Big League Advance investing in baseball players with a VC model

While the stock market may be facing volatile times and investors can’t run away from so many assets moving down together, there’s a creative way to find uncorrelated returns.

Investing in baseball players.

A company called Big League Advance has raised more than $150 million to buy equity stakes in minor league baseball players.

The idea is simple. The players get an upfront payment, but it’s not a loan. They can keep the money forever.
In return, Big League Advance gets a percentage of any eventual Major League Baseball earnings.

Michael Schwimer, a former major league pitcher, founded the company.

“The players get to choose the equity they give up in return for the money they receive,” explains Schwimer. “We might have a scale of a $1 million for 10 percent, or $100,000 for every one percent, and the player can say we will do $300,000 for 3 percent. Our average deal is in the $300,000 to $500,000 range.”

A typical minor league player might make less than $10,000 a year, so getting an upfront payment of $300,000 could be a life-changing amount of money.

As superstar free agents Bryce Harper and Manny Machado are expected to soon sign contracts each worth over $300 million, earning even a small percentage of a contract like that would be big money, and a big win for Schwimer’s investors.

The company’s model is akin to classic venture capital, losing a small amount of money on most investments, with hopes that a few superstars can make up for all the rest.

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