Nick Pivetta’s Deal With The Padres Reveals A Potential Cash Crunch

As Jack Magruder reported last week, the San Diego Padres signed free agent pitcher Nick Pivetta to a new four-year contract. The terms of the deal are interesting, and odd, and unlike any we have seen in the past. Sure, Shohei Ohtani signed a ten-year deal and deferred 97% of it. But that is because he is an international superstar who makes about $50 million per year in endorsements. But Pivetta doesn’t have that sort of cachet or that sort of scratch. Heading into the 2025 season, his career earnings are just under $17 million, bolstered by the $7.5 million the Boston Red Sox paid him last year.

Rather, Pivetta took this deal to help the Padres with their current cash flow issues. As Magruder wrote, the pitcher will get a $3 million signing bonus and then a $1 million salary this year. That jumps to $19 million in 2026, drops to $14 million in 2027, and then increases again to $18 million in 2028. Pivetta also has the right to opt-out of the deal after 2026 or 2027.

Lost Television Revenue

The Padres needed pitching after losing Tanner Scott to the Los Angeles Dodgers and Martín Pérez to the Chicago White Sox. But replacing them was going to be harder than it looks, insofar as the Padres are in a bit of a financial quandary. In 2012, San Diego signed a 20-year, $1.2 billion deal with Diamond Sport Group (DSG) (now called Main Street Sports Group) to broadcast their games. That is $60 million per year. In 2023, DSG filed for bankruptcy, and sought to get out of their deal with the Padres (among other teams). MLB stepped in for 2023, broadcasting the team’s remaining games, and paid roughly 80% of what DSG would have paid otherwise.

But for 2024, MLB was not able to provide the same financial backstop, so the Padres made some local deals and added a streaming package – Padres.TV – for $19.99/month or $99.99 for the whole season. The team ultimately settled with DSG for a reported $10.5 million upfront and some additional sums down the road. Suffice it to say, this broadcast change – from mid-2023 through to today – left a massive hole in their revenues.

Peter Seidler Era

With a solid long-term television package in place, Peter Seidler, who passed away from Non-Hodgkin lymphoma in November, 2023, ran the club with an eye towards winning a World Series, which would have been the first in the team’s history. He, and a group of investors, bought the Padres in August, 2012, and almost immediately went about trying to build a championship team.

Prior to the 2015 season he agreed to cover $75 million of the remaining money on Matt Kemp’s deal (and to cover some additional sums when he was traded to the Braves the following year). In the same month he signed off on a trade for Justin Upton and his $14.5 million salary. James Shields came next, with a 4/$75 million free agent deal. In 2019, he really opened the checkbook, signing Manny Machado to a 10-year, $300 million contract (which was extended to 11/$350 million in 2023). 2020 brought Yu Darvish from the Cubs, along with the $59 million left on his deal (which was extended for another six years and $108 million in 2023). In 2021, he allowed president of baseball operations A.J. Preller to sign Fernando Tatís, Jr. for 14 years and $340 million, and then pitcher Joe Musgrove for $100 million over five years. In 2022, he came out of nowhere to give Xander Bogaerts an eleven-year, $280 million contract. At the trade deadline in 2022, he agreed to a seven-player trade to bring generational star Juan Soto and the remainder of his $23 million contract to Southern California.

In 2021, the club carried a $180 million payroll. That went up to $224 million in 2022. And then all the way up to $253 million in 2023. After Seidler’s death, the new controlling partner – his brother, John Seidler – began paring down the salary commitments. First to go was Soto – who was about to earn $31 million in arbitration. – who was traded to the New York Yankees. In 2024, San Diego had a payroll of $170 million. This year they are anticipated to spend roughly $200 million, but that number is still 12% less than 2022 and 27% less than 2023.

There is no doubt that San Diego is feeling a bit of a cash crunch. But they also understand that winning begets more money. They drew nearly three million fans in 2022, 3.2 million in 2023, and 3.3 million last season. Keeping the ballpark full, keeping the microbrews flowing, and the tacos being served up, helps with the bottom line. To do all of that, they have to compete. And to compete, they have to sign players like Nick Pivetta. Luckily for the Padres, Pivetta is represented by the same agency (CAA Sports) that negotiated Ohtani’s deal with the Dodgers – meaning that they know how to be creative and how to devise a contract that works for both sides. Pivetta will get $4 million dollars for pitching in 2025. But he will average $17 million per season over the next three years (provided he does not opt out at any point).

With all of the talk and lamentations about deferrals and the Dodgers and the Mets, it’s good to see that some teams and some players are still figuring out how to make it work in other, smaller markets.