How the San Diego Padres turned into big spenders

[Wagerallsports]

How the San Diego Padres turned into big spenders​

ESPN PLUS $ MATERIAL

SAN DIEGO -- Nick Martinez sat in the trainer's room at Petco Park in early November, undergoing a physical to complete a multiyear extension, when he first learned his San Diego Padres would be in on the big free agent shortstops. The Padres, on the heels of a spirited run to the National League Championship Series, already employed a franchise shortstop in Fernando Tatis Jr. and a Gold Glove-caliber shortstop in Ha-Seong Kim. Their payroll had already risen to previously unimaginable levels. And yet they planned to chase both Trea Turner and Xander Bogaerts, while also plotting an offer for superstar outfielder Aaron Judge.

Martinez, a veteran pitcher coming off his first season in San Diego, asked himself the question that would eventually be on everybody's mind:

How are we doing this?

Fifteen of the first 20 years of this century saw the Padres finish in the bottom third in team spending, an approach consistent with their three prior decades of existence. By 2022, though, their payroll had jumped into the neighborhood of $220 million, more than double where it stood just three years earlier. Now, after another frenetic offseason that saw them land Bogaerts on a nine-figure deal, it sits at nearly $240 million, a number eclipsed by only the New York Yankees and the New York Mets.

Fourteen active major league players possess contracts valued at more than $250 million, and three of them -- Tatis, Bogaerts and Manny Machado -- play for the Padres. A fourth could materialize in the near future, either through a Juan Soto extension or a Shohei Ohtani signing, and at this point nobody would be surprised by either. This is suddenly who the Padres are. And the man guiding them there, chairman Peter Seidler, won't offer any apologies for it.

"Every baseball franchise, sports franchise, is unique," Seidler said at the onset of spring training. "There's a unique set of circumstances that impact the way organizations are run. And our situation is unique. We have a very sports-oriented and hungry fan base. We believe if we continue to build that trust, they will continue to come. And it's about winning and it's about being exciting, and it's about our fans, young and old, knowing that they're going to be able to watch great, exciting players year after year after year. And when we talk about risk -- there's a risk in doing nothing."

Seidler's aggressive approach has drawn skepticism around its longevity from small- to midmarket owners who have been made to look cheap by comparison, but players throughout the sport have begun to view the Padres as a model for others to follow.

Martinez likened them to his hometown Miami Marlins, who play in a diverse, coastal city with similar dynamics but have been nowhere near as aggressive in their spending. Martinez represented Team USA during the World Baseball Classic and was awed by the crowds at Miami's LoanDepot Park. It made him wonder how the locals might become invested if the Marlins took a leap of faith similar to the Padres.

Said Martinez: "I think it's a blueprint."

---

DETERMINING WHETHER THE Padres' model actually works will take time, but the initial success is indisputable. In 2022, while the industry as a whole absorbed a significant drop in attendance coming off the COVID-19 pandemic, the Padres approached a franchise record for fans visiting Petco Park, nearing 3 million in a regular season that preceded an inspired stretch of play in October.

The ensuing offseason saw enthusiasm escalate to unprecedented levels.

The Padres' Fan Fest in February drew a record crowd of about 48,000 people, producing lines so long the team extended the event an extra hour. Season tickets were capped, at approximately 24,000, for the first time in franchise history. The first four games, against two relatively unpopular teams in the Colorado Rockies and the Arizona Diamondbacks, produced a combined paid attendance of 174,915, a record for any four-game stretch since the Padres' inaugural season in 1969. Opening Day revenue exceeded the previous single-game record by 25%, according to numbers relayed by the team -- topping last year's Opening Day, which also exceeded the previous single-game record by 25%.

"Look, we're testing the limits of what's possible in this market," Padres CEO Erik Greupner said. "The only way you do that is by being bold and having a vision and making the first move. There's risk inherent in that. So far that risk has been rewarded by the fan response."

Seidler purchased the Padres more than a decade ago with visions of turning them into something resembling the Los Angeles Dodgers teams presided over by his grandfather, Walter O'Malley, the prominent executive who brought baseball to the West Coast.

