Even though Fernando Tatis Jr. recently agreed to one of the most lucrative contracts in Major League Baseball history, the San Diego Padres superstar owes a portion of that money to an investment fund.
Ken Rosenthal of The Athletic originally reported on Friday that when Tatis was a 19-year-old playing in the minors, he entered into a deal with Big League Advance, "a company that offers select minor leaguers upfront payments in exchange for a percentage of their future earnings in Major League Baseball."
Per Jared Diamond of the Wall Street Journal, Tatis will owe BLA an estimated $27.2 million as part of the agreement he signed with the company during the offseason ahead of the 2018 minor league campaign.
ESPN's Jeff Passan reported on Wednesday that Tatis agreed to a 14-year, $340 million extension with the Padres.
Michael Schwimer, a former pitcher in the Philadelphia Phillies farm system who is now BLA's president and CEO, told Rosenthal in April 2018 the company's mission is not dissimilar to the stock market, but players don't owe anything if they never make it to the big leagues.
"I tell every investor, 'If you invest in the stock market and you lose, you're losing money on Apple stock or whatever," Schwimer said. "If you invest in Big League Advance and lose, you have changed someone's life.'"
According to Diamond, 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.
The company has drawn scrutiny from players and agents throughout the sport for its business practices. Per Rosenthal, the MLB Players Association sent a memo in January 2016 in which the union said it "'categorically' did not endorse or approve of BLA and its products and warned the future earnings the company sought from players were 'significant.'"
Padres catcher Francisco Mejia filed a lawsuit against BLA in February 2018, citing the "unconscionable" tactics used to get him to accept a $360,000 payment in exchange for 10 percent of his future earnings.
Mejia eventually dropped the lawsuit, saying he's "happy with my agreement with Big League Advance" and doesn't "believe Big League Advance has ever deceived me."
Rosenthal noted that Major League Baseball told Baseball America in 2017 that representatives for BLA were attempting to recruit players using media credentials they received from the outlet.
In 2018, Tatis spoke to Rosenthal about his deal with BLA, saying, "If I'm a successful player and make big money, I'm not going to care about giving that money away. That will be nothing if I make all that big money."
Tatis' $340 million agreement with the Padres is the third-largest in MLB history, behind Mookie Betts' $365 million deal with the Los Angeles Dodgers and Mike Trout's $360 million extension with the Los Angeles Angels.
Just 22 years old, Tatis has established himself as arguably the best young player in MLB. He has hit .301/.374/.582 with 39 homers and 98 RBI in 143 games over the past two seasons.