Earlier this month, Fernando Tatis Jr. signed A massive 14-year, $ 340 million deal With San Diego Padres. Barring a trade, the move would keep the star in San Diego for much less of his career. It will also set him up financially for life – although he is already going to lose a large portion of those future earnings.
When Tatis Jr. was only 18 years old, he was simply a child with a dream, a lowly prospect who came from the Dominican Republic and was trying to catch up in the Padres farm system.
The Wall Street Journal reported Tatis Jr. signed a contract with Big League Advance, which started raising money in 2015. As the name suggests, Big League Advances partners with younger players, paying them in advance on their minor league salaries, in the hopes that they give it a big shock at the majors.
It is similar to other types of investment, such as stock markets, real estate or venture capital funds. To date, Big League Advance has invested $ 150 million in approximately 350 players. In many cases, players never make it to the major leagues and the company does not see the money coming back. But shortly before one player won the mega deal – and Big League Advance returned the prizes.
The Big League Advance selects players to invest based on an algorithm and makes an initial offer. Players can choose what percentage of money they are willing to pay. The higher the initial payment they receive, the larger percentage they will have to pay which they should make in large amounts. Founder Michael Schwimmer said the company, on average, cuts the player’s major-league earnings by eight percent.
It is unknown how much Tatis Jr. agreed with the company, both in terms of his initial advancement and his outstanding balance. However, the eight percent agreement would cost him $ 27.2 million.
Schwimer is a former major legiger, so he is aware of how difficult the show is to obtain. Critics of Big League Advance say that the company likes younger players who might not understand what they are signing. And the Major League Baseball Players Association has distanced itself from the Big League Advance, even warning players to “proceed with caution” with any kind of deal.
But Schwimmer knows everyone what they are doing. For Tatis Jr., the cash security of over $ 1 million was worth some future earnings.
When all is said and done, Tabris Jr. will still make a ton of money. But between state and federal taxes, agent fees, and their payment for the Big League Advance, this massive deal is not nearly as large as it appears.