Some Baseball Players Are Entering 'Income Pooling' Agreements To Fix Imbalance
AUDIE CORNISH, HOST:
Game 3 of the World Series is tonight, featuring baseball players earning millions of dollars. Among those watching the game, all those minor league players earning way less money. There's a company that's pushing a big economic idea to try and balance out that inequality. Kenny Malone of our Planet Money podcast and NPR's sports correspondent Tom Goldman tells us about it.
UNIDENTIFIED PERSON: Got it, got it, got it.
TOM GOLDMAN, BYLINE: I met Logan Ice at spring training earlier this year.
KENNY MALONE, BYLINE: Ice is a minor leaguer who says the salary for a player like him is around $8,000 a year.
LOGAN ICE: But that doesn't account for living. That doesn't account for food - granted they feed you a couple of meals a day.
GOLDMAN: There are really only two options for baseball players - make the majors and make it huge or get stuck in the minors earning bupkis.
MALONE: But a company called Pando says it has a third option. Charlie Olson is the CEO and says this would work for any level of baseball player.
CHARLIE OLSON: There's nothing that's too low. So...
MALONE: What about right now, Kenny Malone in the studio?
OLSON: That's too low (laughter). That's too low.
MALONE: You've never even seen me throw a curve ball.
OLSON: As long as you are on contract by a professional baseball organization, you are available to be a client of Pando's.
GOLDMAN: Pando wants minor leaguers to join what it calls income pools.
MALONE: And here's how this works. A handful of players join a pool and make this deal. Whoever makes it big is going to kick some of their earnings back to the rest of their pool members. Also, Pando is going to get a little cut because that is their business model.
GOLDMAN: Nobody has to pay a cent until they've made it to the majors and they've made $1.6 million. Then that guy has to kick 10% of his salary back to his pool mates.
OLSON: Baseball can be zero-sum when your best friend gets called up and you didn't. Now all of a sudden, when your best friend gets called up, a little bit of you did.
GOLDMAN: One of the first players Pando recruited was Logan Ice.
ICE: I was like, what's the worst thing for me as a player that could happen, financially?
MALONE: And he thought, well, it only costs me money if I make it huge, and then I do have to kick money back to my pool.
ICE: That's the worst thing that could happen to me, is I'm filthy rich...
ICE: ...And I'm giving people money, and I'm helping them so much more than that money's hurting me. If that was the worst thing that could happen to me, I'm game.
MALONE: Pando's business model does raise some questions. For example, do irrationally confident athletes really think they need this kind of an insurance policy?
GOLDMAN: Will having that policy make them less motivated to succeed?
MALONE: The question Major League Baseball is asking is about competition. Will a pitcher go easier on a batter if they're in the same pool, for example?
GOLDMAN: Pando's CEO Charlie Olson isn't worried.
OLSON: I'm sure we can all kind of agree that there are many ways in which a player might be motivated to see a player on another team succeed. And yet, at the end of the day, competition reigns.
GOLDMAN: Charlie Olson says there are now about 140 players in income pools, and as of this season, three of those players have made the major leagues.
MALONE: And Pando is now expanding. They've launched income pools for professional football players and are about to launch pools for business people - people graduating with MBAs and big ideas that may be worth a fortune or bupkis.
GOLDMAN: Tom Goldman.
MALONE: Kenny Malone.
GOLDMAN: NPR News.
(SOUNDBITE OF SNARKY PUPPY'S "XAVI")
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