Fernando Tatis Jr. Extension - 14 years, $340 million

[jjgott]

Minor edit, this is what fans who know absolutely nothing about business or even the very basics of financial management think...

 

Oh jeez. What about baseball makes it anything like a regular business? You don't have to worry about competition (thanks antitrust exemption), you are guaranteed revenue streams from national/local TV deals as well as profit sharing before factoring in ticket sales, concessions, etc., and even if only 10,000 fans show up per game you apparently can still turn around and sell your business for over $1 billion.

 

I agree with you in one sense that if owners just want fans to look at baseball teams like any other private company then they should just be upfront with fans and say they are going to field a team of minimum salary guys. That would make the most sense "financial management"-wise, right? Reduce labor and overhead costs to increase profits? That seems to be the strategy of the Pirates ownership. Weird how none of the "smart" baseball fans talk about what a good job the Pirates owners are doing at maximizing profit margins.

 

It's almost like sports exist as a quasi-public trust and teams owe the fans a certain level of looking beyond the bottom dollar. Especially teams like the Brewers that have benefitted from public investment in the very field they play on. I don't think it's unreasonable that fans hope their favorite team manages its budget closer to that of a non-profit than a purely private corporation.

 

Personally, I'm not arguing Mark A sign every FA possible and he has certainly invested more in the team than Selig did in the last 20 years of ownership. There are of course bad deals and some players make more money than their production on the field warrants. All I was seconding was the fact that owners have the capability to sign whatever players they want, but choose not to for one reason or another. It shouldn't be surprising that a team like the Padres made this deal with Tatis, Jr.. I hope we have a young player of his caliber we can make the same commitment to soon. I always remember how pumped I was when Braun signed his first extension.

[Eye Black]

What about the TV contract?

The Padres 2012 broadcast rights deal was substantially larger than the Brewers deal (which I believe the Brewers had signed a few years earlier)...

 

MLB close to approving Padres’ TV deal

 

Major League Baseball has signed off on the structure of the Padres’ 20-year television deal with Fox Sports, two sources familiar with the situation said, and there are believed to be no remaining obstacles for formal approval.

 

An official announcement could be forthcoming as soon as next week.

 

The deal could be worth up to $1.2 billion to the Padres -- an average of $50 million a year in rights fees plus a signing bonus estimated as high as $200 million.

 

The Padres also received a 20 percent equity stake in Fox Sports San Diego, the new TV home of the club.

[reillymcshane]

So, Tatis has exactly 2 years of service time - meaning he's a free agent in four years. Let's break down a hypothetical contract:

 

2021 - $1M

2022 - $10M

2023 - $15M

2024 - $24M

 

Total Pre-FA salary: $40M

 

That leaves 10 years at $300M - which is a convenient $30M a year for the time frame.

 

No doubt that if Tatis has some really big seasons in the next few years he could get more. But what he got doesn't seem unreasonable. He's locking in $340M. If waits and goes year to year - he could be losing $50-100M. But on the flip side, one injury and he's toast. It's hard to fault someone for locking in this kind of cash.

 

The big thing unknown is what will a future CBA contract do to revenues. If the players get more money he might be giving up quite a bit more potential dollars. But that's just potential. It's hard to believe that making $30M a year is going to be that 'low'.

[Fear The Chorizo]

Again I ask - where in holy hell is SD getting all this money?

 

The Padres organization either owns or partially owns a TON of property immediately around their ballpark (which happened to be publicly funded itself) and have stake in many mixed residential/commercial property developments surrounding the area. They likely make more money as an organization for non-baseball activities than gameday revenues, and those revenue checks are cashed year round no matter what's going on at Petco.

 

It also should be noted that the Padres are one of just two MLB teams that doesn't share its market with any other major 4 sports league teams - so they don't have to compete with other franchises for fan $'s...meaning even a fanbase that is fickle and isn't as engaged as WI sports fans gives the Padres more money than what Brewer fans give them simply due to lack of competition. That goes for TV dollars, too. Oakland somehow is the other, although they basically have all the SF teams in their backyard. They are the pro sports marketplace for San Diego - which is a larger market than Milwaukee and their overall metro area population of ~3.5 Million people is closer to the overall WI state population than the Milwaukee/Madison metro area.

[Eye Black]

It also should be noted that the Padres are one of just two MLB teams that doesn't share its market with any other major 4 sports league teams - so they don't have to compete with other franchises for fan $'s...meaning even a fanbase that is fickle and isn't as engaged as WI sports fans gives the Padres more money than what Brewer fans give them simply due to lack of competition. That goes for TV dollars, too.

