How a Fairly Untapped Athlete Investment Market Could Reach New Heights with Name, Image, and Likeness Opportunities
As the sports industry continues to grow and change, businesses revolving around the professional leagues and their athletes evolve as well. One specific area that brings together financial investment and athletes is rapidly developing. Several firms, including Big League Advantage, EVO Invest, and Prediction Strike, have found new ways to make lucrative investments in the sports industry.
Specifically, Big League Advantage has experienced tremendous success with their groundbreaking investment strategy. The firm’s main area of focus in its first wave of investment was Major League Baseball prospects, most of whom had yet to make their big-league debut. The company’s strategy involves giving a large sum of money to young athletes to use for any needs they may have, which includes training, meals on the road, and even family medical bills. This monetary investment is appealing to the players because it offers an option outside of traditional loans. In this case, the money is simply an injection of capital without any strings attached to pay back if the player’s career does not end in success. However, in return, the athletes agree to pay a percentage of their future earnings, if they are fortunate enough to sign an MLB contract.
When selecting their prospects, the firm uses an algorithm measuring a variety of statistics. The algorithm actually calculates statistics very similar to the ones used when crafting the famous Oakland Athletics roster which made a playoff run and inspired the movie “Moneyball.” This is because a member involved in the process with the Oakland Athletics is also involved in selection process at Big League Advantage. The algorithm has brought a similar run of success to Big League Advantage as they have landed superstar players such as Fernando Tatis Jr, Rafael Devers, Jazz Chisholm, and Elly De La Cruz.[1]
However, this success has not come without its challenges. In 2018, a Cleveland Indians prospect, Francisco Mejía, brought a lawsuit against Big League Advantage in an attempt to void the contract due to “unconscionable tactics.”[2] Mejía received $360,000 from the firm in exchange for 10% of the young catcher’s future earnings. Upon receiving the money, Mejía planned to use it to help care for his sick mother, but eventually wanted to back out of the contract as he got older and closer to a career in the big leagues. According to Minor League Baseball, the deal could cost Mejía up to $10 Million throughout his career.[3] Eventually, Mejía decided to drop the lawsuit against Big League Advantage claiming that he plans to honor his agreement and that he was not deceived or tricked in any way by the investors at Big League Advantage.[4]
As more publicity came out involving Big League Advantage, more media outlets began to negatively portray the investment firm’s practices. Many were calling out their “predatory” and “unethical” business plan seeking to earn a profit on young athletes. However, this is only one side of the story. Similar to every investment firm around the country, Big League Advantage loses deals as well. As mentioned above, if a player does not have success after the funding or suffers a career altering injury, Big League Advantage simply loses their investment and moves forward. Therefore, it seems narrow-sighted to firmly portray the investment firm as the enemy when they also often take losses on their investments. Additionally, founder Michael Schwimer has openly said that Big League Advantage simply approaches a player to make them aware of the opportunity at-hand and allows them to consult with any outside sources before moving forward with a deal.[5]
Whether an investment earns the company a profit or not, they are providing resources to young athletes who need them desperately. As mentioned above, the firm was started by a former major league pitcher, Michel Schwimer. Schwimer started the firm largely because he saw the problems present in baseball’s Minor League system. Players in these leagues are paid nowhere close to their counterparts in the Major Leagues. Under a new agreement between the Minor League Baseball Players Association and Major League Baseball, Triple-A (the league one tier below the MLB) yearly salaries will increase from $17,500 to $35,800. In the lowest-tiered league, yearly salaries will increase from $4,800 to $19,800.[6] Based on these numbers, it is clear why young athletes may need an increase in capital while traveling the country to chase their dreams. Therefore, these investments by Big League Advantage, which are often portrayed in a negative way, actually offer opportunities to young baseball players that would never be available otherwise.
Big League Advantage has been in the news again recently, but this time not for their dealings in baseball. The investment firm has started to take advantage of the loosely defined and rarely regulated Name, Image, and Likeness (NIL) laws. After the laws were enacted, Big League Advantage started to look into investing into college athletes, specifically in NCAA Football. One of their most successful, yet controversial, clients is Gervon Dexter. Dexter was a standout defensive tackle at the University of the Florida and was the 53rd selection in the 2023 NFL Draft by the Chicago Bears.[7]
Soon after being drafted, Dexter brought a lawsuit against Big League Advantage for an NIL contract he signed while in college. Dexter is attempting to challenge the contract using a Florida statute which he claims does not allow for NIL deals to carry on past a player’s college career. Big League Advantage is counter-arguing that the statute does no such thing and that the contract is valid and should be carried out in totality so they can receive their end of the bargain, a portion of Dexter’s future earnings. This litigation is ongoing, and both sides continue to add commentary to the situation, while Big League Advantage has suspended its investment in college football players until the case is resolved. Michael Schwimer has since claimed that Dexter’s lawsuit has caused several players to miss out on lucrative deals. Most notably, Schwimer claims that the investment firm had a deal on the table for Jordan Travis, Florida State’s star quarterback, which they had to revoke. Since then, Travis suffered a horrible leg injury which could cause him to never play football at a high level again. According to Schwimer, the lawsuit caused Travis to miss out on a large sum of money that he may never get offered again.[8]
The result of this case is extremely important, not only for Big League Advantage and Gervon Dexter, but for the landscape of NIL going forward. Other investment firms with a similar business model to Big League Advantage such as EVO Invest and Prediction Strike will be eagerly waiting the outcome of this lawsuit to see if they can tap into the lucrative NIL market as well. If the courts rule in favor of Big League Advantage, the NIL laws could be even more uncontrollable than they already are with no clear end in sight.
[1] https://bigleagueadvantage.com/
[2] https://www.espn.com/mlb/story/_/id/24523401/padres-catcher-francisco-mejia-drops-lawsuit-disputed-payment
[3] https://www.milb.com/news/indians-prospect-francisco-mejia-sues-bla-over-disputed-deal-272068894
[4] https://www.espn.com/mlb/story/_/id/24523401/padres-catcher-francisco-mejia-drops-lawsuit-disputed-payment
[5] https://www.milb.com/news/indians-prospect-francisco-mejia-sues-bla-over-disputed-deal-272068894
[6] https://www.baseballamerica.com/stories/mlb-minor-league-players-reach-deal-on-first-milb-cba/#:~:text=Players%20in%20the%20complex%20leagues,go%20from%20%2413%2C800%20to%20%2430%2C250
[7] https://www.washingtonpost.com/sports/2024/04/04/big-league-advantage-tatis-dexter/
[8] https://www.washingtonpost.com/sports/2024/04/04/big-league-advantage-tatis-dexter/