasonably priced escapes from normal day to day life appears to be quite strong," he said.