You can do this in Vegas.
Duplicate the video onto the track above. Apply the Cookie Cutter FX with a border of the color you want. Adjust to taste, keyframe to make the circle follow the player.
For more complex shapes use a Bezier to cutout generated media.
If you have Photoshop or other similar graphics app, you could also make a feathered selection in Photoshop, fill with red (or make oval selection, fill with red, feather, invert selection, press delete), save as file format that has an alpha channel (PSD, PNG, TGA) then reduce opacity to 50% or so in Photoshop or Vegas, then apply above the desired track in Vegas, then show or hide as appropriate.
If you want that exact effect just add a Generate Media Color Gradient on the track above. Select the Elliptical gradient type and make the two colors red and clear. Adjust the opacity of the red to your liking. Then just position over the players and fade in and out. You could also add a third color and make that clear and punch out the center to make a ring like the cookie cutter does.
That's what I love about Vegas... there are always several ways to solve a particular problem.