Professional athletes as an alternative asset class and the impact of Blockchain

Abstract

Over the recent years, traditional asset classes have shown poor financial performance. This led to an increased interest in alternative investments such as hedge funds, gold, real estate and collectibles. This study explores the possibility of extending the definition of alternative assets to professional athletes and especially professional golf players. The study starts with an in-depth literature review, conducted with two separate objectives that are to be met. The first objective is to determine whether athletes and professional golf players could be considered as an alternative asset from a theoretical perspective and from a quantitative perspective. For this reason, the literature review also aims at determining whether any existing valuation models exist for professional athletes. The second objective of this thesis is to study the impact of the Blockchain technology in such process.

The analysis of the literature highlights that no limitation exists to the inclusion of new asset classes to the field of alternative assets. However, some authors argue that it is essential to establish a valuation model that allows the financialization of golfers. An Index-based valuation model is developed in this thesis in order to allow a relative valuation of professional golfers. The model focuses on the statistical performance of players who played on the European Tour during the 2018 season. Nevertheless, the literature review shows that investing directly in athletes leads to ethical and legal issues. That is the reason why a specific focus is put on the Blockchain technology. Nowadays, Blockchain is changing the way conventional industries are organized. Thanks to the concept of Smart Contracts, using this technology in such models could help solving some ethical issues such as Money Laundering. Therefore, this study aims at highlighting the ins and outs of using Blockchain while taking into account the conditions related to the use of golf players in a tokenization process.

As a conclusion, this thesis suggests that from a literary point of view, golfers can be considered as a tool for financial diversification. On the other hand, the model developed enables investors to compare professional golfers in terms of their performance. This allows the financialization of golfers and could ease their trade. The fact that these athletes can, in principle, be considered as alternative assets means that they can also be used in a tokenization process.