Padres and third baseman Manny Machado Finalizing 11-year, $350MM deal, reports ESPN’s Jeff Basson. The deal will start this year America’s Bob Nightingale today, which means it will run until 2033. That would be Machado’s age-40 season. With Machado having six years and $180MM remaining on his previous contract, this new deal will add five years and $170MM in new money. There are no deviations in the new contract Dennis Lynn and Britt Crowley of the Athletics. Machado will also have a full no-trade clause Lynn.
Machado, 30, initially signed a 10-year, $300MM contract with the Padres through 2019, with the deal giving him the ability to opt out after five years. That departure is at the end of the upcoming season and several factors made it seem like an easy decision for Machado. For one thing, he continues to produce at an elite level, including through the 2022 season, which could be his best yet. He hit 32 home runs and stole nine bases last year, finishing the season with a .298/.366/.531 batting line. His 152 wRC+ indicates that he was 52% better than the league average hitter. He graded out eight outs above average at third base, with his overall contributions leading to a 7.4 hit conversion rate, according to FanGraphs’ calculations.
Not only that, but the market for elite players is very strong this winter, with many players going deep into the nine figures. Aaron Judge $360MM guaranteed, Tree Turner received $300MM, Xander Bogaerts $280MM, Dansby Swanson $177MM, Carlos Rodan $162MM, Jacob deGrom $185MM and Brandon Nimmo With $162MM Machado having five years and $150MM remaining on his contract at the end of this year, opting out was the obvious choice from a financial standpoint and Machado has been very open about his plans to go that route.
Earlier this month, it was reported that the Padres were planning to work out an extension with Machado to prevent Machado from opting out, although a week ago negotiations appeared to be in jeopardy. It was reported at the time that Machado’s camp had set a Feb. 16 deadline for negotiations, after which he wanted to put contract talks aside to focus on baseball. The club apparently offered to add five years and $105MM to his contract, which wasn’t enough to put pen to paper. As the deadline passed, it appeared that the season would begin with uncertainty, although reports on Friday indicated that discussions were continuing. It looks like the Friars have increased their chances of bringing Machado’s reps back to the table and hammering out a deal.
It would add another huge salary cap to the long-term books of a San Diego club that has become surprisingly aggressive in recent years. They’ve never been one of the sport’s biggest spenders, but have changed that reputation recently. In addition to Machado’s contract, they also gave away bigger deals Eric Hosmer, Fernando Tadis Jr, Joe Musgrove, Yu Darvish and many others. The exact breakdown of Machado’s contract is still unknown, but these massive and lengthy contracts will have something in the neighborhood of $100MM on the books through 2028.
The increased spending has introduced the club into luxury tax territory, having paid competition tax arrears over the past two seasons. They’ll do so again here in 2023, having hovered around a third tier of $273MM in recent weeks. A recent report suggests the club are short of that threshold, but this deal is likely to push them away for now. CBT uses the average annual value of the contract rather than salary in a given year, meaning we can calculate Machado’s tax impact without knowing the full breakdown of the new contract. His previous contract came with a $30MM win but this new contract has an AAV of $31.81MM. Catalog resource That now puts the club’s tax figure at $273.3MM. Those calculations are unofficial, but given previous reports about how close the club was to the line, it wouldn’t be surprising if they actually close now.
A club’s CBT status isn’t calculated until the end of the season, but with the Padres clearly in win-now mode, they could continue to make upgrades at the trade deadline this summer. That means they are more likely to see their CBT numbers increase rather than decrease throughout the season. If they actually end up north of that $273MM range, they’ll face increased tax rates, but they’ll also move the top pick ten spots back in the 2024 draft. Owner Peter Seidler seems willing to pay those fines as part of making the Padres a competitive club now and in the future.
Clubs hoping to land Machado next winter will need to come up with other plans for next winter. Machado will no longer be part of the 2023-2024 free agent class, the title of which Shohei Ohtani Players like Aaron Nola, Julio Urias And Matt Chapman. For the Padres, they don’t have to worry about filling a vacancy at third base, with Machado now locked in for next season and another decade after that.
A lot more to come.