The San Diego Padres took out a loan for approximately $50 million in September to help cover short-term expenses, including player payroll, reports The Athletic. The club opened the season with a franchise-record $248.9 million payroll. As recently as 2019, the Padres had a $97.2 million payroll. Player spending has ballooned significantly in recent years.
But in September, the Padres had a third-party lender willing to loan the club $100 million. The team asked MLB for permission to receive close to the full $100 million, according to people briefed on the team’s finances. MLB gave the team permission to draw roughly $50 million, which the league deemed a sufficient amount for the team to cover its expenses.
Owners can borrow as they see fit when doing so in their own name, but the league has standards and an approval process when loans are taken out in a team’s name. The greater a club’s pre-existing debt, the more difficult it can be to receive permission, people briefed on the process said. The Padres were carrying enough debt relative to their revenues that MLB was more cautious than it might have been in other situations.
Earlier this month, it was reported the Padres, in part to get back into compliance with MLB regulations regarding their debt service ratio. San Diego drew a franchise record 3.27 million fans this season. The only other year the club drew three million fans was 2004, the first year of Petco Park. The club did not, however, make the playoffs, which would have added handsomely to the revenue line in the books.
According to Cot’s Baseball Contracts, the Padres already have $217.8 million on the books for 2024, including arbitration projections. That does not include re-signing or replacing Blake Snell and Josh Hader, or other possible free agents like Seth Lugo, Nick Martinez, and Michael Wacha. Those three all have some sort of contract option or opt-out.
Given their current payroll commitments, it seems likely the Padres will at least entertain trade offers for Juan Soto this offseason. Soto is a year away from free agency and unlikely to sign an extension without first testing the open market, and his arbitration salary figures to clear $30 million. Trading Soto would be the quickest way to clear payroll and add cheap young talent.
Other big money players like Xander Bogaerts, Yu Darvish, Manny Machado, and Joe Musgrove have full no-trade protection and would be difficult to flip in a salary-clearing move. Jake Cronenworth and Ha-Seong Kim would certainly appeal to some teams, though both will make approximately $7 million in 2024. Trading them would only save so much cash.
The Padres had a tremendously disappointing season in 2023, going 82-80 and missing the postseason. They had to win 14 of their final 16 games just to finish with that record. A year ago they went to the National League Championship Series.