Big League Advance, a group that gives young baseball prospects cash in exchange for a cut of their future MLB earnings, is looking to raise $250 million for its third fund, founder and CEO Michael Schwimer told Sportico in a telephone interview.
The group recently filed paperwork informing the SEC it was raising money from wealthy and institutional investors.
Big League Advance typically asks for a cut in the 1% to 10% range of a player’s MLB income. It’s not a loan, and if the player never makes it to the majors, the group loses its stake. Success is predicated on enough players reaching the majors—and a handful signing pricey free agent deals—that the fund comes out ahead.
“We have more than 400 players right now, and it’s getting more popular; players are saying ‘yes’ more and more and more,” said Schwimer, who pitched two MLB seasons with the Phillies. “So we’re raising a $250 million fund to keep investing in baseball players.”
Big League Advance raised $26 million in its first fund and $130 million in its second, and has now deployed all but a few million of that total. Schwimer said the group has invested in 400-450 players, with about 100 having reached MLB and roughly the same number out of baseball entirely. The highest-profile success is San Diego Padres shortstop Fernando Tatis Jr., who recently signed a $340 million contract—one of the largest in MLB history.
The Big League Advance business model isn’t without controversy. The Major League Soccer players’ union has called such third-party agreements “exploitative,” and the MLBPA, which doesn’t represent minor league ballplayers, has expressed fears about conflicts of interest that might arise from these deals. In 2018, Big League Advance was sued by Cleveland Guardians prospect Francisco Mejia, who claimed he was taken advantage of in a deal that gave him $360,000 in exchange for 10% of his MLB earnings. Mejia later dropped the lawsuit and apologized.
Schwimer said Big League Advance already has about $100 million committed to the new fund. He declined to provide names of those investors.
The group’s prior investors include mutual fund manager Bill Miller, former Goldman Sachs partner Steven Duncker and Marvin Bush, brother of former President George W. Bush. Cleveland Browns executive Paul DePodesta also has an ownership stake, which is in a blind trust.
Schwimer said Big League Advance has begun adding a charity component to its deals, giving prospects an extra $5,000 toward the charity of their choice.
“It also helps our investor base know what our players are interested in,” he said. “So if a player makes the big leagues and wants to start a foundation, well, our investors are extremely high-net worth individuals, and they all give to charity anyways. Now they can just keep pumping money into the BLA family.”