The Padres and the third baseman Manny Machado inked an 11-year, $350 million deal, reports ESPN’s Jeff Passan. The contract begins this year, per USA Today’s Bob Nightengale, which means it runs until 2033. This will be Machado’s season at the age of 40. Since Machado had six years and $180 million left on his previous contract, this new agreement will add five years and $170 million in new money. The new deal includes no opt-outs, per Dennis Lin and Britt Ghiroli of The Athletic. Machado will also have a full no-trade clause, per Lin.
Machado, 30, initially signed a 10-year, $300 million deal with the Padres through 2019, with that deal giving him an option to opt out after five years. That exit was looming at the end of next season, and several factors made it seem like an easy decision for Machado. For one, he’s continued to produce at the elite level, including a 2022 season that was perhaps his best yet. He hit 32 home runs and stole nine bases last year and finished the season with a .298/.366/.531 batting line. His 152 wRC+ shows he was 52% better than the average hitter in the league. He was also rated at third base with eight outs above average, with his total contributions resulting in a 7.4 win-over-back tally, according to FanGraphs calculations.
Additionally, the market for elite players has been pretty strong this winter, with many players pushing deep into the nine figures. Aaron Richter got a $360 million guarantee Trea Turner got 300 million dollars, Xander Bogaerts $280 million Dansby Swanson $177 million, Carlos Rodon $162 million Jacob de Grom $185 million and Brandon Nimmo $162 million. With Machado still having five years and $150 million left on his deal by the end of this year, exiting was the clear choice from a financial standpoint, and Machado has been pretty open about his plans to go down that route.
Earlier this month it was reported that the Padres were planning to secure an extension with Machado to prevent him from dropping out, although just a week ago the talks appeared to be in jeopardy. It was reported at the time that Machado’s camp had set a hearing deadline of February 16. After that, he would prefer to put aside contract talks to focus on baseball. The club apparently offered to extend his contract by five years and $105 million, which wasn’t enough to get a pen on paper. Once the deadline passed, it seemed possible the season would begin with continued uncertainty, although reports on Friday suggested discussions were continuing. It seems the brothers have upped their offer enough to bring Machado’s rep back to the table and negotiate a deal.
This will add another hefty salary to the long-term books of a San Diego club that has become surprisingly aggressive in recent years. They’ve never been among the game’s biggest funders, but recently changed that reputation. Besides Machado’s contract, they also issued big deals Eric Hosmer, Fernando Tatis Jr., Joe Musgrove, Yu Darwish and other. The exact breakdown of Machado’s deal is yet to be revealed, but these hefty and drawn-out deals mean the club will already have something close to $100m on the books for 2028.
That increased spending has brought the club into luxury tax territory, having paid the competitive equalization tax in each of the last two seasons. They’ll be sure to do so again in 2023, having hovered around the third level of $273 million for the past few weeks. Recent reports showed the club was just below that line, but it’s possible this deal will tip them for now. The CBT uses the average annual value of a deal rather than salary in a specific year, meaning we can calculate Machado’s tax burden without knowing the full breakdown of the new deal. His previous deal came in with a hit of $30 million, but this new one has an AAV of $31.81 million. Roster Resource now calculates the club’s tax number as $273.3 million. Those calculations are unofficial, but given previous reports of how close the club came to the line, it wouldn’t be a surprise if they actually came a hair’s breadth away.
A club’s CBT status isn’t calculated until the end of the season, but with the Padres clearly in win-now mode, they’ll likely be looking for upgrades by the trade close this summer. That means their CBT count is more likely to increase than decrease over the course of the season. If they do end up on the north side of that $273 million line, they’ll face higher tax rates, but also see their top pick move down ten spots in the 2024 draft. It seems owner Peter Seidler is more than willing to pay those penalties to make the Padres a competitive club now and in the future.
For the clubs hoping to compete in Machado next winter, they will have to come up with other plans for next winter. Machado will no longer be part of the 2023-2024 Free Agent class led by Shhei Ohtani and will also like players Aaron Nola, Julio Urías And Matt Chapman. For the Padres, they don’t have to worry about filling a third-base spot as Machado is now suspended for next season and another decade after that.
There’s more to come.