The Emmanuel Clase Market Is Perhaps Understandably Bearish

Emmanuel Clase’s paid leave has screwed up some plans. The news that the All-Star closer is involved in MLB’s sports betting investigation “did not simply deprive the Cleveland Guardians of their top trade chip,” The Athletic’s Ken Rosenthal reports, but also “ended any chance of the Guardians becoming a buyer.” Officially in sell mode, and without the guy expected to net a haul in a hot reliever market, the team flipped ace Shane Bieber to the Blue Jays and Paul Sewald to the Detroit Tigers on Thursday, and reportedly shopped around Gold Glove outfielder Steven Kwan.

Guardians execs were not the only ones with a lot staked on Clase. He’s one of seven baseball players who signed an agreement with the company Finlete, which allows fans to purchase shares in a player’s future earnings. The concept is a variation on the income-sharing agreements some young athletes sign to guard against career uncertainty, promising an investment firm a percentage of their future earnings in exchange for a cash advance. Big League Advance, now doing business as Big League Advantage, might be the best known of these firms: Fernando Tatis Jr. recently sued BLA, accusing them of using “exploitative, predatory business practices” when they signed him to one of these contracts at age 17. Overwhelmingly, the players signing income-sharing agreements are young Latin-American players, who are able to sign with MLB teams at a younger age and tend to receive lower signing bonuses than their drafted U.S.-born counterparts. 

Unlike BLA, Finlete courts retail investors, selling itself as “an opportunity to be an investor in addition to being a fan.” Because it’s in the securities business, all the details of Finlete’s Clase offering are publicly available, both the terms promised to Clase and the ones outlined to investor-fans. The company’s CEO, Rob Connolly, told me in an email that 282 investors participated in the Clase offering, investing a total of more than $315,000 in his earnings. Clase’s suspension is a paid leave, so Connolly says everyone will continue to receive their dividend payments. But needless to say, his future earnings are not what they used to be.

The agreement Finlete signed with Clase promised him a payment of up to $2.5 million in exchange for up to 3 percent of the next 25 years of his pre-tax baseball earnings. If the offering were not fully funded—which turned out to be the case, as the offering closed at around $315,000—that percentage would be proportionally reduced. He ended up owing investors something like 0.3 percent of his future earnings, and Connolly said Clase has received more than $237,000 under the agreement.  

Emmanuel Clase Preferred Stock was sold with a minimum investment of $396. People who invested greater amounts could qualify for certain perks and bonus shares: $5,000 would get you an autographed Clase baseball card; $50,000 would get you an all-expenses-paid trip to Cleveland for a Guardians game and a meeting with Clase. The offering documents also had to identify various risk factors specific to the investment. For example: “A player could cease playing professional athletics at any time due to illness, injury, or death, if they are dropped from the team and unable to secure a new contract, if they incur negative publicity or if they are suspended or banned from the professional league.” Finlete said in the document that it priced the shares based on internal estimates of Clase’s potential earnings. It’s not clear exactly what those estimates were, but last September, Finlete pointed Twitter skeptics to the contracts of Major League relievers Edwin Diaz and Josh Hader. Other Finlete clients include Tirso Ornelas, an upper-minors Padres prospect who had his first cup of coffee in MLB this spring, and Jhostynxon Garcia, a Red Sox outfield prospect nicknamed “The Password.” 

You can sort of see why a young minor leaguer might be interested in this financial security: Baseball is unpredictable and very hard. Ornelas went 1-for-14 in his brief stint in the majors. A recent FanGraphs prospect report noted Garcia’s “red flag A-ball strikeout rates.” Clase’s case is a bit stranger. He entered the agreement with Finlete in July of 2024, his fifth season in the majors. In his most recent outing before signing the agreement, he’d notched his 29th save with a scoreless inning against Tampa that lowered his ERA to 0.81. The agreement itself is dated July 16, on which evening Clase was also closing out his third consecutive MLB All-Star Game. He struck out Pete Alonso to open the ninth and finished Bryan Reynolds off with three 99-mph cutters to close it. 

Clase would end 2024 with the most saves in baseball for a third straight year, a season so dominant that he was the rare reliever to finish top three in voting for the AL Cy Young. His contract, which pays him $4.9 million this year, is admittedly a pretty terrible one, and he won’t be a free agent until his age-31 season in 2029, but he clears Ornelas’s pay grade by a good bit.

Connolly acknowledged that most of Finlete’s athletes are minor leaguers beginning their careers, but said, “Established players may seek capital for reasons ranging from diversifying their financial planning to creating deeper engagement with their fan base. Ultimately, every athlete’s decision is personal and voluntary.” Clase’s agent did not immediately respond to a request for some insight into this decision, and Clase’s engagement with his fanbase is probably not very deep right now, as he has tanked the Guardians’ entire season. Relievers are volatile. You can’t always put your trust in one.