One year removed from an offseason that saw the Padres radically alter the direction of their franchise by paring down on payroll and trading superstar Juan Soto to the Yankees, San Diego once again finds itself in something of a financial pickle. The club is expected to maintain its payroll level from 2024 headed into 2025; according to RosterResource, that’s a budget of $169M and a luxury tax payroll that falls below the first threshold (which sits at $241M in 2025). Getting to that level of payroll may be easier said than done, however, as the Padres are currently projected for a payroll just under $210M in 2025 with a luxury tax payroll of $244M, just above the first threshold.
That leaves the club likely looking to pare down payroll by around $40M this winter, and they’ll surely be hoping to make additions to the team in spite of those cuts. The Padres will need to add at least one starter to pair with a trio of Dylan Cease, Michael King and Yu Darvish this winter, and the departure of Jurickson Profar leaves a void in left field, not to mention the losses of role players David Peralta and Donovan Solano weakening the club’s lineup at DH and on the bench. Of course, any players the club parts ways with to reduce payroll will surely create new holes that need to be filled, leaving A.J. Preller and the club’s front office in a bit of a pickle.
One avenue the Padres could use to reduce payroll this year runs through Luis Arraez. The club acquired the 27-year-old back in May, and he generally played fairly well during his time in San Diego this year with a .318/.346/.398 slash line that was good for a 111 wRC+ and earned him the third consecutive batting title of his career. A contact savant who has managed to reduce his already impressive 10% strikeout rate from 2021 to 7.1% in 2022, 5.4% in 2023, and 4.3% this past year, Arraez struck out an unbelievable 3.4% of the time during his time with the Padres. As an above-average hitter who is more reliable than anyone else in the game when it comes to putting the bat on the ball, it’s easy to see why Arraez has been attractive enough to clubs that both the Marlins and Padres have given up significant packages to land him in recent years.
That preternatural knack for contact is held back by Arraez’s lackluster plate discipline causing his walk rate to decline steadily alongside his strikeout rate over the years and a complete lack of power, however. Both of those flaws were on full display in 2024, as Arraez walked at a 3.6% clip with an ISO of .078, which both ranked third from the bottom among qualified major league hitters. It’s possible that the thumb injury Arraez played through this year before undergoing surgery in October could have impacted him in the power department, but even his career-high .115 ISO with the Marlins last year landed just outside the bottom ten among qualified hitters. Between those flaws in his hitting profile and his lackluster defense that largely limited him to first base and DH with the Padres, it’s also easy to see why both the Twins and Marlins were willing to part ways with him on the trade market in recent years.
Could Arraez be dealt for the third year in a row this winter? Doing so is perhaps the simplest path to slashing a significant chunk of payroll for the Padres. Cease and King are both projected by MLBTR contributor Matt Swartz for hefty arbitration salaries, but neither reaches the $14.6M figure Arraez is currently penciled in for. Clearing that money off the books would drop the Padres’ payroll to around $195M. While San Diego would then need to replace Arraez at first base headed into next year, a number of bats at the position including former Padres Josh Bell, Ty France and Anthony Rizzo figure to be available for a relative bargain this winter, meaning it should be fairly easy for the club to replace Arraez in the lineup and still come out $10M-12M ahead, not to mention that the return for Arraez’s services could help to plug holes in the rotation or outfield. Those motivations behind a potential deal were enough to land Arraez the 17th spot on MLBTR’s Top 35 offseason trade candidates list.
With that being said, a trade of Arraez isn’t the only option at the Padres’ disposal as they look for ways to pare down payroll. He’s already indicated this winter that he would be open to an extension with the club this winter as he stares down his final year under team control before free agency, and the Padres have regularly worked out contracts that offer the club additional financial flexibility in the short-term and the player additional security in the long term in the past. That includes deals that comes together just before a player is due to reach free agency, such as the extensions they’ve offered to Darvish and Manny Machado in recent years.
If Arraez were amenable to it, it’s easy to imagine the Padres back-loading the deal to reduce his 2025 salary significantly and/or offering a lower AAV over a longer term in order to duck under the luxury tax threshold. As one example, a six-year deal worth $60M would come with an AAV of just $10M, allowing the club to shave ~$4.6M of its expected luxury tax bill for 2025. Meanwhile, if the deal was structured such that Arraez made just $5M in the first year of the deal followed by $11M salaries over the rest of the contract, that would offer the Padres nearly $10M in savings on their 2025 payroll as compared to his arbitration salary — a figure not that different than what they’d save by trading him and replacing him with a low-cost veteran.
Those numbers are purely hypothetical, of course, and it’s certainly possible Arraez would not want to lock into a deal with such a relatively low annual salary without first seeing what’s available to him on the open market. That’s not the only flaw in the plan of extending Arraez, either; while a deal with a similar structure to the one mentioned above would be a major help in solving San Diego’s immediate payroll concerns for 2025, in a longer-term view it simply kicks the can down the road to next season when Arraez’s salary would shoot up by $6M and could leave the club in the same financial jam it finds itself in now.
