January 20, 2008
A side-arming right-hander in the Indians organization, Randy Newsom aspires to more than pitching in the big leagues--he is also an entrepreneur. A 25-year-old graduate of Tufts University, Newsom recently started his second business, and it is one that promises to create a buzz in both the sports industry and business community. David talked to Newsom about his bold new venture: Real Sports Investments.
David Laurila: When I first interviewed you in 2005, you were an undrafted free agent pitching in extended spring training and told me that you were the Anti-Prospect. Coming off a season in which you were a Double-A All-Star and pitched well in the Arizona Fall League, do you still consider yourself an anti-prospect?
Randy Newsom: Absolutely. I will always have an underdog mentality. However, what I've found over the past couple of seasons is that baseball is full of Anti-Prospects. We're everywhere. I've come to realize that everyone is an anti-prospect unless they're The Guy. In Boston, Jacoby Ellsbury is The Prospect; Clay Buchholz is The Prospect. With the Indians, Adam Miller is The Prospect. I wasn't drafted, and even guys in the 10-20 range--they're not The Guy. And one year can put you up, or put you down, pretty quickly. Take a guy like Jed Lowrie, in the Red Sox system. Two years ago everyone was down on him because he got hurt and it affected him all year. Last year he showed how good he really is and what kind of player he could be, so he's back up. But even though he was a high-round pick, he's not looked at a "can't miss," so this year is a big year for him again. Everybody is that way. It's year-to-year, so when it comes to being an anti-prospect--I don't think there are a lot of guys who have had to come through what I have to get where I'm at, but I've gotten to Double-A, and pitched in the Arizona Fall League, and I see myself getting to the big leagues. I'll always be the undrafted underdog from Tufts University in my own head. I know that I am not the typical major league prospect and I've gotten comfortable with that "on the outside trying to force my way in" role. I look at guys like David Eckstein, or pitcher similar to myself in style in Ehren Wasserman, and realize that the major leagues are full of guys who have made it from all different situations. No major league team has ever had a roster full of first-rounders only. I know guys like me help teams win big games.
DL: You recently started a company with some of those experiences in mind. Tell us about it.
RN: The company is Real Sports Investments, LLC. We have a website, and it is the only place where people can invest in professional athletes. RSI contracts with athletes and gives them cash up front in exchange for a promise to pay a small agreed upon percentage of their future major league earnings, kind of like insurance. RSI then sells those future earnings to willing investors. We really focus on helping ease the financial burdens a lot of minor leaguers face while also creating a stronger baseball community by allowing fans to invest in players and hopefully help them reach the major leagues.
DL: Where did you come up with this idea?
RN: I've had some really great teammates in the past couple of years, and after talking with a bunch of them this fall in Arizona I realized that minor league baseball players, no matter their background, have a lot of similar issues and concerns. A lot of guys, some of whom might be just a season away from the relative fortune of a major league contract, are living paycheck to paycheck. Minor leaguers can make as little as seven or eight thousand dollars a year. Some have families to take care of, some have to take jobs right away once the season is over to pay bills, and many of those that are a little better off still can't afford some of the things that could help them reach the big leagues, like hiring a nutritionist or going to some of those expensive training institutes. With that in mind, I wanted to come up with a way that players could use their own upside earning potential to try to help their financial situation in the present and kind of lock in some of that earning potential, like insurance. I mentioned this to my friend and former teammate, Brian Pritz, and he put me in contact with another former minor leaguer, our CEO and majority owner Mike McGirr, who actually wrote a business plan at Cornell Business School along these same lines. We started talking, used his business plan as a model, worked some things out, and launched RSI.
DL: Along with helping players, you also mentioned fans. Where do they come in?
RN: When we started RSI, we noted that while baseball might be at an all-time high in terms of popularity, fans have been getting more skeptical because of all the scandals and negative headlines. We wanted to give the fans a way to get back into the game positively. We think our idea is perfect for that. Fans can now invest in their favorite minor league players. This not only helps the player, but it allows the fan to put his sports knowledge to the test. If a fan has the natural ability to evaluate talent, then he will be able to profit from it. Because the fan and the player both benefit when the player succeeds, it will result in a more passionate fan who will have an enhanced spectator experience. We truly feel it's a great situation for everyone: players, fans, investors, and ultimately baseball.
DL: You just touched on how fans have been getting more skeptical because of all the scandals and negative headlines. From your experience, how openly is the subject of steroids discussed in minor league clubhouses?
RN: They're not. There's minor league testing, and I haven't seen anyone take it. I've never seen or even heard of anyone using it in the minor leagues, except in my first year. When I was in the Gulf Coast League I heard a little bit of this and a little bit of that. My first year with the Red Sox, somebody tested positive, but he was a great guy and there were circumstances surrounding it. He was a Latin player who was given something to take by his winter league team, and he tested positive. He still had the stuff with him, so they were able to test it and prove it, but there was obviously no intent on his part. Other than that I haven't had experience with it, but you don't talk about it. There are some guys that you know have done it in the past, maybe in college or coming into the draft. Others you wonder about. They implicated 80 names, and I saw a quote where someone said they could have implicated 8,000. But everyone has rights, and they're innocent until proven guilty. I hope that's taken into account. I don't know what the truth is. I feel like there's only one guy that there's been substantial truth brought against, in both the public eye and in the legal system, and that's Bonds. It would take an 'innocent' verdict to convince me on him. But while the Mitchell Report brought some of it out in the open, unless you can directly link payments or have a guy admit it, everyone is innocent until proven guilty. In the clubhouse atmosphere, no one really wants to talk about it because no one is really sure who did it.