It is a good point, and I would tack on having a market monopoly on sponsorship dollars as well. Being the only show in town gives them a lot of leverage when it comes to dealing with the companies seeking to market to the local sports fan demographic. Obviously that provides additional incentives and value to their media rights holders as well.

[homer]

If the Brewers did something like this, the same guys calling our owner cheap would be first in line calling it a dumb deal that would come back to haunt them in years 11 - 14.

[TURBO]

If the Brewers did something like this, the same guys calling our owner cheap would be first in line calling it a dumb deal that would come back to haunt them in years 11 - 14.

 

and I bet the same thing is happening in SD as we speak...

[wibadgers23]

If the Brewers did something like this, the same guys calling our owner cheap would be first in line calling it a dumb deal that would come back to haunt them in years 11 - 14.

 

This is just my own personal viewpoint but I think I would be far more excited in the present moment about signing such an unbelievable talent to a long term deal than I would be scared about the contract going bad 10+ years down the road.

[MrTPlush]

A big big point to consider, the bad years of Tatis are likely ridiculously far off. A decade from now $30mil a year won't be like it is now. Heck, go back to when Braun signed his extension that gave him $20mil a year. Look where that $20mil would have ranked in 2011 compared to today...$20mil isn't that insane of a salary to be handing out.

 

Considering this locks up 26-32 year old Tatis and only goes to his age 36 season this might end up a great deal if he is truly a super star player. By the time he is 32-36 salary inflation may make his salary far from top of MLB earners. (those year figures may be slightly off...just quick glances and calculations).

 

This is so much different than guys signing huge contracts at 28-30+ where their decline and bad years are right around the corner.

[folly412]

Massive endorsement bitcoins have to be coming his way as well. Possibly the most exciting young player I've seen since Griffey.

[owbc]

In my view the “cheap owner” stuff only applies to signing contracts they are overpays in exchange for a few extra wins.

 

Every single owner in baseball would have locked in Tatis for this price. It’s a bargain. ARod made way more money than Tatis is going to make. The Padres got lucky that MLB is facing some uncertainty right now.

[ClosetBrewerFan]

It's just getting kind of old to go through this with every large contract after we gave Christian Yelich one last year and had essentially back to back 90 win seasons. We've been better than the Padres for 15 years and it isn't close. We tried to pay Justin Turner. I don't get what people are even upset about anymore. You'd swear we live in the Wendy Selig era if you just swapped out the names involved.

Agreed, why do people think that the Brewers cannot do a contract like this? They literally just did this last year with Yelich. 9 years and $215M is an average of $24M/year and locks him up until he is 37. Tatis has an AAV of $24M and is locked up until he is 36. I get its overall more $ but that's because he's younger... Its still locking them both up until their late 30s. The Brewers have shown they can offer contracts like this.

[Eye Black]

I agree that the Tatis contract extension isn’t outrageous by any means as compared to likely market value, but when you pair it with some of their other free agent contracts over the past few off-seasons it is a bit surprising how much an apparent “small market” team has been willing to commit financially.

 

Joel Sherman pointed out that they now have four infielders on large contracts (of varying degrees), and this doesn’t count the Wil Myers contract which wasn’t small either or the $56 million left on Yu Darvish’s contract:

 

The Padres infield of Hosmer ($144), Ha-Seong Kim ($28M), Tatis Jr. ($340M) and Machado ($300M) — the $812M infield.

[True Blue Brew Crew]

My thoughts don't go to the contract Tatis just signed, they go to the one Ronald Acuna signed last year. There's no way Acuna's agent is getting a Christmas card this year.

[ewitkows]

My thoughts don't go to the contract Tatis just signed, they go to the one Ronald Acuna signed last year. There's no way Acuna's agent is getting a Christmas card this year.

 

Totally different personal circumstances around those contracts. Tatis grew up in a big league household with tons of money. He could gamble and wait for a massive deal. Acuna didn't come from that background and if he got hurt or took a FB to the head and couldn't play again, he's not going to get that payday. It's all about risk of the next contract and Tatis has less risk because of his situation.

[brewcrewdue80]

It's just getting kind of old to go through this with every large contract after we gave Christian Yelich one last year and had essentially back to back 90 win seasons. We've been better than the Padres for 15 years and it isn't close. We tried to pay Justin Turner. I don't get what people are even upset about anymore. You'd swear we live in the Wendy Selig era if you just swapped out the names involved.