A.J. Preller was hired to run baseball operations near the end of the 2014 season and was given the ability to outfit the roster with stars, triggering a fast-paced offseason that saw Matt Kemp, Wil Myers, Justin Upton, B.J. Upton, James Shields and Craig Kimbrel join the team. All but Myers were gone by the end of 2016. An aggressive teardown followed. The payroll was reset, the farm system was replenished and the Padres became even more aggressive shortly thereafter.

Eric Hosmer's eight-year, $144 million contract in February 2018 was followed by Machado's 10-year, $300 million contract in February 2019. In a five-month stretch from August 2020 to January 2021, Mike Clevinger, Blake Snell, Yu Darvish and Joe Musgrove were added to the rotation. Tatis, the budding superstar acquired in exchange for Shields, was given a 14-year, $340 million extension that February, and Bob Melvin, a three-time manager of the year, was poached from the Oakland Athletics in October. The summer of 2022 brought with it the acquisitions of Soto and Josh Hader, giving the Padres arguably the most star-studded roster in the sport -- and, somehow, they were not finished.

Bogaerts headlined their offseason spending, but Martinez and Robert Suarez were brought back on deals that totaled $88 million, and veterans such as Seth Lugo, Matt Carpenter, Michael Wacha and Nelson Cruz signed for an extra $50 million or so in guaranteed money.

Just as important as the additions, though, was who the Padres retained.

Over the past eight months, the team has allocated more than $600 million to extend four of its most prominent core pieces. Musgrove, born and raised in the San Diego area, signed for $100 million over five years. Darvish followed with a six-year, $108 million deal. Machado eschewed looming free agency through an opt-out clause with an 11-year, $350 million contract, the fourth largest in baseball history. And Jake Cronenworth, the versatile infielder who has become a clubhouse favorite, signed for $80 million over the course of seven years. Soto could be next, perhaps also Hader -- but an Ohtani pursuit is expected, too.

"Everybody just sees the dollars, the dollar amounts, but I think seeing the people that they're bringing in -- they're special, they're unique players, they love to play the game," Machado said. "And whenever you can have a clubhouse like that, that's so united and so great, there's no dollar amount that can satisfy that. That's the beauty of the players who are in here."

CRITICISM OF THE Padres tends to center on the idea of sustainability, a concern expressed by pundits and executives alike.

Rockies owner Dick Monfort, who recently joined Major League Baseball's new economic reform committee, lent his voice to the sentiment in late January, saying: "What the Padres are doing, I don't 100 percent agree with, though I know that our fans probably agree with it. We'll see how it works out." Two weeks later, MLB commissioner Rob Manfred sounded nearly as cynical, praising the Padres for growing their revenue but adding: "The question becomes, 'How long can you continue to do that?' And what happens when you have to go through a rebuild?"

Machado, Bogaerts, Tatis, Darvish, Musgrove and Cronenworth will all be paid a premium into either their mid-30s or their early 40s on megadeals that stretch out as far out as 2034. But while rival executives widely view that as an impediment to consistent winning, the Padres see it as a foundation for it.

Notable Padres Under Contract​

PLAYER	CONTRACT	SIGNED THROUGH	AGE AT END OF DEAL*
Manny Machado	11 years, $350M	2033	41
Fernando Tatis Jr.	14 years, $340M	2034	35
Xander Bogaerts	11 years, $280M	2033	41
Yu Darvish	6 years, $108M	2028	42
Joe Musgrove	5 years, $100M	2027	34
Jake Cronenworth	7 years, $80M	2030	36
*Age on Nov. 15 of year they are signed through

"First you need a lot of people with ability, then you need stability," Preller said from the press conference that celebrated Cronenworth's extension. "I think we want to, as you sit down as a Padre fan, to know that over the course of the next decade, the players that we believe a lot in, that we believe are championship-level players and people -- they're going to be here. They're going to be people that, when you come to see games, that when your kids come to see games, that they can be excited about it. It's not a situation where you come in year to year and you're not sure who's on the field, who's in your lineup."

