This is interesting, a form of insurance for professional baseball players and others.  As I understand, after player makes MLB and earns $1.6mm, 10% of his income goes into a pool for distribution among other pool participants who don't make it.  Not sure if there is a cap on how much a player pays in.  Participation is voluntary, players have to opt in themselves and they would likely join a pool of players with similar payoff profiles.

I think there is at least one pool in baseball with a player that has reached. 

Lot of ways to look at this.  

Home insurance - Protection recognizing the low probability of a substantial loss.

Income Pooling- Protection recognizing the high probability of insubstantial income (depending on the characteristics of a pool and individual player)

https://www.pandopooling.com/about

 

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Problem is if it is voluntary who opts in (decide when you get drafted and then if you fail you are eligible and who doesn't opt in isn't eligible) then likely only the guys after the second round opt in (no big bonus) and those make the majors less often anyway (let alone become high salary guys) so it probably will be underfunded.

You would need some 100+ mil contracts in the pool to make it really pay.

This week, RipkenFanson was contacted by a member of "the team" who's listed in OP's article. It's intriguing. Like housing, you don't want to own (here be) the most expensive house on the block. I can see where this pooling could help a player whose career path after baseball is full of uncertainty.

I agree it's an interesting concept. 

If a potential participant was otherwise comfortable with the idea, I'd advise him/her to be careful because Pando (or another organization trying something similar) might not be around years from now when one of these arrangements was due to pay off.  The underlying contracts would still be enforceable if they were written halfway competently, but each member of the pool would be faced with trying to track down other members and potentially serving and suing them.  That would be expensive.  For that matter, even if Pando survives, its interest is in getting its percentage off the top--I doubt it would have a fiduciary obligation to make sure pool members also get paid.  A lawsuit against Pando could be successful, but again would be costly, and Pando may not have enough assets to make a suit worthwhile.  You are dealing with a company and a model that has no track record.  I'd feel much better if this were offered by an existing insurance company or maybe an investment bank.  (And if people show interest in this kind of thing, maybe that will happen.)

Participants also would want to know who the other members of the pool were going to be.  You wouldn't want to be the highest-rated prospect in a pool, and no one would want you to be the lowest-rated in theirs.  I guess Pando could guarantee participants would have some minimum rating by Baseball America or another third party scouting service--but I have no idea how much faith one should place in those.

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