Agreed, why do people think that the Brewers cannot do a contract like this? They literally just did this last year with Yelich. 9 years and $215M is an average of $24M/year and locks him up until he is 37. Tatis has an AAV of $24M and is locked up until he is 36. I get its overall more $ but that's because he's younger... Its still locking them both up until their late 30s. The Brewers have shown they can offer contracts like this.

Brewers contract was already on top a previous extension. This contract is while Tatis is still in the midsts of pre-Arb. Padres likely could have gone 5 seasons and paid him a total of 50million. I mention that because they'll clearly pay him more upfront, and the question becomes does that inhibit them from surrounding him with better teammates through FA during the next 5seasons? Im sure statheads will compare what kind of WAR value he provides through his next 14years and justify SD as getting more return than paying him. Just how much WAR does he accrue after the last 9 seasons and what he is paid for them? Vs including the already team controlled years.

[Jopal78]

Again I ask - where in holy hell is SD getting all this money?

 

The Padres organization either owns or partially owns a TON of property immediately around their ballpark (which happened to be publicly funded itself) and have stake in many mixed residential/commercial property developments surrounding the area. They likely make more money as an organization for non-baseball activities than gameday revenues, and those revenue checks are cashed year round no matter what's going on at Petco.

 

It also should be noted that the Padres are one of just two MLB teams that doesn't share its market with any other major 4 sports league teams - so they don't have to compete with other franchises for fan $'s...meaning even a fanbase that is fickle and isn't as engaged as WI sports fans gives the Padres more money than what Brewer fans give them simply due to lack of competition. That goes for TV dollars, too. Oakland somehow is the other, although they basically have all the SF teams in their backyard. They are the pro sports marketplace for San Diego - which is a larger market than Milwaukee and their overall metro area population of ~3.5 Million people is closer to the overall WI state population than the Milwaukee/Madison metro area.

 

San Diego is only ahead of three clubs: Kansas City, Milwaukee and Cincinnati in terms of market size. While it is true that they don't "share" their market with anyone, they are also hemmed in by the Pacific Ocean, Los Angeles to the North, and Mexico to the South so there isn't a ton of potential for market expansion.

 

However, the Padres did a similar splurge once before when they signed James Shields and traded for Craig Kimbrel, Justin Upton, Matt Kemp, Melvin Upton, Ian Kennedy etc. then broke the team up a year or so later. At least this time around they have Machado and Tatis and not a bunch of veterans in their 30s.

[True Blue Brew Crew]

My thoughts don't go to the contract Tatis just signed, they go to the one Ronald Acuna signed last year. There's no way Acuna's agent is getting a Christmas card this year.

 

Totally different personal circumstances around those contracts. Tatis grew up in a big league household with tons of money. He could gamble and wait for a massive deal. Acuna didn't come from that background and if he got hurt or took a FB to the head and couldn't play again, he's not going to get that payday. It's all about risk of the next contract and Tatis has less risk because of his situation.

 

Umm, the situations aren't 240 million dollars different.

[Thurston Fluff]

When there are several teams willing to take on overpriced players because they're marginally better than what they had contracts like this aren't as risky for small market teams as it first appears. The risk is not getting much of a return in prospects if he doesn't live up to his contract. Giancarlo Stanton being a prime example. The problem for the Marlins wasn't financial ruin due to his contract as much as the loss of prospects in return when the inevitably had to trade him.

[jerichoholicninja]

People do realize he's not getting a $340M check today, right? Haven't seen the breakdown yet but he's most likely getting only a few million a year the first couple seasons then probably settling in the $30-$35M a year range the last 10-ish years. And in those year the Padres will spend less money on other players and will be called cheap and greedy at that point.

 

There's only two outcomes from this contract.

 

1. In about five years, he'll be the superstar player everyone hopes he would be but then he'll complain that the team sucks because they can't afford anyone to surround him with so he's traded to the Yankees.

 

2. He goes total bust and turns into an albatross that keeps the franchise in the gutter for a decade.

[KeithStone53151]

My thoughts don't go to the contract Tatis just signed, they go to the one Ronald Acuna signed last year. There's no way Acuna's agent is getting a Christmas card this year.

 

Totally different personal circumstances around those contracts. Tatis grew up in a big league household with tons of money. He could gamble and wait for a massive deal. Acuna didn't come from that background and if he got hurt or took a FB to the head and couldn't play again, he's not going to get that payday. It's all about risk of the next contract and Tatis has less risk because of his situation.

 

Umm, the situations aren't 240 million dollars different.

