Michael Lewis has sold many thousands of books in the past four years by utilizing a Malcolm Gladwell-like perspective and writing style in analyzing the sporting world. His 2003 book Moneyball is famous for its examination of baseball’s Oakland A’s; despite having one of the lowest payrolls in all of Major League Baseball, the A’s manage to win the AL West and make the playoffs most every year. Lewis attributes this success to the A’s brilliant General Manager, Billy Beane, and particularly to his staff’s use of statistical methods in choosing which players to place on their roster each spring.

The A’s went against conventional wisdom in choosing which statistics to value in prospective players. Scouts have traditionally valued stats like batting average, RBI’s, and home runs. Beane and his team–who are usually armed with computers and complex formulas–value decidedly different statistics; on base percentage instead of batting average, for example. This new wave of baseball minds also chooses to discredit stats like RBI’s and runs, which they characterize as incidental to the in-game situation, not one player’s individual skill, talent, or performance. Many in baseball mocked Beane and the deals he made, but as the A’s continued to win, personnel with other teams began to accept some of his methods and employ them in composing their own squads. The publication of Moneyball blew the entire movement wide open, and it is now generally accepted as truth.

More recently, Lewis analyzed the National Football League, and the curious fact that left tackles are the second-highest paid position, on average, throughout the league. Left tackles don’t really accumulate statistics at the same rate that quarterbacks (completions, touchdown passes), running backs (rushing yards, touchdown carries), or most every other position does, so why are they paid so well for their service. Lewis argues that, as the game evolved in the 1970s and 1980s, the quarterback became the most important player on the field; as this became true, attacking the quarterback became a priority for every team’s defense; and as pass rushing became a huge part of the game, protecting the quarterback became one of the most important tasks an offense needed to accomplish. The left tackle, who is responsible for protecting a right-handed quarterback’s “blind side,” thus became a very important commodity. Hence, the book’s title: The Blind Side. The left tackle had traditionally very poorly paid, but as the game evolved and his importance became clear, the position has increased in stature and, most notably, compensation.

In a recent column for Yahoo! Finance, Lewis writes about yet another innovative concept: a stock market for trading athletes. The start-up responsible for this idea, A.S.A. Sports Exchange, is currently developing this market. Lewis describes the basic structure for the market as cleanly as possible:

“The athlete would sell 20 percent of all future on-field or on-court earnings to a trust, which would, in turn, sell securities to the public.”

As Lewis points out, some critics believe this is merely legalized gambling. A.S.A. Sports Exchange defends itself by saying that, after making an emotional investment in a team or particular player for so long, fans should be permitted to make a financial investment as well. A kind of “shadow market” already exists for players and teams, though; millions of people participate in fantasy leagues each year, and billions is spent gambling on athletic events each year, too.

Lewis makes an interesting argument regarding the similarities between the stock market and pro athletes potential for success. The stock market is essentially tasked with “assigning prices to assets with uncertain futures”; how is this any different from the Oakland Raiders deciding who to select with the first pick in the NFL draft this Saturday?

Another company attempting to enter this market is Protrade, which allows fans and users to trade athletes like commodities. Lewis uses the example of Peyton Manning to demonstrate how this process works:

“[Users] can watch their Peyton Manning stock rise and fall from play to play during the season and see what happens if he’s traded to another team in the off-season. The exchange also allows them to short the jock’s stock—to profit from his poor performance. Each stock pays dividends, which gain in value based on the athlete’s on-field performance.”

While much of this information relates to earlier aspects of the course regarding financial markets, I believe that many things we have recently learned in class apply here as well. If a player has a great opening day, and you see that many people have been “picking up” his stock, just like one would pick him up off of the waiver wire in a fantasy league, an information cascade will develop. If an athlete has statistics that are impressive enough for an arbitrary period of time, and if ESPN does a 60-second feature on his recent success, what other motivation do you need to pick up a few shares? His prospects for the future seem undoubtedly bright, and besides, with baseball games six or seven days a week and football games once a week, you have more information–and more current information–to work with in making your financial decisions. With the stock market, you have to wait for quarterly reports and sift through the morning paper to know how your mutual fund is doing, but with athletes, it’s all on ESPN every night! How will this idea not be successful?

Speaking of ESPN, this presents an interesting ethical dilemma. Reporters are well known for being selective in their coverage of many things in sports–I’m thinking of injuries, specifically. Sometimes it’s a deliberate campaign of misinformation, waged by a coach or front office that doesn’t want the opponent to know who is hurt, but oftentimes–and this is less true now that it was before ESPN and its 24-7 branding, admittedly–sports journalists will fail to report significant injuries or other information. A recent example of this is the revelation, after his team’s elimination, that phenom Sidney Crosby of the Pittsburgh Penguins played with a broken foot for most of the first round of the NHL playoffs. This is a dilemma for ESPN because, if their reporters and staff have the best information, and have to decide what should be conveyed to the public, how do they do this accurately and honestly when a large amount of money could be at stake? ESPN, like it or not, holds a virtual monopoly on sports coverage, particularly on television, and I don’t really trust their people to give me the facts anymore. If the stock market becomes part of this consideration, however, I trust them even less–they would be a manipulative “trader” in this network of information, in my opinion, and hold too much power in the market–unless their monopoly on television coverage is broken, this will be a huge problem for this idea.

The idea of “perfect matching” becomes more difficult to assess, too; no longer can we rely simply on numbers and statistics to match up buyers and sellers. Now, allegiances and favorites come into play. No matter how perfect the match, no matter how bright a player’s future, does a Red Sox fan really want to own shares of Derek Jeter? Or a Yankees fan shares of David Ortiz? (As a Royals fan, I don’t want shares of either of those bums, but that’s beside the point).

If either of these start-ups is successful in its efforts to launch a “Jock Exchange,” as Lewis calls it, or if any other company is successful for that matter, the sports world will undoubtedly be revolutionized. Fans will be able to trade stocks of their favorite players while picking up the occasional rival who has had a particularly good month. While season tickets, paraphernalia, and other forms of merchandise certainly constitute a financial stake in one’s team, this financial interest will increase exponentially if one can invest in players like stocks. For those who object on moral grounds, Lewis states that:

“It is indeed gambling, but then, so is the New York Stock Exchange.”

One of the more interesting aspects of Lewis’ article pointed out that financial experts are already salivating at the idea of a “jock market”–it is sure to bring scores of unexperienced investors. This paragraph, in particular, made me laugh out loud:

“Bad investors attract good investors, who see the opportunity to take their money—or as the leading sports agent puts it, “Smart people will be interested in this because stupid people will.” And smart people, over time, will drive market values. When the agent mentioned his plan to a former Wall Street colleague, now a top hedge fund manager, the man said, “Great, in the beginning I’ll just short every player,” then added he would start with Tiger Woods.”