SF Giants division rivals make curious decision by signing veteran starter

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An SF Giants division rival made a minor move on Sunday. The San Diego Padres signed veteran starter Julio Teherán to a minor league deal. According to Jon Heyman of the NY Post, Teherán will earn $6 million if he is added to the active roster. This move could have interesting consequences.

SF Giants division rivals make curious decision by signing veteran starter

The right-handed hurler was a reliable starter earlier in his career, earning 77 wins and two All-Star appearances in his first nine seasons with the Atlanta Braves. However, his career has been a roller coaster in recent years as he has battled injury and inneffectiveness.

Teherán posted a 1.60 ERA in six starts for the Staten Island FerryHawks of the Atlantic League in 2022. He has a showcase for major league teams last winter, but did not receive an offer to his liking, so he pitched in Indy ball.

On the surface, this move appears to be a solid depth move by San Diego. They have found success finding pitchers like Nick Martinez and Robert Suárez where few other teams are looking, so Teherán could be the next reclamation project.

However, this is a move that could have significant consequences. According to Cot's Baseball Contracts, the Padres already have committed $230 million against the Competitive Balance Tax (CBT). This includes projected arbitration figures.

The CBT threshold for 2023 is $233 million, meaning that the Padres have only $3 million below the cap right now. And, if Teherán is added to the active roster at any point, it should push them over the CBT threshold.

San Diego has surpassed the CBT threshold in each of the last two seasons, so the penalties become more prohibitive if the team is unable to reset by shedding payroll. There is no word on if the CBT penalties have any influence on the Padres' plans, but in a minor move last winter, the Padres traded away middle infielder Adam Frazier to the Seattle Mariners to seemingly cut payroll.

Payroll may not have been the primary motivation, but it must have been a factor as San Diego traded away a player coming off of an All-Star season, who was set to earn a reasonable $8 million through arbitration.

The Padres have a lineup that features Manny Machado, Juan Soto, and Fernando Tatis Jr. They made it to the NL Championship Series, but they have a pitching staff that posted a 3.81 ERA in 2022, which was the 11th-best mark in baseball. That is good, but there is room for improvement.

They may be constricted in some ways in targeting free agents. For example, players who have rejected a qualifying offer. Given that the Padres exceeded the luxury tax in 2022, they would lose a second and fifth-round pick as well as $1 million in bonus pool space for international free agency if they sign a player who rejected a qualifying offer such as Carlos Rodón.

The Padres may feel as if their competitive window is wide open after making the playoffs in two of the last three seasons, so these penalties may not carry much weight. That said, there is a limit as to how much teams are willing to spend and these penalties really can hurt a farm system quickly.

$230 million is a sizable investment for a team that still plans to be active this winter. Perhaps, they will make a couple more cost-cutting moves such as trading Drew Pomeranz and Blake Snell. That would create some room.

On a different note, the Giants have a substantial sum of money below the CBT threshold that they could use to sign a certain New York Yankees outfielder. However, the Los Angeles Dodgers do as well. The Giants will need to upgrade the roster, but they may be able to use their spending power to close the gap against at least one division rival.