When Fernando Tatis Jr. signed a massive 14-year, $340 million contract in 2021 with the San Diego Padres, it was the third biggest contract in baseball history. That $340 million, however, is not all going into Tatis’s bank account, and it has nothing to do with income taxes, nor even with the shortstop’s recent suspension after a positive test for a performance-enhancing drug.
When Tatis, now 23, was a teenager playing single-A minor-league baseball, he signed a contract with Big League Advance, a firm that invests in young athletes. The firm spreads its investments across dozens of prospective professional athletes by providing them upfront cash in exchange for a percentage of their future earnings.
According to Big League Advance, the firm splashed out $26 million among 77 minor-league baseball players in 2017, including Tatis. Players give up anywhere between 1% and 12% of future earnings. The typical deal is for 8% of future earnings, but the firm has not provided details of its arrangement with Tatis, according to Sportico. The contract applies to salaried earnings and not the proceeds of endorsement deals.
If Tatis’s deal was for 8% of his earnings and remains in effect for the 14-year duration of his Padres contract, that would mean $27.2 million would go to Big League Advance .
A contract like Tatis’s is a home run for the firm.
“When we signed him he wasn’t considered a Top 40 prospect,” Big League Advance CEO Michael Schwimer said about Tatis. “At the time, talking to investors, the amount of money we were offering him was a sizable portion of our bankroll. But we trusted the model.”
Tatis’s father also played big-league baseball, tallying over $18 million in career earnings, according to contract data from Spotrac.
Considering how difficult it is to make it to the majors from the lower rungs of the minor leagues, the risk mitigation can be worthwhile for athletes taking the quick, and certain, money — only about 10% of minor leaguers make the big leagues, according a Mother Jones report.
In 2022, Tatis was suspended for 80-games after positive test for steroid Clostebol. The Padres shortstop has apologized for this “mistake.”
Big League Advance, which was founded by Schwimer in 2016, has investors including mutual-fund manager Bill Miller of Legg Mason fame; former Goldman Sachs
partner Steven Duncker; Marvin Bush, a son and brother of former U.S. presidents; and Cleveland Browns executive Paul DePodesta.
Unconventional contract structures are growing increasingly familiar in sports. One noteworthy baseball example is Bobby Bonilla, who agreed in 2000 to forgo $5.9 million he was owed by the New York Mets in favor of payments spread out over 24 years, with an annual 8% interest rate.
Bonilla’s payments, which started in 2011 and go to 2035, will end up giving him a total payout of $29.8 million. That date will come a year after Tatis’s 14-year, $340 million contract with the Padres expires.
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