The Bright Side Of Dead Money

Over at FanGraphs last week, Craig Edwards wrote about teams with the most “dead money”—that is, money paid to players who aren’t playing for the team that’s paying them. The Padres, somewhat surprisingly, are second on the list, with $35 million—over half their entire 2017 payroll—in contracts being paid out to old friends playing elsewhere, in 2017 alone.

It’s surprising because the dead money leaderboards are usually populated by large market clubs, almost exclusively. In fact, all of the teams surrounding the Padres—the Dodgers, Yankees, Angels, and Red Sox—qualify as such. Those teams are able to pay players to go away, in a sense, whereas small market clubs are less likely to part with millions of dollars without the chance of a tangible, on-the-field return. In other words, small market teams are, in general, less likely to get too cozy with the concept of sunk costs.

On the surface, it looks bad. It’s another area where the baseball commentariat can point out lowly San Diego and get a chuckle or two. In an ideal situation, you don’t want to be on this list, and a number of the players the Padres are still paying—Matt Kemp and James Shields to name two—conger up bad memories of bad decisions.

Think of it another way, though: the Padres are actually paying money, lots of money, to make their future outlook brighter. Let’s go through some of the players individually.

James Shields ($22 million over next two years)—When the Padres dealt Shields to Chicago, they likely hoped that he’d pitch well enough to opt out of his contract, saving the Padres this bill. He didn’t. Oh boy, he didn’t. By throwing in a bunch of money with Shields, however, the Padres were able to pry away Fernando Tatis Jr. from the White Sox. Somewhat unknown at the time, Tatis Jr. has developed into one of the most intriguing prospects in the farm system, and he’s cracked national top 100 lists for FanGraphs and Keith Law. He’s very much the perfect kind of prospect for the Padres: a few years away, a position player (who could maybe, just maybe, stick at short), and full of game-changing potential.

The Padres probably could have gotten rid of Shields without including much money, but they would have got nothing back more than filler. Instead, they basically paid for the right to pick out a good prospect, and they got one. If $22 million is the going rate for a one in five shot at Manny Machado, it’s probably not a bad deal.

Melvin Upton Jr. ($12.05 million this year)—It was always surprising to see how much money the Padres tossed in when they dealt Upton to Toronto. When the Padres traded the outfielder last summer, he was arguably worth his contract, depending on your metric of choice. Either way, they ate most of his contract and got back Hansel Rodriguez, a right-handed pitching prospect who turned 20 last month.

Rodriguez doesn’t have half the hype of Tatis, but he’s possesses just about everything you’d expect from your typical high risk, high upside pitcher profile. There mid-90s (and up) heat, there’s an encouraging slider, there’s a so-so and limited performance track record, and there’s about 343 potential pitfalls Rodriguez will have to dodge before he turns into a reliable major-league contributor.

Still, at the very least, he’s depth on the farm. Take enough chances on dudes who can throw 98 miles an hour, and you’ll hit now and then. In the big picture, that seems to be a large part of the Padres strategy with young players. Just keep adding them; particularly, ones with at least a big tool or two.

Hector Olivera ($28.5 million over next four years)—This whole thing—the Padres, along with like eight other teams, still owe Matt Kemp some money, it is believed—is a mess, but it breaks down like this: the Padres dealt Kemp to the Braves, took on Olivera, immediately cut him, and saved a decent chunk of change in the process. In short, they saved some money, cleared out a spot for Hunter Renfroe or another young outfielder, and played the addition by subtraction game by sending Kemp to Atlanta.

It’s the best they could muster out of that terrible original deal that sent Yasma . . . okay, I’ll stop.

Jedd Gyorko ($7.5 million over next three years)—Eh, there’s not much to say here.

It’s easy to criticize the Padres for having so much money tied up in players wearing different uniforms, and it’s fair to point out the past miscues that put them in that situation. Overall, though, for fans hoping for a winning team in a couple of years, it’s hard to see how all this dead money isn’t a good thing. Almost none of the money owed will have any meaningful impact on the payrolls of the 2019 or 2020 teams. In that sense, the dead money shouldn’t hamper any future free agent negotiations or contract extensions.

Further, it shows that the Padres they were—eventually—smart enough to move on from past mistakes while also allowing them to clear out unneeded veterans, opening up important roster space for younger players with more upside and less sass. And, most importantly, it helped to facilitate a couple of important prospect acquisitions, namely Tatis Jr., who at least has a scratch-off ticket’s shot of turning into a good big-leaguer when the Padres are good.

There are probably better ways to spend $70 million (over the next four years), but one worse way would have been to keep paying it to Shields, Kemp, and Upton Jr. through the end of their respective contracts. The Padres kicked in a bunch of cash, moved on, and quietly made their organization stronger in the process.

Note: Mickey Koke also recently wrote about this at East Village Times.

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  • ballybunion

    Great explanation. Of course, those who just look on the surface will call the moves more evidence of incompetence by A. J. Preller, adding it to their long list of alleged mistakes. They never consider how many of his earlier moves were dictated by ownership and management, particularly management Preller no longer answers to. How soon they forget Comrade Lenin’s observation that sometimes you have to take one step back to take two steps forward. Who knew Lenin was a baseball fan?

    BTW, the money cited is for this year only. It’s less next year, and less the year after, and then disappears altogether, just about the time the Padres are ready to compete for a playoff spot and use the money for acquisitions. So Preller was thinking ahead when he made those moves.

    • Much thanks, and agreed.

      I think I got the numbers right, right? ~$35 million in 2017 and, overall, ~$70 million over the next 3-4 years (including 2017).