The MCA of the Major Leagues

It’s been said a million times. It’s not a loan. The seller receives an upfront payment in exchange for an agreed upon percentage of future earnings. If there’s no earnings, then nothing is owed.

No, it’s not a merchant cash advance, it’s a big league advance, a deal offered by a company named just that, Big League Advance (BLA) to baseball players.

“Players receive an upfront investment from Big League Advance in exchange for an agreed upon percentage of their future Major League earnings,” the BLA website says. “If the player never makes it to the Major Leagues, the player will never owe or pay any money back to Big League Advance.”

The company was founded in 2016 and recently made the news because of its success with Padres player Fernando Tatís Jr. Tatís recently signed a 14 year contract with the team worth $340 million, the third highest in history. And now BLA stands to get their cut, potentially as much as $30 million, according to the WSJ.

The BLA website explains it as such:

Players choose what percentage of their future career earnings they want to give Big League Advance. For example, Big League Advance may offer a player $50,000 for every 1% of his future professional earnings. If a player wanted to sign a deal for 5%, he would receive $250,000, or if he wanted to sign a deal for 10%, he would receive $500,000. While our offer amounts are non-negotiable, the percentage the player would like to give up is up to the player.

The average deal is for 8% and the underwriting performed is a combination of the players’ background, scouting, and statistics.

Michael Schwimer, a former Major League pitcher, is the founder and CEO. The WSJ says that the company has made advances to 350 players for a combined $150 million.