The Cost Of An Early Payday: Lessons From Tatis Jr.'s Advance Financing Agreement

Deal Structure and Context

Big League Advance was founded by former MLB pitcher Michael Schwimer with a venture-capital model: it offers minor league players upfront capital in exchange for a fixed percentage (typically 5–10%) of their future MLB earnings. The firm spreads its risk across dozens or hundreds of prospects, knowing that only a few will reach lucrative major league contracts.

Tatis reportedly signed his deal in 2017 while still a minor leaguer. The contract obligated him to pay BLA 10% of his future MLB earnings if he made it to the big leagues—a bet that ultimately paid off handsomely for BLA once he inked his record-setting deal in 2021, until he contested the deal in court.

The Rise of Advance Financing Agreements in Baseball

Advance financing agreements like the one Tatis Jr. entered have become increasingly common in professional baseball, especially among minor league prospects who face uncertain and often meager salaries. Companies such as Big League Advance offer upfront money in exchange for a percentage of future earnings, theoretically providing players with immediate financial security while lenders bet on their long-term success.

While these deals can appear beneficial, they often contain terms that heavily favor the lender, locking players into agreements that can significantly diminish their eventual earnings. The controversy surrounding Tatis Jr.'s lawsuit is not an isolated incident but part of a broader, systemic issue.

Legal Structure and Issues

A. Income-Purchase Agreements, Not Loans

These deals are not considered traditional loans. Instead, they are structured as purchases of future income, which means they generally avoid regulation under state usury laws. There are no interest rates—just a straight percentage of future income, contingent upon success.

B. Assignability of Future Income

In the June 2025 lawsuit, Tatis argues that the contract should be void under Dominican law, asserting that the agreement was signed without proper oversight and may not meet legal requirements in his home country. He is also seeking declaratory judgment in the U.S. to prevent enforcement. The suit raises the issue of cross-border contract enforceability and whether a U.S.-based entity can collect based on an agreement signed abroad, especially when the athlete claims the contract was unconscionable.

C. Unconscionability and Fairness

This lawsuit echoes previous concerns about unconscionability, particularly among international players with limited financial literacy or legal support. The case of Francisco Mejía, another MLB player who challenged a similar deal with BLA in 2018, shows that these agreements—while legally creative—can push the limits of fairness and consent.

Broader Ethical and Legal Concerns: The Minor League Context

As highlighted in a recent Sports Litigation Alert article, these types of agreements raise serious ethical and legal questions, especially for minor leaguers who typically lack bargaining power and often enter contracts without independent legal counsel. Many young athletes are vulnerable to accepting terms that they do not fully understand, leading to potential exploitation.

The Tatis Jr. lawsuit spotlights how these agreements can jeopardize a player's financial future. The lack of standardized regulation or oversight in this niche market means protections for players are often minimal or nonexistent.

The Stakes: Contextualizing the Tatis Jr. Contract

Understanding the gravity of Tatis Jr.'s challenge requires recognizing the scope of his actual earnings. According to The New York Times/The Athletic, Tatis Jr.'s 14-year, $340 million contract extension is among the largest in baseball history. Against this backdrop, the $2 million advance may seem modest, but the 10% cut of his future earnings translates into tens of millions of dollars over the life of the contract.

This contrast illuminates why Tatis Jr. now seeks to void the agreement—what seemed like a helpful early payday now appears as a costly gamble that may undercut his rightful compensation.

Precedents in the Legal Arena: The Francisco Mejía Case

Tatis Jr.'s legal challenge also echoes the 2018 lawsuit filed by Cleveland Indians prospect Francisco Mejía against Big League Advance, as reported by ESPN. Mejía alleged disputes over payment terms and the fairness of the contract, bringing attention to the opaque practices employed by advance financing companies.

Though Mejía's case was ultimately settled, it set an important precedent and raised awareness about the risks players face in these arrangements. The similarities between the two cases suggest systemic issues that merit closer scrutiny by both legal authorities and baseball's governing bodies.

How to Protect Yourself: Lessons for Players and Lenders

Given these developments, it is essential for both players (lendees) and lenders to approach advance financing agreements with caution and transparency.

For Players:

1. Independent Counsel: A clear red flag in many cases is the lack of independent legal advice. Athletes must be represented before entering such binding agreements.
2. Full Disclosure and Modeling: Contracts should include scenario modeling to help athletes understand the high-end cost of the deal (e.g., $34M repayment on a $2M advance).
3. Repayment Caps: Clauses that limit the total repayment (such as 2x or 3x the advance) can make agreements more equitable.
4. Buyout Options: Allowing early buyouts if the athlete lands a major contract.
5. Cooling-Off Periods: A waiting period between contract offer and signing to ensure time for review.
6. Alternatives: Athletes can explore endorsement deals, NIL rights (especially for college athletes), or financial structures involving equity rather than fixed percentages.

For Lenders:

1. Contractual Clarity: The contract should define payment triggers, repayment mechanics, and assignment terms with precision.
2. Performance-Based Triggers: Repayment should only commence once the player reaches MLB or hits specified benchmarks.
3. Enforceability Safeguards: Anti-repudiation clauses and jurisdictional provisions can prevent disputes post-success.
4. Due Diligence: Investing only after evaluating player performance data, health, and organizational position.
5. Avoiding Regulatory Classification as Loans: Legal counsel must ensure contracts are clearly defined as income-share agreements to avoid unintended classification as loans.
6. Reputation Management: As public scrutiny increases, maintaining fairness and transparency is key to preserving institutional credibility.

Conclusion

Fernando Tatis Jr.'s lawsuit against Big League Advance is a clarion call to the baseball community and financial services industry alike. It underscores the pressing need for legal safeguards, ethical lending practices, and informed decision-making by players. As the landscape of athlete financing evolves, stakeholders must prioritize fairness, clarity, and protection to ensure young athletes are not forced to pay an outsized price for an early payday.