Jerry Crasnick of ESPN reported on Friday that the Indians top prospect, Francisco Mejia, has sued a company called Big League Advance, looking to invalidate an agreement he signed with them which, in exchange for a modest cash payment a few years ago, purports to entitle the company to 10% of his future earnings.
Big League Advance is run by former Philadelphia Phillies pitcher Michael Schwimer and counts former MLB general manager and current Cleveland Browns executive Paul DePodesta as a board member and partner in the business. The model: to pay minor leaguers a certain sum of money — in Mejia’s case $360,000 — and in exchange for that, the company will receive 10% of all future earnings. Mejia claims in the suit that he could earn $100 million in his career. That’s not implausible given how good he’s supposed to be.
Mejia claims that Big League Advance’s tactics were “unconscionable,” in that (a) he was under duress at the time he signed the agreement due to his mother being ill and in need of money for medical treatment; and (b) that he had no legal counsel at the time he signed the agreement and that he does not speak English. Schwimer and Big League Advance counter that Mejia’s agents were fully aware of the agreement and that Mejia indicated at the time he signed that he fully understood what he was doing. They add that Mejia came back to them twice for additional installments in the same year the initial agreement was signed. It’s also worth noting that the contracts are in Spanish, which further undercuts Mejia’s position.
Making the case that this contract should be voided on the grounds of unconscionability is a tough, tough case, especially in a business-friendly Delaware courtroom, where this case will unfold due to it being the corporate home of Big League Advance. To win that case the contract has to be more than merely unfair. There has to be something more, something almost underhanded to it. Fangraph’s Sheryl Ring, an attorney, has a good overview of that today.
An additional undercurrent to this, which is not 100% clear from Crasnick’s story, is whether or not Mejia is claiming that this is a usurious, and thus illegal loan. On the math would could argue that paying, potentially, $10 million on a $360,000 advance represents an illegally high interest rate. If Mejia is claiming that Big League Advance will likely argue — I suspect successfully, if it comes to it — that this wasn’t truly a loan given that Mejia would be under no obligation to pay a dime back if he never made the big leagues. Of course, one could make the counter argument that, even if that was technically the case, it was all but certain in 2016 that Mejia would have, in fact, made the bigs, thereby making it a loan, practically speaking. As a matter of fact, Mejia was called up at the end of 2017 and will likely be back up in Cleveland for good some time this season. He’s already on the hook to Big League Advance for the earnings he’s made in that cup of coffee.
It’s worth noting at this point that Big League Advance is not alone in this business. There’s a company called Fantex which does this too, with Andrew Heaney, Maikel Franco, Collin McHugh, Jonathan Schoop, Tyler Duffey and Yangervis Solarte, among others, all signing up in recent years. A big difference between the Fantex deals we know about and what Big League Advance is doing, however, has to do with the money involved. Heaney got $3.34 million for that 10% cut a few years back. Franco got $4.35 million, McHugh got $3.96 million, Schoop got $4.91 million Duffey got $2.3 million and Solarete got $3.15 million. All of these will be much more balanced deals than that which Mejia received. Ones that could be viewed more akin to insurance policies if you look at it just so. It’s also likely that, given the money involved, those players were not approached while under personal duress and likely had legal counsel to represent their interests. The circumstances definitely matter.
The legalities of Mejia’s deal will be sorted out by the courts. We’re not the courts, however, so we’re allowed to have an opinion about it irrespective of the law. That opinion: it stinks. It stinks to high heavens. It might stink less if the money was decent and it reeks pretty damn badly given that it stands to be a pennies-for-pounds deal, but approaching young, relatively uneducated and financially strapped players looking to arbitrage their future earnings is shady either way.