Padres Looking to Lower Payroll Next Season, Possibly to Under $200 million
One year after the San Diego Padres decided to go all-in by signing shortstop Xander Bogaerts to an 11-year, $280 million contract, the team is living with the consequences. Bogaerts was the team's latest shiny new toy, but the massive spending increase on player salaries extends over the last several seasons.
The Padres' payroll reportedly jumped from $104 million in 2018 to $253 million in 2023.
The front office decided to push its chips in to compete for a World Series title. The plan backfired. The team reached the NLCS once, but advanced no farther. Now the team must cut back on spending.
These payroll cuts have already cost the Padres star outfielder Juan Soto this off-season, as well as multiple starting pitchers from the 2023 staff who were not retained in free agency. The off-season just got started, but it's already been a tough one for the Friars.
In September, the San Diego Union-Tribune reported the team planned to cut payroll to "around $200 million" going into 2024, in part to comply with MLB's debt-service rule.
Now, Dennis Lin of The Athletic is reporting the club may be looking to get under the $200 million threshold before next season. The front office continues to be in cost-saving mode.
"According to people briefed on the club’s thinking, the Padres might be inclined to open next season with a payroll that is more than a little lower than $200 million, a number that has been widely reported as a rough target."
Padres executives have no interest in paying a luxury tax for another year, if they even have the ability. Since they have paid a tax after every season since 2021, the Padres are slated to be taxed 50 percent on the overage in 2023, when teams were taxed on every dollar spent above $233 million. Teams like the Padres must pay additional surcharges for exceeding the first luxury tax threshold by more than $20 million.
Resetting the player payroll below the first luxury tax threshold for 2024 ($237 million) will allow San Diego to avoid being taxed on its spending for the first time since 2020. That's a necessary objective, but it's a tricky balance for a team still trying to be competitive.
"Doing so would help with another potential objective. Team officials have recently indicated they would prefer to stay under Major League Baseball’s $237 million luxury tax threshold in 2024."
With the likes of Bogaerts, Manny Machado and Fernando Tatis Jr. still on the roster, the Padres have good reason to attempt to win. But having multiple players locked up to expensive, long-term contracts could hamper their spending in 2024 and beyond.
Without a World Series ring to show for it, the Padres must live with the results of their free-spending ways. It's already caused them to lose a lot of talent this winter.
