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.

Source : CNBC

Related posts

Facebook should hire people and not rely on machines


Yahoo 'most probably' acutely aware of hacking scandal previous to Verizon takeover bid, claims former CEO


‘Shark Tank’ entrepreneur pitches bike-blending smoothie bar, Moberi


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.