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(CN) — San Diego Padres slugger Fernando Tatis Jr. on Monday sued Big League Advantage, claiming the investment fund that advanced him $2 million in 2017 when he was an 18-year-old minor leaguer isn’t entitled to a 10% cut of the $340 million contract extension he signed four years ago.
Tatis argues in a complaint filed in San Diego County Superior Court that Big League Advantage, which was founded in 2016 by former Major League Baseball pitcher Michael Schwimer, operates as an unlicensed financial lender in violation of California law. Tatis seeks a court order that the income-sharing agreement with the investor is void and unenforceable.
“As unlicensed finance lenders, defendants have built a business model that preys on young, financially unsophisticated athletes, offering lump-sum advances in exchange for significant portions of their future earnings,” according to the lawsuit.
Under California law, Tatis maintains, any contractual arrangement, contingent or otherwise, where an individual or entity makes an advance payment against anticipated future wages is defined as a consumer loan and can only be issued by licensed lenders.
“Defendants misrepresented the agreement as an ‘investment’ rather than a loan, concealed its unlicensed status, and failed to adequately disclose the usurious interest rate which seeks to charge plaintiff a 90% interest rate per annum over the course of his contract, far exceeding California’s 10% limit,” according to the complaint.
Under a 2017 agreement, Big League Advantage is entitled to 10% of Fernando Tatis Jr.’s career earnings — an amount he says could total 1,700% of the $2 million advance he received.
A Big League Advantage representative did not immediately respond to a request for comment.
The company’s website states that it utilizes a proprietary algorithm to identify promising young athletes and offers them advances in exchange for a share of their future earnings upon turning professional. It has deals with more than 700 athletes.
“The BLA deal is not a loan,” the website explains. “It’s structured as an investment in the player’s athletic career. There’s no principal to repay and athletes only pay BLA if they earn professional income in the leagues that BLA defines as professional earnings.”
When Tatis signed a 14-year, $340 million contract extension with the Padres in 2021, at the time the third-richest contract in MLB history, media reports quickly noted that he’d owe Big League Advantage around $27 million.
In his lawsuit, Tatis argues that the investment fund approached him in October 2017 in the Dominican Republic. They took him out to dinner and, within days, presented him with a contract to sign.
“Despite being a teenager clearly lacking in financial experience and understanding, the plaintiff was rushed through the process without the benefit of independent advice,” he claims. “The swift timeline, orchestrated by BLA, exploited his youth, inexperience, and relative lack of financial sophistication, all contributing to the plaintiff’s inability to understand the agreement’s true nature.”
The lawsuit claims violation of California’s Unfair Competition Law and fraudulent inducement, and it seeks declaratory relief, restitution and damages for unjust enrichment.
Tatis is represented by Alexander Winnick of Winnick Law PC in Santa Monica, California, and by Maurice Mitts and Geoffrey Paul Huling of Mitts Law LLC in Philadelphia.
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