By: Dante Camilli
Fernando Tatís Jr. just signed a 14-year, $340 million contract to remain with the San Diego Padres.[1] Not only is this deal the third largest contract in MLB history, it is also the longest the league has ever seen.[2] Tatís has been touted as the next face of the game, but this deal may seem odd to fans who know that Tatís has yet to play 162 games in his career.[3] Even more strange is the fact that the Padres had four more years of control over Tatís before they even needed to offer a deal of this magnitude.[4] Why is it then, that this may be one of the best moves a franchise has made in recent years?
Arbitration and Player Control
Major League Baseball’s contract system is governed and manipulated by a player’s service time. Often, stars have to wait to get their big pay day until they have accrued six years of service time in the MLB.[5] Given this restrictive time frame, teams often delay the debuts of their top prospects so that they can retain an extra year of control.
One of the best examples of service time manipulation is how the Cubs handled rookie Kris Bryant in 2015.[6] After batting .425 and hitting nine home runs in spring training, the Cubs shocked everyone by not having Bryant on their Opening Day roster.[7] The Cubs purposely held Bryant in the minors until calling him up on April 17th, making it impossible for him to spend the 172 days needed to count as one MLB service year.[8] To date, Bryant has still not signed a multi-year extension with the team, despite winning Rookie of the Year and an MVP, and bringing a World Series Championship that broke the Cubs 108-year championship drought.[9]
For Tatís, he can now avoid the annual drama of arbitration hearings. The Padres still had four years before Tatís truly hit free agency, so this contract serves as a good faith extension. $24 million a year is a ton of money, good for the 22nd highest annual salary in the league.[10] But for a player who can potentially be the face of the game, how did the Padres get him for such a bargain?[11] In negotiations, the looming control over Tatís likely served as a tool for the Padres. The Padres gave Tatís 14 years of security but may have gotten a discount on the annual salary by reminding him and his agent that they did not need to go forward with this deal at all. Both sides mutually got the assurance that this relationship can continue for the next 14 years, at a figure that is great for both sides. San Diego, seemingly, is putting their trust in the 22-year-old superstar, contrary to how Chicago has handled Kris Bryant.
This Deal vs. The Field
How does the value of the Tatís deal stack up against the rest of the league? The best comparison to begin with is the current face of baseball, Mike Trout. In 2019, Mike Trout signed a 12-year, $426.5 million contract extension to remain with the Los Angeles Angels.[12] The perennial MVP receives $35.45 million every year and will continue to do so until he is 38 years old. For Tatís, his extension will run out when he is 36 years old.[13] Although we do not know how Tatís will age over the next 14 years, one could reasonably assume teams may not be jumping at the opportunity to sign an aging middle infielder to another large deal at the end of his career. As a result, this contract is going to represent the bulk of Tatís’ career earnings.
Another comparable player is Francisco Lindor, who will be earning $22.3 million this season for the New York Mets.[14] Lindor, one of the best shortstops in baseball, will be a free agent this year and could be set for a big pay day from the now Steve Cohen-financed Mets franchise.[15] Since Lindor is 27 years old, and has continuously signed one-year contracts under the arbitration system, his next payday could be in the $300 million ballpark but probably for less years and a greater annual salary. Every year we see contract records shattered, so it would be interesting to see if Lindor earns more than Tatís after this season, especially with the upcoming restructuring of the league’s collective bargaining agreement.
The Upcoming CBA Negotiations
The MLB’s Collective Bargaining Agreement (CBA) with the Players Association is set to expire this December and revenue sharing issues and COVID-19 have caused rifts between the two sides.[16] Unlike the NBA, which splits revenues 49-51 in favor its players,[17] baseball players have been earning about 48% of revenue[18] but gain none of the profits from postseason television contracts.[19]
As a result, the players portion of the economic pie is considerably smaller than it could be, which is a hot topic in the negotiations of a new CBA.[20] If the players win out and gain a higher share of the revenue split, MLB contracts could continue to inflate year over year. By signing prior to this change and not being able to access this larger revenue split, Tatís may have prevented himself from receiving an even bigger payday.