DL: It's purely speculative on a player-by-player basis, but what about the game itself?
RN: Baseball is guilty. Make no doubt about it. Some players used performance-enhancing drugs. We know that for sure. But I think that's true for every professional sport. The stakes have become so high--the impetus to get that extra edge has become so high--that they've been used all over. Personally, not only have I never felt the need, I've never had the know-how. I've talked to a lot of guys about this, in baseball, and they wouldn't even know where to go, or who to talk to. So I think we're the generation that just started; we're the first generation of how baseball should proceed from this time on out. It's a faux pas; it's not looked upon positively, as Jose Canseco talked about in his book. It has a very negative connotation.
DL: Rather than using PEDs, you simply dropped your arm-angle to get an edge?
RN: Exactly. I didn't so steroids; I just started throwing like a girl.
DL: Getting back to your business venture--is Real Sports Investment still in the theory stage or has it been put it into practice?
RN: We're doing it. Right now you can go to our website and buy shares of me. I wanted to put my money where my mouth is, and I went first. I sold four percent of any salary I earn in the major leagues to RSI, who divided that four percent into 2,500 shares and they are now being sold online at www.realsportsinvestments.com. And to be honest, the response has been incredible. Just by word of mouth it's started to take off. I'm the only player with shares available right now but we have more that will be following soon.
DL: How many players have you approached about this venture, and do they fit a certain profile? And if players are interested, how do they become involved?
RN: They're all Anti-Prospects! (Laughs) Not exactly. We've talked to so many players and had an overwhelmingly positive response from them. Due to the confidentiality we've promised them I can't talk about any player specifically, but this isn't a one-player thing; we have more to follow. We will have players other then me on the website in the very near future. We also are in the process of upgrading our website so that we can be as efficient as possible for players and fans. The players themselves come from every background you could imagine. We don't have a true prototype player, but we have been very consistent in the things we value in prospective players. We want guys that are hard workers that are committed to not only their teams but the game of baseball on a whole. We want gamers. Pitchers, catchers, infielders, outfielders, we are really looking at character guys who are absolute competitors and a lot of guys who have already overcome some adversity. Basically, we're trying to get guys who fans will really enjoy rooting for and guys that will appreciate that special relationship with fans. If a player is interested, they can email me personally at email@example.com or they can go to our website and fill out the "info for players" form.
DL: Is it possible for one person to buy all of the shares of one player?
RN: No. We really wanted this to be about involving a lot of fans and making sure that this is as transparent of a process as possible to ensure the fairness for both fans and players. We have limited the amount any one of our members can buy in an individual player to twenty percent. While we understand a lot of our members want to buy more then one share, and we encourage that, we wanted to make sure that players didn't have any one person too invested in their careers. We feel our limit keeps the integrity of the process and protects everyone involved.
DL: Who specifically are you targeting as your investors, and how will you attract them to RSI?
RN: Fans. We really feel that the reason fantasy sports are so popular is because fans want more involvement than just being a spectator. Anyone who loves the game of baseball, or wants a way to get more involved then just watching the game, is welcome to become a member on our website and then buy shares in any players they feel are going to make it. We will be providing passionate fans with a way to be their own general manager while helping provide players with a type of insurance. Fans with the inherent ability to evaluate and judge talent will finally be able to put their talent to work for themselves and profit from their sports knowledge.
DL: Any time a unique idea is presented, the logical question is, "Why hasn't anyone done this before?" Do you have an answer for that?
RN: David Bowie sold off the future earnings rights of his songs in the famously dubbed 'Bowie Bond.' People are able to purchase shares in racehorses. People invest in golf and tennis players as well as musicians and artists. Harvard MBAs have auctioned of a percentage of their future salary. Society as a whole benefits with efficient capital markets. Why not for minor league baseball players?
DL: Baseball is obviously a business. What, if any, impact will Major League Baseball have on RSI's business plan?
RN: We haven't contacted MLB with regards to any potential partnership, but would welcome the chance to talk. Because RSI enables minor leaguers to achieve their dreams of playing in the big leagues by providing them with additional resources as well as enhancing the experience of sports fans by allowing them to become even closer to the game, we really believe MLB would support such an business model. We really want to improve the fans' experience as well as let the best players rise to the big leagues. It should help everyone.
DL: For many players it is asked, "If he couldn't play baseball, what would he possibly do?" Not only do you have a degree from a highly-regarded university, you've started two businesses. (Editor's note: Newsom's other business is Lacers; the website is lacersonline.com) What else do you plan on doing?
RN: Baseball has afforded me a lot of really great opportunities, and I am trying to take advantage of as many of them as I can. I really appreciate the fact that I get to go after the same dream I've had since I was four years old. I want to be a major leaguer more than anything, and that's my main focus right now. In regards to Real Sports Investments, I am hoping that we can help other players and improve the fan experience and be a really positive story for baseball.