Analysis

How Phillies could sign Harper and pitching, do Hoskins and Nola deals, and still pursue Trout



Can the Phillies one day afford Trout, and do other contracts they will need, if they give a huge deal to Harper? (Photo: Arturo Pardavila III)

There is an old saying when discussing finances – you can’t have it all. Nearly everyone, even most wealthy folks, have to make choices at some point about how to spend their money.

Back in April of this year, Forbes released their annual Major League Baseball team values. The Philadelphia Phillies came in at ninth on the list with a $1.7 billion value attached.

But just because the Phillies are valued that highly doesn’t mean they can spend a billion dollars on player salaries.

How much can the team actually spend? Can they really afford a free agent contract of the magnitude that Bryce Harper or Manny Machado would surely command?

If the Phillies lay out the huge sum that it will cost to bring one or both of those young superstars to Citizens Bank Park for the 2019 season and well into the next decade, how would that affect their ability to put together a further competitive roster?

The team and the fan base certainly would like to be able to afford homegrown young stars Aaron Nola and Rhys Hoskins. And what about the ultimate Phillies fan pipe dream, bringing Mike Trout home when he becomes a free agent in a couple of years?

Well, I’m here to tell you that it can all get done. Well, at least most of it. In the end you might not have it all. But you will have a lot, and what you do have should excite you.

FISHING FOR TROUT

First, let’s assume that you really, really want the Phillies to sign Trout when he becomes a free agent after the 2020 season. That is your ‘Plan A’, the one thing that you want above all others, with everything being equal.

I don’t have to stretch my assumptions to believe that is the case. Any Phillies fan who has been listening to talk radio and following the fans on social media for the last couple of years knows full well that bringing Trout to South Philly is their dream.

Let’s assume it is your dream. What would that take? What might a long-term Trout contract look like?

Figure in what Harper and Machado are likely to get this year. Factor in that Trout will turn 29-years-old when he hits free agency in the fall of 2020. Know that he will have already made over $146 million by that time.

Trout may be looking for the same 10-year deal that will likely be the ask to land either Harper or Machado, even though he will be a couple of years older than both players are now. Such a deal would take Trout through his age 38 season, basically the rest of his career.

I think that we could be looking here at a landmark contract. Trout has been the consensus best player in baseball for a few years now. He has stayed mostly healthy. He is a solid citizen. He is a seven-time all-star, five-time Silver Slugger, two-time MVP. Three other times he has been the runner-up for the AL MVP Award. All of that already at just age 26 years.

It is completely reasonable to believe that we could be looking at baseball’s first $400 million deal. Ten years, $400 million. That is the price tag that I am putting on the next Trout contract, beginning in 2021. So that is where you begin. You will need to factor in roughly $40 million per year of your player salary budget from 2021-30 for Trout.

Let’s say that the Phillies are able to successfully woo Harper to town. He ends up with a $350 million deal over a decade, which, by the way, could be conservative. That would mean budgeting roughly $35 million each year from 2019-2028.

In these combined scenarios you would have Trout and Harper from 2021-28, eight full years, for a total of about $75 million per season spent on just two players.

COMMITMENTS ALREADY MADE

Now what else have the Phillies already committed in salaries over the coming years? There are two big commitments, dollar-wise, that the club has on the books at the present time.

Jake Arrieta is owed $25 million in 2019 and $20 million in 2020. Carlos Santana is owed roughly $20 million each of those same two years. Arrieta has a player option for 2020, so it’s possible you won’t have to worry about that – but let’s assume he stays. For the first two years of the Harper deal, you would also be paying out those two contracts.

The team also owes roughly $22 million next season for the combined contracts on outfielder Odubel Herrera and relievers Pat Neshek and Tommy Hunter. Don’t sweat the pitchers too much, next year is the final year for both.

Finally, the Phillies owe Scott Kingery. But his deal costs just $1.5 million next year and $1.75 million in 2020. Let’s assume the non-tender of Cesar Hernandez and his replacement by Kingery. That saves the club some $7 million or so to fill the second base position with what I believe will prove an upgrade.

ARBITRATION AND THE REST

Nola is just one of 10 Phillies eligible for arbitration this off-season. (Photo: Arturo Pardavila III on Flickr)

Earlier this week I wrote a piece here at Phillies Nation on the 10 players eligible for arbitration. If the club does the smart thing and listens to me, signing only the seven players I suggested, it would cost them an estimated $21 million. Those seven are Aaron Nola, Vince Velasquez, Jerad Eickhoff, Hector Neris, Adam Morgan, Maikel Franco, and Aaron Altherr.

Let’s add it up so far based on next season. For roughly $125 million you would have Kingery and Franco as infielders, Harper, Herrera and Altherr as outfielders. You would have Nola, Velasquez and Eickhoff as rotation options. Righties Neris, Hunter and Neshek along with lefty Morgan in the pen.

Every other returnee could be brought back at the Major League Baseball minimum salary of $555 thousand for 2019. Here we are talking about players such as Hoskins, Roman Quinn, Nick Williams, Jorge Alfaro, Nick Pivetta, Edubray Ramos, Victor Arano and J.P. Crawford.

With these figures as a baseline, the Phillies player salaries for the 2019 season would total roughly $145 million. The only new player you have brought in would be Harper. In 2020, you drop off the $16 million from Neshek/Hunter, factor a slight bump up for Herrera/Kingery, and you would have roughly $13 million more to spend.