For these reasons, the Padres may have gotten the most valuable $340 million contract of all time. By negotiating in good faith and keeping their star happy early in his career, the Padres can continue to focus on building a World Series contender around him. Although the World Series champion Los Angeles Dodgers are in the same division, the Padres are setting course for a decade of dominance by permanently pairing Tatís and Manny Machado, and aggressively trading for Yu Darvish and former AL Cy Young winner Blake Snell.[21] If MLB contracts continue to inflate, retaining the future face of baseball for $24 million a year through his prime and beyond will go down as one of the best moves a franchise has ever made in the sport. The Padres broke the mold of player manipulation and kept their best player happy at a discount, and the rest of the league should absolutely take note.
References:
[1] Gabriel Fernandez, Biggest MLB contracts in history: Where does Fernando Tatis Jr.’s $340 million Padres contract rank, CBS Sports (February 18, 2021), https://www.cbssports.com/mlb/news/biggest-mlb-contracts-in-history-where-does-fernando-tatis-jr-s-340-million-padres-contract-rank/
[2] Id.
[3] Baseball Reference, Fernando Tatis Jr., (n.d.), https://www.baseball-reference.com/players/t/tatisfe02.shtml
[4] Dayn Perry, Fernando Tatis Jr., Padres agree to mammoth 14-year, $340 million contract extension, per reports, CBS Sports (February 18, 2021), https://www.cbssports.com/mlb/news/fernando-tatis-jr-padres-agree-to-mammoth-14-year-340-million-contract-extension-per-reports/
[5] MLB, Salary Arbitration, mlb.com (n.d.), http://m.mlb.com/glossary/transactions/salary-arbitration
[6] Jonathan Bernhardt, Kris Bryant’s belated call-up to Chicago Cubs exposes flaw in MLB system, The Guardian (April 20, 2015), https://www.theguardian.com/sport/2015/apr/20/kris-bryants-belated-call-up-to-chicago-cubs-exposes-flaw-in-mlb-system
[7] Id.
[8] Baseball Reference, Kris Bryant, (n.d.), https://www.baseball-reference.com/players/b/bryankr01.shtml
[9] Rhiannon Walker, Lovable losers no more: The Cubs end 108-year drought by beating Cleveland, 8-7, to win World Series, The Undefeated (November 3, 2016), https://theundefeated.com/features/lovable-losers-no-more-the-cubs-end-108-year-drought-by-beating-cleveland-8-7-to-win-world-series/
[10] Perry, supra.
[11] Id.
[12] Spotrac, Mike Trout, (n.d.), https://www.spotrac.com/mlb/los-angeles-angels/mike-trout-8553/
[13] Id.
[14] Spotrac, Francisco Lindor, (n.d.), https://www.spotrac.com/mlb/new-york-mets/francisco-lindor-14113/
[15] Katherine Acquavella, Steve Cohen says Mets are ready to spend like a ‘major-market’ club; team likely to keep manager Luis Rojas, CBS Sports, (November 10, 2020), https://www.cbssports.com/mlb/news/steve-cohen-says-mets-are-ready-to-spend-like-a-major-market-club-team-likely-to-keep-manager-luis-rojas/
[16] Dayn Perry, What MLB, MLBPA negotiations mean for 2021 season and beyond, and why players rejected league’s offer, CBS Sports (February 2, 2021), https://www.cbssports.com/mlb/news/what-mlb-mlbpa-negotiations-mean-for-2021-season-and-beyond-and-why-players-rejected-leagues-offer/
[17] Jabari Young, NBA’s strong relationship with its players could prevent collective bargaining issues, CNBC (August 29, 2020), https://www.cnbc.com/2020/08/29/nbas-strong-relationship-with-its-players-could-prevent-collective-bargaining-issues.html
[18] Maury Brown, MLB Spent Less on Player Salaries Despite Record Revenues In 2018, Forbes (January 11, 2019), https://www.forbes.com/sites/maurybrown/2019/01/11/economic-data-shows-mlb-spent-less-on-player-salaries-compared-to-revenues-in-2018/?sh=1a59994e39d7
[19] Perry, What MLB, MLBPA negotiations mean…, supra.
[20] Id.
[21] Mike Axisa, What else do Padres need after two blockbusters? Why three moves are still on A.J. Preller’s agenda, CBS Sports (December 30, 2020), https://www.cbssports.com/mlb/news/what-else-do-padres-need-after-two-blockbusters-why-three-moves-are-still-on-aj-prellers-agenda/