Sports contracts and sports car prices. They are the two biggest sticker shock things in the world for white men. Not all white men, of course. But the ones that run to social media to furrow their brows and wave their fist in the air are all assuredly foaming at the mouth with indignation at the fact that the San Diego Padres and their neophyte turned supernova shortstop Fernando Tatis Jr. came to an agreement on a 14 year, 340 million dollar contract that will pay Tatis to stay in San Diego until after his age 35 season, at an annual rate of 24.3 million dollars.
Of course, you will find the typical people who aren’t in tune with sports vomiting takes about how much money that is, and how it should go towards things like the environment and social programs. These are the same people who post about their horoscope on their Facebook page. There is a correlation. These people cause a bad opinion riptide by running headlong into the “all athletes are overpaid, they are just playing a game” crowd. A quick reminder, as I feel I have to every time I write about sports contracts: athletes aren’t overpaid. If Lebron James were paid his true value to the Los Angeles Lakers, taking into account people watching on television, merchandise being bought, brand awareness, etc, he would be worth at least 250 million dollars per year. Athletes have a shelf life. Most careers last only a couple years, and come far from the upper crust of the biggest contracts. Most go into jobs like real estate, or insurance, or sales, after their careers end. That’s the different between athletes and the people who lament their pay. They can how up and do your job after their career is over. You were never able to do a fraction of what they could, no matter what your stale pork rind of a brain would make you believe.
In reality, this is a good contract for both sides. For Tatis, if he were to continue his current trajectory, he would be worth much more than 24 million dollars per year on the open market. But he wouldn’t be able to hit the open market for another four seasons. Because the salary system in professional baseball is incredibly slanted against young players, he would have made around 40 million dollars combined over the next four seasons before realistically either renegotiating his contract or becoming a free agent. Instead, he will make 100 million dollars over that time period. He also protects himself against injury. If, four years down the line, Fernando tears an ACL and never comes back fully as the player he was, he still has the cost certainty of the contract. Major League Baseball, unlike the NFL, doesn’t give teams the ability to just say “oopsie” and cut a player in the middle of a contract. The Padres could cut Tatis someday, but they are on the hook for every penny of the contract.
Why does this make sense for the Padres to do, then? They are putting up all of the risk in this, especially when you take into account the fact that Tatis is unlikely to stay at shortstop, a premium position pay wise, for the entirety of his contract, and will eventually have to take a corner infield spot, and maybe eventually, DH. They are taking on the risk of injury, a changing market, and just plain poor play. So why do it?
As I mentioned above about Lebron James, players are worth more than they are paid, and it goes beyond the stats that they put up (even though that doesn’t hurt, either). For a team like the Padres, they are the only major league team in their city. They need a face of the franchise. They need someone to put on the tickets and build their team around. They need someone who is going to be on commercials for the local regional sports networks. The guy who could be the perennial All Star wearing their logo. It just so happens that Tatis is young, charismatic, and plays bigger than a television set can handle. He is potentially a top 5 player in baseball for the next decade. How good is Tatis?
Brian Kenny of MLB Network currently has him as the third best player in all of baseball. MLB is counting down the top 100 players in baseball right now in the lead up to the season. Tatis’ name hasn’t shown up, yet. And there are only the top ten left to announce. He will be near the top of the list. He finished last season seventh among position players in Wins Above Replacement, according to Baseball Reference. He finished the abbreviated season 2nd in runs, 8th in total bases, and tied for 4th in home runs. He did all of that during his second season in the Major Leagues.
While 24 million might seem like a lot, he will only be the 22nd highest paid player in the league this season. He is not going to magically rise up the list, either. In spite of the fact that owners are continuing to try to suppress salaries, a number of great players are going to be hitting free agency after the next two seasons who will most likely end up with a higher average annual value than Tatis. Francisco Lindor, Freddie Freeman, Trevor Story, Corey Seager, Javier Baez, Jose Ramirez, and Tim Anderson will all be looking for a bigger yearly number than Tatis, with the possibility of others looking for that range, depending on the seasons they have the next two years.
If Tatis continues at the trajectory he is rising at, then he would have hit free agency in four years as a 26 year old. Mike Trout, Mookie Betts, Nolan Arenado, and teammate Manny Machado all hit free agency during their age 26 or 27 seasons. All of them are making over 30 million dollars per season.
Let’s say that contracts stay static over the next four seasons, which isn’t likely, but not impossible as the owners seem absolutely willing to have a shutdown of the 2022 baseball season so they can suppress salaries further. The Padres could let him reach free agency before reaching a new deal with him. Even at a static rate, they would be paying 30 million to him per season, minimum. That means they would be giving something resembling a 10 year, 300 million dollar contract. With arbitration over the next few seasons, he would have made around 40 million total in those seasons, meaning they would have paid him 340 million over 14 seasons, making this a wash.
That’s not why you make the deal, though. They are paying a little bit more on a yearly basis on the front end to save a lot of money over years 5-11 on the contract, where he would be worth 30-40 million dollars per season. If Tatis becomes the second best player in baseball behind Mike Trout, it’s not a stretch to think he would get a contract in the same range as Trout in four seasons, meaning he would be looking at making 35 million dollars per year. By getting the contract early, the Padres are saving 11 million dollars per season during Tatis’ prime years, and aren’t as far underwater on the yearly cost of the contract in his age 34, 35, and 36 seasons, when you would expect a glaring slide in productivity.
Additionally, by having Tatis with a lower AAV over his prime years, they are going to be able to afford to spend money on the rest of their core as they approach their free agency years, which is intimidating because…
The Padres have something very important on their side: a young team with a great farm system. They can afford to give Fernando Tatis Jr. a mega contract, and trade for Yu Darvish and Blake Snell because they can supplement those players with younger players like Dinelson Lamet, Chris Paddack, Jake Croneworth, and Victor Caratini on their Major League Roster. If those guys trip up, they have, according to Keith Law of the Athletic, the 2nd best prospect in baseball in pitcher MacKenzie Gore, number 8 overall prospect CJ Abrams, number 38 prospect Luis Campusano, or number 60 prospect Robert Hassell!
The Padres are deep, with the financial and team building flexibility to get better. They have declared an arms race in the NL West against the World Series champion Los Angeles Dodgers. While most baseball fans have to watch their teams sit on their hands and pretend to be poor, the Padres have decided to no longer be an afterthought in the baseball landscape. They have made California the center of the baseball universe for this season and many seasons beyond.
Fancy Boys Club 