The San Diego Padres were expected to shed payroll heading into this offseason. However, after declining Michael Wacha's team option on Saturday, it is clear that the SF Giants division rival will look a lot different in 2024.
SF Giants division rival appears motivated to slash costs after surprising move
The Padres' need to cut payroll is due in part to being in compliance with MLB with respect to the team's debt service ratio. San Diego appears to have legitimate cash flow issues as they received a $50 million loan in September to cover payroll obligations.
The Padres finished last season with a payroll of $296 million against the Competitive Balance Tax (CBT). If they plan on getting payroll to around $200 million for next season, a lot of work needs to be done.
They have players like Blake Snell ($10 million), Josh Hader ($14.1 million), Nick Martinez ($8.6 million), and Seth Lugo ($7.5 million) hitting free agency, so that will certainly help the situation. However, the Wacha move is a bit surprising, and perhaps, an indicator of just how serious the cash flow issues are in San Diego.
Wacha had a unique team-player option. The Padres held a team option for the next two seasons, which if they had excerised it, would pay Wacha $16 million per season. Given that they declined the team option, it now becomes a $6.5 million player option for 2024.
The veteran pitcher is expected to decline that player option in favor of free agency. Wacha is coming off of a very strong 2023 campaign in which he tallied a 3.22 ERA, 3.89 FIP, 1.16 WHIP, 8.3 K/9, and a 2.88 SO/W ratio across 134.1 innings.
He posted a 3.32 ERA in 22 starts for the Boston Red Sox in 2022 but did not have much of a track record of success last winter, so he had to settle for a bargain deal. A year later, Wacha is in a very good position to secure a nice payday.
With that being said, given that he has posted a 3.27 ERA over his last 261.2 innings, a $16 million annual salary over the next two seasons would appear to be a very nice deal that many teams would like to have. It is not a prohibitive cost by any means, and if it does not work out, the deal is off of the books after the 2025 season.
However, that is all a moot point with the Padres declining the team option. They will be an interesting team to watch this winter because they will still have a solid lineup consisting of Manny Machado, Fernando Tatis Jr., Juan Soto, and Xander Bogaerts.
They will have to get very creative with rebuilding the starting rotation. Yu Darvish and Joe Musgrove are expected to anchor the rotation. However, they will need to replace about 550 quality innings with Snell, Lugo, Martinez, and Wacha all departing.
That is not going to be an easy task to do with a club that is slashing costs. They will need to get creative. The Wacha move is surprising given how effective the 32-year-old pitcher has been over the past two seasons and an early sign that the Padres will scale back spending after being so aggressive over the past couple of winters.