Selling shares of a pitcher

Take a guess on what
Tyler Duffey's career
earnings will be.

The Twins' Tyler Duffey is one of five pre-arbitration MLB players who has sold a percentage of his future earnings to a company called Fantex, which in turn intends to sell securities to investors.

In Duffey's case, he's to get $2.23 million now in exchange for 10 percent of his "future on- and off-field cash flows." Of the six baseball players named in the linked Associated Press story, Duffey is getting the smallest amount. Jonathan Schoop, Baltimore second baseman, is the highest; he will get $4.91 million for 10 percent of his future earnings.

Fantex also announced deals with one NFL player and four golfers and is still devising the securities it intends to market to investors. I am probably not their target market, and I'm not particularly eager to buy player futures with my retirement savings.

I am, however, intrigued by the decision of these athletes to sell a substantial portion of their future for cash upfront. My reading of the story is that these deals have yet to kick in, so presumably Duffey has neither received his payment nor started to give up 10 percent of his salary. But essentially Fantex and Duffey are wagering on whether he tops $22.3 million in career earnings. If Duffey turns into Boof Bonser, he gets $2.23 million and Fantex gets, presumably, less than $200,000; if Duffey matches Ricky Nolasco's career earnings (counting what Nolasco is to get during his current contract), Fantex gets 10 percent of some $85 million, which is a pretty nice profit.

Duffey is hedging against a possible career-altering injury, which is a reasonable choice. That is why some players will sign multi-year deals that buy out their arbitration years and/or a year or more of free agency; these deals are often seen as team-friendly because they limit the player's upside, but they also guarantee life-altering money. (At $40,000 a year, it would take 55 years to earn $2.23 million.)

Duffey now, presumably, has the freedom to turn down such an offer from the Twins, should the Twins be inclined to make such an offer.