Tatis Investment Windfall
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A story about how an investment company made $30M by betting early on a baseball player's future earnings.
"Fernando Tatis Jr. signed a $340 million deal with the Padres, and this company called Big League Advance made $30 million off of that deal. Here's what they do - they go to minor league baseball players and say 'Look, you're making nothing in the minor leagues, you're riding the bus, hoping to one day get to the league and become a star.'
They offer deals like '$100,000 for 1% of your future earnings' or '$350,000 for 8% of all your future earnings.' They bet on you and take a risk. They do analytics to try to guess which players to invest in, knowing they'll lose money on 80% of the deals that don't pan out, hoping that 20% turn into huge returns like Fernando Tatis Jr.
They even got sued by one player who they offered $360,000 for 10% of his future earnings. He thought it was a predatory deal, but he only ended up making $1.2 million in his career, so he actually came out ahead by taking the $360k upfront versus the $120k he had to pay them in the end. He dropped the lawsuit."
Shaan Puri
Host of MFM
Shaan Puri is the Chairman and Co-Founder of The Milk Road. He previously worked at Twitch as a Senior Director of Product, Mobile Gaming, and Emerging Markets. He also attended Duke University.