Cincinnati Reds prospect Elly De La Cruz is already one of the most exciting young players in the Major League — and he only just made his MLB debut on June 6. His journey was a long one; he moved away from home at six years old to train more and learn from better players. When he was ten, he moved to Santo Domingo to play in a competitive league. As other players got signed, De La Cruz continued toiling, not receiving much attention from clubs.
One day, he was asked to join a practice that a Reds scout was attending. The only problem: The scout was in town to see another shortstop. De La Cruz was asked to participate simply to boost the appearance of the other player. But De La Cruz impressed the scout enough that he received a contract worth $65,000.
Over the next few seasons, De La Cruz rose through the ranks of the minor leagues. He joined the Triple-A Louisville Bats to start this season, and when Reds outfielder Nick Senzel got injured, De La Cruz was called up to the majors.
If he keeps up his strong play, he’s likely due for a massive payday during his next contract. That’s the good news.
The slightly bad news is he’ll pay 10% of whatever he makes – both during that contract and for the duration of his career – to a company called Big League Advance (BLA).
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Let’s say De La Cruz continues his hot start and scores a contract worth $250 million. He’ll owe 37% in federal income taxes, bringing his salary down to $157.5 million. Add in his position in Ohio’s highest state income tax bracket (3.99%), and that’s another $10 million off his earnings. Take 10% for his agent fees, and suddenly, De La Cruz is looking at $122.5 million. That’s where it would end for a player not involved with BLA, but De La Cruz will owe another 10% from that original $250 million.
By the end of it all, De La Cruz would walk away with about $97.5 million — or 39% of what the contract is “officially” worth.
Michael Schwimer, a former baseball player, founded BLA in 2016. The company pays a Minor League player a lump sum upfront, with the average investment being $350,000. If that player never reaches the Major Leagues, they don’t owe any money back. But if the player strikes it big, they owe a portion of their salary back to the company.
BLA made waves when Fernando Tatis Jr. signed an enormous contract with the San Diego Padres. The company received $27 million as a result of that contract. Critics believed BLA was taking advantage of players who didn’t know any better. After all, these are usually younger guys who haven’t earned much money playing baseball. If someone comes along with a six-figure offer, they might be inclined to take it.
But Schwimer is quick to point out the players don’t have to repay anything if they don’t reach the Majors — and in fact, BLA has actually lost quite a bit of money. Schwimer told Action Network that BLA has raised $244 million to invest in players but has recouped less than $50 million. He added that the team has donated to player charities, and if they fizzle out of baseball, the company’s investors work to help them find jobs.
According to Schwimer, most prospects come to the company. They’re currently working with 530 baseball players. Most of them won’t be home runs like Tatis Jr. or possibly De La Cruz.
But even for guys who ultimately make nine-figure salaries, it’s got to sting knowing some of that money will go away as soon as they get it.