Transfer Market

November 2 – 2006

Bloomberg.com, that indispensable tool of financiers around the globe, is reporting the launch of a new, soccer related hedge fund. The strategy? Invest in young prospects, then grab a share of the massive transfer fees these future stars generate.

And though this may shock the sensibilities of those who fear the transfer market might come to resemble a modern slave trade, it is worth remembering: it’s too late. The appearance of hedge funds, however troublesome, is only natural when one considers the massive amounts of money at stake in a lightly regulated market. The MSI ownership of Tevez and Mascherano represented a hostile takeover of sorts, and the attempted use of these contracts as leverage for the purchase of West Ham (the theory floated here) seems all but confirmed.

So, should you rush to the wire to arrange your first $470,000 stake? Hardly. This “hedge fund” ain’t your grandpa’s; in other words, there’s not a whole lot of hedging goin’ on. Traditionally a hedge fund would buy an assortment of stocks and sell others short, thereby reducing the overall risk in a potentially fast changing market. No matter what the market does, the properly hedged fund is (in theory) protected from massive losses. These transfer funds, however, are merely speculating on the growth of young talent; a couple of ACLs, drug problems, and washouts later, and you’ve got yourself a portfolio full of burger flippers.

But what if you could short sell some players? Who among today’s massively valued Premiership stars are Enrons in Exxon clothing? Our first tip is free. After that, you gots to pay.

• Jonathan Woodgate – His current loan spell with Boro has been impressive, and many are talking about an England bid to crown his resurgence. If he makes his move permanent it’ll be for far less than the $26million Real paid for him originally, but even then – he’ll still be overvalued. Woodgate is a walking emergency room, and if he leaves the Riverside, it’ll likely be in a wheelchair.
• Andriy Schevchenko – No matter how much his manager and fellow players laud his impact, the bottom line is this: the guy was brought to Stamford Bridge with the understanding that he is his generation’s purest goalscorer. As Drogba’s stock continues to rise, Sheva’s will continue to fall. He’s no Sergei Rebrov, but still.
• Petr Cech – Selling short is a cynical game, and it doesn’t get more cynical than playing against skull fractures. Sure, it’s possible the world’s best goalkeeper will return to form, but it’s also possible he’ll be the Prem’s answer to Ben Roethlisberger. See you in hell.
• Joey Barton – Once every 8 months, Barton comes out on top in a contract dispute, so you’d think his value keeps rising. But in truth, he’s the midfield general of a team that loves to lose. City have attached their future to his fortunes, and you get the feeling they’ll eventually find that to be a miscalculation. When he does move, it’ll be for far less than City currently value him. Plus, how much can a player in jail be worth?
• Craig Bellamy – And speaking of jail, Bellamy’s stock appears to have hit rock bottom, but we assure you: he can fuck up still worse. Not having a neck is something he seems to have overcome, but not having a brain? Bells is a penny stock waiting to happen.

Feel free to toss out your own short sells.