Padres Payroll Keeps Climbing But Still Well Short of 'Steve Cohen Threshold' For Now

The Padres' 2023 competitive balance tax payroll is creeping up closer to the "Cohen Tier," where penalties start to get even more severe.

If there's one thing we know about Padres owner Peter Seidler, it's that he's willing to spend money to put a successful product on the field. Just this offseason, San Diego spent big on shortstop Xander Bogaerts and showed a willingness to spend even bigger on Aaron Judge. They traded a huge haul of prospects to Washington for Juan Soto, knowing he'd be making big money in arbitration. They worked out lengthy, lucrative extensions with Joe Musgrove, Yu Darvish, and Fernando Tatis Jr., among others, and they're always looking to add to the team.

As Dennis Lin writes for The Athletic, the Padres do have some sort of financial limit, and they're likely approaching it after signing right-handed pitcher Michael Wacha this week.

These Padres do have at least a rough idea of a limit — club officials say Wacha’s deal will increase their estimated luxury tax figure to just shy of the $273 million threshold — but they remain willing to go to unusual lengths, especially for a franchise operating in one of baseball’s smaller media markets. So, around the sport, they continue to be an object of great curiosity.

It's a soft limit, for sure, and it might be tested if they try to work out an extension with Manny Machado before he opts out of his contract after the 2023 season. At the moment, the only teams paying more this season are the two New York teams, and the Yankees aren't far above the Padres.

Many of their deals have been designed to lessen the luxury tax hit. Darvish wanted a two-year extension; the Friars spread it over six. Wacha's deal could go as long as four years, with an average annual value well below what he was seeking on a two-year deal. And Bogaerts' deal will take him through his age-40 season, but the AAV is only about $25 million.

Still, even with all these beneficial contract terms, the Padres are well over the first luxury tax and pushing up on that $274 million third threshold, where penalties start to get even more extreme. Can they maintain that kind of spending? It's tough to tell, but if it gets them a World Series title, it will be worth it to them.