San Diego Padres Show Being ‘Small Market’ Is an Ownership Choice

The San Diego Padres are showing up much of Major League Baseball.

While they finished second in the NL West last season, some projection systems have them as the favorite to win the division in 2023. That would be a seismic shift in a division long dominated by the Dodgers, with brief runs by the San Francisco Giants.

The Padres signed superstar free agent shortstop Xander Bogaerts in the offseason. That would be notable enough on its own. But the signing came despite the Padres already having Fernando Tatis Jr. to play the position, as well as Ha-Seong Kim, who graded out as an elite defender last season.

That surprising spending on roster construction and the resulting fan interest has helped spur ticket and merchandise revenue.

So much so that despite playing in MLB's fifth-smallest media market, the Padres will almost certainly be paying into the league's revenue sharing program, instead of taking money out of it.

According to the San Diego Union-Tribune, team CEO Erik Greupner explained that this was all part of ownership's plan.

“I think it’s a validation of the approach that if you invest in the team on the field and you create a compelling and winning product, the fans will respond,” Greupner said. “I think that was always in the forefront of Peter’s mind when he initiated that strategy.”

Sure enough, the Padres enter spring training with the third highest payroll in baseball, behind only the two New York teams. Just a few years ago in 2019, they had the 29th highest payroll.

You have to spend money to make money.

LOS ANGELES, CA - SEPTEMBER 28: San Diego Padres shortstop Fernando Tatis Jr. (23) and San Diego Padres third baseman Manny Machado (13) walk by each other during the MLB game between the San Diego Padres and the Los Angeles Dodgers on September 28, 2021 at Dodger Stadium in Los Angeles, CA. (Photo by Brian Rothmuller/Icon Sportswire via Getty Images)

Padres Show Small Market Success is Possible

Small market teams like the Cincinnati Reds, Oakland A's and Tampa Bay Rays have long maintained that running high payrolls essentially isn't possible. Those organizations and others have essentially become permanent recipients of MLB's revenue sharing.

The Padres, not too long ago, were similarly thrifty.

But now, a change in philosophy has led to record revenues. The Union-Tribune reported that their increased financial muscle has come from ticket and sponsorship sales. All because the team has committed to trying to win and bringing in or retaining star players.

Who would have guessed?! Fans want to see competitive teams with star players.

Interest has grown so substantially that the Padres have had to cap season ticket sales at 24,000 to leave enough single game seats available.

Their recent fan fest event was so popular that it led to overcrowding in concourses and massive lines.

There's no reason that other franchises in smaller markets couldn't pursue the same path. Sure, it might require some initial risk and sacrificing profit. But investing in the product undoubtedly pays off.

Attendance at Petco Park in 2022 was the highest it had been since the stadium opened in 2004. And will almost certainly be even higher in 2023.

Instead of viewing the Padres as a model to follow, other owners seem upset that they're showing what's possible.

San Diego shows that acting like a small market team is somewhat of a choice. And unfortunately, much of MLB seem content to make that choice.