The Padres project to at least compete for a division title with the rival Dodgers, whom they defeated in last year's NL Division Series. But they're also poised to exceed the luxury tax threshold for the third straight year, a circumstance that increases the rate to 50%. By average annual value, the figure used to determine where teams reside relative to the luxury tax, they already have a combined $131 million committed to six players in 2027. Ten years from now, in 2033, Tatis, Machado and Bogaerts will make a combined $96 million while nearing the end of their respective careers.

The only way the Padres can achieve sustainability, Preller said, is to continually develop players who can provide value while costing little more than the major league minimum, a pursuit made more difficult by drafting later in rounds. Also, of course, they have to win.

Preller smiled sheepishly when asked how often the word "sustainability" has come up in interview settings over the past few months.

"Definitely a lot more recently," he said.

"A lot," Greupner added. "The answer is a lot."

Greupner noted that the topic is hardly ever mentioned locally; the fans, he claimed, are too excited about what's happening in the present to let it be clouded by uncertainty about the future. Sustainability comes up mostly when the Padres are talked about from a national perspective, as was the case when Seidler spoke to the media from Peoria, Arizona, in February.

"People love that word," Seidler said. "Let's find a different one. Do I believe our parade is going to be on land or on water or on both? Putting a great and winning team on the field in San Diego year after year is sustainable."

---

THE OFFSEASON AFTER Jake Peavy won the 2007 Cy Young Award, he signed a three-year, $52 million contract extension that amounted to a hometown discount. The Padres were promising then, boasting a roster that combined accomplished veterans with burgeoning young players, not far removed from consecutive division titles. Peavy wanted to see it through. He attempted to make sure of it by insisting on a no-trade clause. Nineteen months after he obtained one, the franchise's perpetual frugality had forced Peavy to accept a trade to the Chicago White Sox in another cost-saving transaction. "I had no choice but to leave," he said.

From the first night of the Padres' 2023 season, Peavy, who will be inducted into the team's Hall of Fame later this summer, marveled at how much had changed. He left shortly after Trevor Hoffman and a little bit before Adrian Gonzalez, the latest in a long line of stars to shine elsewhere. Now Peavy sees a Padres team that chases the priciest free agents, pulls off the boldest trades and operates in a manner befitting larger markets in Los Angeles and New York, a reality he -- not to mention generations of Padres fans -- never could have envisioned.

"To see this happen," Peavy said, a smile spreading across his face, "let's just say I like it better."

Peavy's Padres are suddenly the ones who absorb other teams' most iconic players, not the other way around. Bogaerts carved out his career with the Boston Red Sox, where he was a four-time All-Star and a two-time World Series champion, but he might ultimately be more linked to the Padres if these next 11 years go the way he hopes. The same can eventually be said for Machado, Tatis, Darvish, Musgrove and Cronenworth -- and perhaps eventually Soto and Hader, too.

"This fan base is going to develop a repertoire with the players and the personnel," Peavy said, "and these guys are not going to have to leave like players in the past did."

Peavy's time with the Padres was followed by stints in Chicago, Boston and San Francisco, three of the most passionate baseball markets in the country. The energy at Petco Park in recent years, he said, rivals all of them.


The Padres are all but guaranteed to set an attendance record this season, even though they'll lose two home games to Mexico City. Their combined revenue from 2019, 2021 and 2022 -- the COVID-shortened season is not part of the calculus -- has made them a revenue-sharing payer for the first time in nearly 20 years. Twenty-five major league teams reside in a bigger television market than the Padres, according to data from Nielsen, but San Diego County is home to 3.3 million residents -- many of them still reeling from the departure of the NFL's Chargers and still clamoring for the city's first major championship, in any sport.

It's a degree of longing often underestimated when the topic of sustainability comes up.

"I tell you this -- in the very near future, this town's going to have a World Series parade, and it's going to turn this city upside down," Peavy said. "Once they do that, it's over. The rest is history."