PADRES: IT’S RIGHT TIME TO BE ALL IN

Other franchises seem to be stuck in neutral

Major League Baseball contends its 30 teams lost a total of more than $3 billion in 2020. The claim has been made at the Padres organization’s highest levels that the club’s deficit exceeded $100 million for the year.

There is no certainty regarding when the season will start or when fans will be allowed back into ballparks in 2021 — paying for the tickets, parking and concessions that multiple sources say comprise 40-50 percent of most teams’ revenue. Whenever it is, the expectation is venues will not be permitted to hold their full capacity and teams are again projecting heavy financial losses.

The specter of a work stoppage looms in 2022 as the players and owners negotiate a new collective bargaining agreement. The last stoppage, in 1994, caused MLB’S popularity (and revenues) to crater for years.

There is significant concern among some in the game that there will not be a “normal” season until 2023, at the earliest.

In the midst of this precariousness, the man who runs the Padres has effectively declared none of it matters, all is well and now is the time to take a gigantic move into being relevant — by adding about $40 million in additional obligations to the team’s 2021 payroll in a span of 24 hours near the end of last month.

“These (acquisitions) weren’t to be competitive on ceremony, but they truly wanted to go for it and compete at the highest level,” said David Carter, principal of the Sports Business Group and an associate professor of sports business at USC. “There might be some short-term COVID considerations. But they are clearly playing the long game.”

Padres Chairman Peter Seidler and the people in his employ who make such decisions, in essence, believe there is no better time for the Padres to go for it. Really, they felt they had no choice.

The Padres made the

postseason five times in their first 51 years. Only once did they go in back-to-back years, in 2005 and ’06. After that, they went 13 seasons without a playoff berth before finally returning in 2020.

People familiar with Seidler’s motivation say the drive to alter that history is at the forefront of his mind. Moreover, they say Seidler, General Manager A.J. Preller and others involved in setting the course for the franchise consider it imperative the team not backslide. (Seidler declined to be quoted for this article, saying he didn’t think it reflected well on a team owner to talk about anything related to finances.)

“He’s made an emphatic statement that ‘We’re in it to win it,’ ” said one person in close contact with Seidler. “(The Padres) care about a sustained period of winning baseball. This is a new level of commitment from ownership.”

Seidler declined to be quoted for this article, saying he didn’t think it reflected well on a team owner to talk about anything related to finances. That is even in light of the fact he Seidler is demonstrating to be pretty much the antithesis of almost every one of his counterparts; he has committed more money to bolstering his team’s roster this offseason than all but one other club.

On Dec. 27 and 28, the Padres added nearly $41 million to their 2021 payroll with trades for starting pitchers Yu Darvish and Blake Snell and catcher Victor Caratini, and the free agent signing of Ha-seong Kim. They also shed almost $7.5 million in commitments for a net increase of more than $33 million.

Since the end of the World Series, the New York Mets have committed a net of approximately $69.4 million in ’21 payroll. The Atlanta Braves have committed about $28 million and the San Francisco Giants almost $27 million. After that, it’s not really close, as most teams have essentially sheltered their checkbooks in place during the pandemic.

Go back four months, to trades made since Aug. 29, 2020, and the Padres have added a net total of approximately $33.7 million in payroll commitments between last season and the upcoming one. That is again second only to the Mets and far more than any of the other 28 teams.

The Padres’ estimated payroll of $151 million is fifth highest in the majors, according to spotrac.com.

The disparity will diminish in the coming weeks. There is little more than a month until the scheduled start of spring training. Players and teams will eventually have to work to thaw the relative freeze on the free agent market.

But arguably no team — not even the Mets — will have been remodeled as thoroughly as the Padres over the past four months. Exactly one quarter of their 40-man roster is made up of players who were not in the organization before the August trade spree.

The Mets were recently purchased by hedge fund magnate Steven Cohen, who at $14 billion is estimated by Forbes to be the 77th-richest person in the world and possess the highest net worth of any MLB owner (by almost a factor of two).

Seidler, whose family as a whole has been the team’s largest stakeholder since this ownership group took over in August 2012, is not a billionaire on his own. Neither is Ron Fowler, who in November sold a sizable portion of his ownership stake to Seidler and stepped down as executive chairman. (He is now vice chairman). Alfredo Harp Helu, whose percentage of Padres ownership is second to Seidler, is worth an estimated $1.2 billion.

Multiple sources said the Padres’ ownership group, comprised of a handful of people who own a stake believed to be around 90 percent of the team and then about two dozen others who own the rest, has committed to a large cash contribution in the coming year to help cover expenses. The team — which according to Forbes’ April estimates had nearly doubled in value to $1.45 billion since the 2012 sale — will certainly make a significant draw on its line of credit as well.

Such moves are fairly routine among major league teams, but the magnitude of the infusion in this instance serves to emphatically announce a new era.

The Padres’ gusto comes, of course, after a period of mostly pruning in anticipation of this kind of growth.

The franchise committed almost 10 percent of its spending over a four-year period between 2015 and 2019 to debt reduction and interest payments.

The monumental effort to get out from under the mountain of high-interest credit payments they inherited when they purchased the team in August 2012 was made with the idea the Padres could refinance and, in the words of Seidler at the time, “accelerate our financial capacity.”

In February 2019, they committed $300 million to sign Manny Machado to a 10year contract. Last offseason, they added five veteran players (via trade or free agency) that even in a season shortened to 60 games cost more than $11 million. Just four of the 26 players on the Padres’ National League Division Series roster were on the team before 2019.

The remaking of the Padres roster began under Fowler. He did the hands-on engineering of the reduction and refinancing of the Padres’ debt and worked daily with Preller on instituting what they often called “the process,” with strategic signings peppered amid the stockpiling of young talent that served as the real live currency that has helped endow the recent spree of acquisitions.

But it is Seidler who now has his foot on the spending gas pedal as the team’s new chairman attempts to get his franchise across a finish line it has never achieved.

It brings up a question: If the Padres can do it, why can’t more teams do it?

“That depends on how much debt they’re carrying, what their ownerships organizational philosophy is, how strong your brand is, the market in which you play,” Carter said. “You have to have the financial wherewithal and the stomach to do it to convert this from being your grandfather’s Padres to being your grandchildren’s Padres.”