Fernando Tatis Jr. signed a massive 14-year, $340 million contract on Wednesday with the San Diego Padres, which made it the third biggest contract in baseball history.
Aside from paying California taxes, not all of that $340 million will go to Tatis.
When he was just a teenager playing Single-A baseball, he signed a contract with Big League Advance, a firm that invests in young athletes. According to Big League Advance, the firm spread out $26 million among 77 minor league baseball players in 2017, and that included the Padres superstar. Players like Tatis then agree to give up anywhere between 1% and 12% of future MLB earnings.
That has now came back to bite him in the butt as Tatis’s deal was for 8% of his earnings, which would mean $27.2 million of this contract will go to Big League Advance.
“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.”
According to Jared Diamond of the Wall Street Journal, the company uses a proprietary algorithm to project player performance and future earnings to determine the set amount it will loan a player.
“For instance, if Big League Advance offers a minor-leaguer $100,000 up front for 1% of his earnings, that player can then decide to accept $500,000 in exchange for 5% or $1 million for 10%,” Diamond wrote.
Click on ‘Follow Us’ and get notified of the most viral MLB stories via Google! Follow Us
Just 22 years old, Tatis has established himself as arguably the best young player in MLB.
