Latest On Padres, Manny Machado
12:29 p.m: A source told MLBTR’s Tim Dierkes that the report of Machado, who is seeking a $400 million 10-year extension, is wrong. It’s not known exactly what Machado is after or if his camp has made a counter-offer to the Padres’ offer to extend his existing contract by five years and $105 million.
With Machado’s February 16 deadline passed, his imminent return to the free-agent market appears to be one story during this much-anticipated Padres season.
10:19 a.m: Padres and third baseman Manny Machado had recently held some renewal talks to prevent him from stepping out of his contract at the end of this season. Reports from yesterday showed the club were ready to extend their current deal for another five years and $105 million, but USA Today’s Bob Nightengale reports that $145 million was below his asking price.
Machado originally signed a ten-year, $300 million deal with the Padres, which gives him a chance to drop out midway after season five. He’ll have five years and $150 million left if that opportunity presents itself this fall. Given that he’s been playing at MVP level, especially in the last year, he could certainly find a guarantee greater than what’s available on the open market. For a long time it seemed he would be inclined to trigger this opt-out and recently admitted that he does intend to do so. With the additional five years and $105 million, the club effectively offered him a ten-year, $255 million contract beginning in 2024. Nightengale reports that Machado’s camp was targeting $400 million over the same ten-year period, or another $250 million at the top of his current deal.
Given this massive rift between the two sides, it’s not surprising that no deal materialized. Aaron Richter had one of the best seasons in recent history, earning a $360 million contract this offseason, one of the biggest deals of all time. That Machado and his representatives are targeting this range is quite ambitious, but also understandable. The player has peace of mind that he has secured that $150 million even if he suffers a worst-case scenario like a career-changing injury this year. That gives it the leverage to set a really high asking price, as driving a hard bargain now doesn’t risk going empty-handed.
No wonder the Padres balked at such a question. They’ve been pretty aggressive in recent years, including their previous deal with Machado, their $340 million extension Fernando Tatis Jr.$280 million deal with Xander Bogaerts and other. However, the kind of deal Machado was going for would have been on a different level.
In addition to pure cash transactions, they also have to think about the luxury tax. It was recently reported that the club’s competitive balance sheet tax calculation places them just below the third tier of $273 million, with recent deals for players like Michael Wacha And Yu Darwish intentionally structured to reduce their respective tax burdens. Exceeding this limit would result in an increase in taxation as well as a ten-spot drop from the top pick in the 2024 draft.
CBT is calculated using the average annual value of a deal, not a player’s salary in a given season. Machado’s current deal comes with a $30 million hit, but the extension he’s seeking would effectively turn the contract into a $550, 15-year deal for tax purposes, which is the $400 million he’s aiming for going forward , and the $150 million he will have earned at the , combined by the end of 2023. That would bring his tax bill to $36.67 million, increasing the club’s tax bill and certainly pushing them over that threshold.
With Machado’s camp reportedly setting a deadline for contract talks of February 16, it appears that no deal will materialize at that time. It’s always possible for the Padres to come back with an offer strong enough to make him reconsider that position, but given their tax situation, things seem lined up for Machado to end the season and get back on to enter the free market. He would be one of the best free agents in the class alongside players like Shhei Ohtani And Aaron Nola. The Padres could always re-sign him at this point but they will certainly have competition from other clubs in the league.
Machado’s tenure at the club has been largely successful. After not qualifying for the postseason since 2006, they have featured twice in the past three years. Machado started 32 homers last year and hit .298/.366/.531 for a wRC+ of 152. He hit 7.4 wins over substitutes according to FanGraphs and finished second in the National League’s Most Valuable Player poll, only behind Paul Goldschmidt. They’ve been aggressively adding free agents this winter and appear primed for another strong season in 2023, but whether they can keep their star third baseman beyond that remains to be seen.