Padres Payroll 2024: How much space left before luxury tax threshold?

The San Diego Padres had a disappointing 2023 season on every level. They finished in third place, -- 18 games out of first place -- and were home for postseason baseball. It's hard to imagine a lineup consisting of Fernando Tatis Jr., Juan Soto, Manny Machado, and Xander Bogaerts could never stake a claim in the National League playoff chase.

You would think an outcome of this nature would fuel the organization to revamp the roster this past offseason. Instead, the Padres front office seemed to be stuck in neutral all winter long. President of baseball operations and general manager AJ Preller claims the organization is not done improving the lineup. It begs to ask how far are they willing to go.

Projected 2024 Padres Payroll and Luxury Tax Payroll

No major league baseball team is perfect (even the Los Angeles Dodgers), as every front office is constantly looking to upgrade their roster. The Padres want to add a player to the mix if the opportunity is right financially. The current roster is competitive but not constructed to compete at a championship-caliber level. Preller feels there is plenty of time between now and the trade deadline on July 30 to fill roster needs.

Every franchise has a payroll limit. Let’s take a look at the Friars' current payroll totals and how much money is available to make player moves this summer:

Estimated 2024 Padres Active/Opening Day Payroll: $152.6 million

Estimated 2024 Padres Luxury Tax Payroll: $214.8 million

The above payroll numbers are the closest to the actual figures submitted to the league office by Opening Day. These numbers can change based on a late trade or free agent signing before the start of the regular season.

The 2024 luxury tax has four thresholds ($237 million, $257 million, $277 million, and $297 million), and a team is penalized for surpassing each threshold. The luxury tax number does not include each player’s 2024 salary but the average annual value (AAV) of each guaranteed contract. Also, contract buyouts are not a part of the final total. And if a team acquires a player during the season, the AAV is factored into the luxury tax based on the time left in the year.

In 2023, the Friars had one of the highest payrolls in the sport, as they ranked third at $248 million. It came as no surprise that the Padres pared down the payroll over the winter.

Several media outlets have reported interim chairperson Eric Kutsenda prefers not to have the payroll exceed over $200 million this season. Preller does have some wiggle room to improve the roster, but he will need Kutsenda's approval to acquire a high-price talent that puts the club over the luxury tax threshold.

Last season, the Padres had to pay a $39 million tax bill for going over the threshold. There will be no problem in this area heading into the 2024 season. The Friars are firmly under the $237 million luxury tax threshold.

Top 5 Salaries on the 2024 Padres Roster

• Manny Machado: $31.8 million
• Xander Bogaerts: $25.4 million
• Fernando Tatis Jr.: $24.2 million
• Joe Musgrove: $20 million
• Yu Darvish: $18 million

Machado has the highest luxury tax salary adjustment on the 2024 Padres payroll. His salary is $13 million, but his contract extension’s AAV is $18 million more for this season. Machado is among several Padres with long-term contracts that take up significant space against the luxury tax. It has become an obstacle for Preller to make offseason acquisitions.

At this moment, it would be counterproductive for the Friars to move any of their high-priced players. Each has little value on the trade market because they’re coming off a season of poor production or missed time due to injuries. 

The Padres have room to improve, but payroll limitations will make it difficult for Preller to add pieces. His margin for error is small, especially with the clocking ticking towards Opening Day, and it seems he's looking toward the trade deadline anyway.