Indians Prospect Francisco Mejia Embroiled In Legal Dispute Over Future Earnings

Indians prospect Francisco Mejia, who is generally considered one of the game’s very best prospects, has brought suit against an entity known as Big League Advance, according to a report from ESPN.com’s Jerry Crasnick. The litigation seeks to set aside a series of contracts between Mejia and BLA.

The precise nature of the agreements is itself evidently a subject of the lawsuit. Generally, though, the arrangement was for Mejia to receive a payment ($360K in this case) in exchange for a portion (10%) of his future earnings. Mejia clams the up-front money was in the nature of a loan, whereas BLA characterizes it as a no-strings-attached payment.

This general scheme shares plenty in common with Fantex, which previously struck some notable bargains with young MLB players. Of course, that company originally sought to sell “shares” of its investments to the general public, a novel marketing concept that seems not to have worked in practice. The BLA approach appears to be more of a hedge fund model and is (per its website) focused on pre-MLB players. Unlike players who are already in the majors, many prospects’ earnings are somewhat less certain and presumably can, therefore, be secured for lesser investments.

Unsurprisingly, Mejia’s allegations paint a less savory account of BLA’s business model than would the entity itself. CEO Michael Schwimer, a former MLB pitcher, denied that the organization utilizes abusive recruitment tactics and disputes certain elements of Mejia’s claims in particular. Crasnick ticks through some of the chief allegations. Whether or not the contract is enforceable will ultimately be decided by the pending court case, which is only just getting underway, unless the sides agree instead to a settlement.

Whether or not Mejia will be bound by this agreement is itself of note, as he’s a significant player who is expected to have a chance at staking a claim to a regular MLB job in short order. (Indeed, he already touched the bigs last year, leading BLA to seek its first payment.) But the lawsuit is potentially also of broader consequences, as it could have implications for the still-uncertain development of this model of outside investment in professional athletes’ future earnings.

Most notably, perhaps, is the simple fact that this sort of agreement was struck in the first place. Unlike the Fantex situation, BLA seemingly has not sought visibility. Indeed, it asks in a counterclaim for an injunction forbidding Mejia from publicizing his interactions with BLA. But it certainly seems this isn’t an isolated matter. The entity’s website claims that it has arrangements with at least three (anonymous) players who have reached the majors since originally signing with BLA. The site also quotes some unattributed statements of gratitude from those players.

As all this is going on, the 22-year-old Mejia is trying to force his way into the Indians’ immediate plans. He’s off to a tepid start at Triple-A and still doesn’t have a clear position at the game’s highest level. (A catcher by trade, Mejia is also working in the outfield at Columbus.) But most evaluators expect the youngster to establish himself before long as a high-quality hitter at the game’s highest level.

Prospect rankings — including Baseball Prospectus (#5), ESPN.com (#7), MLB.com (#11), and Baseball America (#20) — unanimously value Mejia as a top-end talent. He’s obviously already on the verge of drawing a major-league salary. Certainly, there’s every chance that ten percent of his eventual earnings will turn out to be quite a tidy return on the initial investment reputedly embodied in the contract that’s now in dispute.