The San Diego Padres jumped into the deep end of the free-agency pool last week as they revealed their intentions to meet and pursue coveted free agent Manny Machado. Although the Padres deny being the “mystery” team in pursuit of Machado, their announcement certainly shocked many of us.
The question for White Sox fans is whether the Padres’ presence in negotiations will alter their pitch to Machado as the offseason drags along. There isn’t much information — as has been the case all offseason — to base hard conclusions on. Still, there are several factors at work that will indeed necessitate a revision to all parties engaged with Machado.
(Oct. 25, 2018 – Source: Jeff Gross/Getty Images North America)
First, I might be the only person not surprised by the Padres jumping in on Machado. I’ll admit that I was shocked at first, but after a few minutes of chewing on the news, it made sense.
The Padres finished the 2018 season with a $130.2-million payroll, nearly $36 million greater than the 25-man Opening-Day total. Part of the heavy burden for the Padres was approximately $19 million in shared salary obligations that included $11 million in James Sheild’s salary. Sheild’s salary is cleared from the books in 2019, but they still owe $12.5 million to Hector Olivera and Jed Gyrko.
They signed Wil Myers to a six-year extension in 2017 and also grabbed Eric Hosmer on an eight-year deal in 2018. The Pads still have Myers on a relative discount in 2019, but in 2020 the team owes Myers and Hosmer a combined $43.5 million in salary. If they add Machado’s expected $30-ish-million salary over at least five years the payroll begins to climb fast without much flexibility to add sorely needed pitching. The Padres have also reportedly sought a trade partner for Myers as well.
(Sept. 25, 2018 – Source: Getty Images North America)
But the larger issue for the Padres has been a debt issue inherited by Ron Fowler in 2012 after buying the team from James Moores who owned the club for 18 years. Moores saddled the organization with serious debt at high interest rates that drained cash reserves and plunged the Padres into financial duress. Below is a brief summarization from a San Diego Union-Tribune article that was permitted a general glimpse into the Padres’ books.
First, only $35 million in capital calls from ownership and $68 million in payments from MLB’s sale of its technology arm, BAMTech, has kept the team at break even on a cash basis.
Second, the team has invested heavily in infrastructure — both in terms of its ballpark and its minor league system.
Third, and perhaps most importantly to the fan base going forward, the Padres have extricated themselves from an oppressive interest rate and are finally poised to put their money to good use — perhaps as soon as this year and almost certainly within the next two years.
Now that the franchise has refinanced their debt and reduced their interest payments by three percentage points it appears the organization feels they have some wiggle room to make a splash in free agency. And given their wealth prospects, including Fernando Tatis Jr., Mackenzie Gore and eight other players in MLB’s Top-100 prospects, the Padres owe their fanbase an earnest attempt at improving the roster.
But does the Padres desperation make them serious bidders for Machado? And do they have enough flexibility to compete with the White Sox and Phillies? Don’t bet on it.
This sounds like the Padres (rightly so) pandering the fanbase and adding another team in the high-stakes sweepstakes for a valuable free agent. The White Sox are poised to broker a large deal for Machado and seem to have placed their faith in landing an infielder over pursuing Bryce Harper, something I agree with wholeheartedly and have been saying since November.
Whatever the Padres offer, expect the White Sox come back over the top and force San Diego out of negotiations. The Phillies will probably do the same. San Diego’s microclimate certainly attracts many players, but Machado’s decision is likely to come down to dollars and cents, and my gut tells me the Padres don’t have enough black ink to do it.