 

It's really not that simple though. Acuna's is definitely more team friendly, but the $100 million only bought out a max of 3 years of free agency if both options are exercised(will be $123 million if both options are exercised). I think we did the exercise earlier that a player could maybe get close to $75 million during team control years if they were a monster every year. So around $17 million per year for the 3 FA years. Yes pretty team friendly, but also worth noting Acuna was 20 years old at the time of signing the contract. Worst case scenario for him, he left around $50 million on the table assuming he could get $35 per instead of $17. He also will have another opportunity at age 30 to hit free agency and get another big contract. If he's good to the point that he was truly underpaid in his late 20s, he'll get plenty of money for his seasons in his 30s.

[SeaBass]

People do realize he's not getting a $340M check today, right? Haven't seen the breakdown yet but he's most likely getting only a few million a year the first couple seasons then probably settling in the $30-$35M a year range the last 10-ish years. And in those year the Padres will spend less money on other players and will be called cheap and greedy at that point.

 

There's only two outcomes from this contract.

 

1. In about five years, he'll be the superstar player everyone hopes he would be but then he'll complain that the team sucks because they can't afford anyone to surround him with so he's traded to the Yankees.

 

2. He goes total bust and turns into an albatross that keeps the franchise in the gutter for a decade.

I knew I saw a tweet today with an outline of a breakdown, I don't think it's inclusive of everything but enough to go on. Plus it's from Heyman so all the grains of salt apply.

 

 

Jon Heyman

@JonHeyman

 

As I just said on @MLBNetwork Tatis Jr. will be paid $34M over his next 4 years and $306M over his 10 free agent years for $340M. He’ll get a $10M signing bonus w/salaries of $1M $5M $7M and $11M in 1st 4 years. The deal tops out at $36M. Theres a no-trade clause, no opt-outs.

[Fear The Chorizo]

Again I ask - where in holy hell is SD getting all this money?

 

The Padres organization either owns or partially owns a TON of property immediately around their ballpark (which happened to be publicly funded itself) and have stake in many mixed residential/commercial property developments surrounding the area. They likely make more money as an organization for non-baseball activities than gameday revenues, and those revenue checks are cashed year round no matter what's going on at Petco.

 

It also should be noted that the Padres are one of just two MLB teams that doesn't share its market with any other major 4 sports league teams - so they don't have to compete with other franchises for fan $'s...meaning even a fanbase that is fickle and isn't as engaged as WI sports fans gives the Padres more money than what Brewer fans give them simply due to lack of competition. That goes for TV dollars, too. Oakland somehow is the other, although they basically have all the SF teams in their backyard. They are the pro sports marketplace for San Diego - which is a larger market than Milwaukee and their overall metro area population of ~3.5 Million people is closer to the overall WI state population than the Milwaukee/Madison metro area.

 

San Diego is only ahead of three clubs: Kansas City, Milwaukee and Cincinnati in terms of market size. While it is true that they don't "share" their market with anyone, they are also hemmed in by the Pacific Ocean, Los Angeles to the North, and Mexico to the South so there isn't a ton of potential for market expansion.

 

However, the Padres did a similar splurge once before when they signed James Shields and traded for Craig Kimbrel, Justin Upton, Matt Kemp, Melvin Upton, Ian Kennedy etc. then broke the team up a year or so later. At least this time around they have Machado and Tatis and not a bunch of veterans in their 30s.

 

I'd argue being extremely close to Mexico and Tijuana - with a metro population approaching 2.5 million people - carries a plenty large potential for market expansion. Tijuana and San Diego are essentially the same metro area separated by the border only. "Market' how MLB defines it is far different than overall metro area as well.

 

Milwaukee is hemmed in by Chicago to the south, Lake Michigan to the east, and no large urban centers north and west of Madison/Milwaukee worth a darn in terms of market revenue.

[3and2Fastball]

The Padres will be fun to watch this year. They are a team on the rise. It was a great signing!!!

 

Tatis Jr is the most talented Shortstop since Alex Rodriguez. That left side of the infield may not be quite Brooks Robinson & Mark Belanger but it’s one of the best defensive 3B/SS combos ever.

 

I’ll probably end up watching more Padres games than Brewers games this year, especially if the Brewers play as boring a style of Baseball as they did last year. (Will definitely tune in to watch Woodruff & Burnes pitch though)

[3and2Fastball]

All owners can afford to sign whoever they want, they just choose not to. It’s as simple as that. Good for Padres fans.

 

100% correct!