PLEASE SIR, I WANT SOME MORE

Were it me, and I hope that Matt Klentak is thinking this way, Harper is not my only free agent this off-season. I would be going after at least one starting pitcher at the top of the market.

That would mean someone such as Patrick Corbin. The left-hander could end up costing you $75 million over five years. Even that $15 million more per year keeps you at around $160 million for next season, and the contract is nearly paid for by the 2020 contract adjustments.

The Phillies can certainly afford not only that, but more. And they are actually allowed to spend over $40 million more if they so desire without going over the Competitive Balance Tax threshold of $206 million for 2019. That CBT rises to $208 million in 2020 and then $210 million in 2021 before the MLB-MLBPA Basic Agreement runs out in December 2021.

NOLA AND HOSKINS

This is Nola’s first of three arbitration-eligible seasons. So there is no rush to get a long-term deal done from the team’s perspective. He just put up a Cy Young Award-contending season. His value is high, and probably won’t get any higher.

I would work out a 2019 contract for him this off-season, and then look at a long-term deal next summer or next off-season. By then we would have a better idea of the overall team finances and would get to see if he can demonstrate whether 2018 was just the start of a long, stellar career.

Hoskins is even easier for me. He is a big bat, but one that is limited to first base if you don’t want to hurt your team defense too much. I am a big proponent of strong defensive play, so would never let Hoskins be my starting left fielder.

He is not even eligible for arbitration until after the 2020 season. I am going year-to-year and simply renewing Hoskins for the next couple off-seasons. Then after 2020, let’s see what happens with Trout and where our overall team finances are at that point.

PULLING IT ALL TOGETHER

To me, this is how you need to approach the Trout situation – pay much of the Harper contract up front. Give him $55 million in each of the next two years, and then have the deal trail off to a $30 million average over the final eight years when you need to also pay Trout.

Paying Harper a higher salary in each of the next two years gives you flexibility to add more during the mid-2020’s. That could possibly include paying raises for players like Hoskins and any of the other current youngsters who might still be around at that point.

Also, you have to presume that the CBT threshold will increase substantially in the next Basic Agreement. A five-year MLB BA could see the CBT rise to $250 million by the end, making it easier to fit in such salary commitments.

A team’s total salary hit against that CBT is currently based on the AAV (average annual value) of a contract. So no matter what, the Phillies would take a $35 million hit on Harper and a $40 million hit on Trout. But that is for now. The MLBPA will certainly be going after that issue in the next BA.

Paying Harper much of the money up front could allow the Phillies much more flexibility in possibly trading him down the road, assuming there isn’t a full no-trade for the length of the deal. I would be looking for that opportunity to deal him at some point, maybe 6-7 years down the road, in exchange for that up front money.

HARPER AND MACHADO?

You want Machado too, on top of everything else? The Phillies should be able to afford it, if they get creative. (Ian D’Andrea/Wikimedia Commons)

I’m on record as not wanting Machado here in Philly. That has much more to do with his personality than his salary. But let’s say you want him on top of everything else. Can the Phillies possible afford him too? The answer is probably yes.

Figure that Machado would want roughly the same $350 million that Harper will want. Give it to him. Pay him $50 million in each of the next two non-Trout seasons. Then you average a little more than $30 million over the final eight seasons.

In that scenario you are paying Trout $40 million, Machado and Harper each roughly $30 million, each year from 2021-28. That would be $100 million of what should be an overall Phillies player salary budget that remains over $200 million during that entire period.

The ability to handle such contracts would be helped greatly by the team’s ability to bring up productive players from their minor league system.

Filling lineup spots and places on the pitching staff with as many young, talented, homegrown players as possible over that decade would make affordability and winning both a much easier.

While that sounds massive to fans, the fact is that this will be what it costs to put an attractive, star-filled, winning and title-contending team on the field year-after-year. With a team value that should rise to at least the $2 billion mark by that time, the Phillies organization could easily afford it.

Cot’s currently estimates that the Phillies are $71 million under the Luxury Tax threshold for 2019, $135 million for 2020, and $182 million in 2021. That gives them a ton of financial clout to play with.

Fact is, controlling owner John Middleton and whomever is making up his Philadelphia Phillies management team over the next decade is going to be able to afford a star-studded team. Now, are they willing to do so? Will they be able to deliver a consistent World Series contender to the fan base that includes players they want to come out and watch? That remains to be seen.

 

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4 Comments

4 Comments

  1. Howard Roark

    November 8, 2018 at 5:38 pm

    Mike –

    Nice article but there are a few issue with your calculations. First, luxury tax is based on the AAV of a contract, i.e., the annual average value of a 10 year 300M contract is $30M a year regardless if you front load it, back load it or agree to pay $1M per year for 30 years. I don’t see this changing under the next collective bargaining agreement. Second, you didn’t include insurance and other costs which usually account for $10-15M and count towards the luxury tax.

    • Matthew Veasey

      November 8, 2018 at 5:52 pm

      Yes, but while AAV matters against the “Luxury Tax” threshold, front-loading still helps with two things. Long-term financial planning, and trade possibilities down the road if there isn’t a full no-trade for entire length. Club should still be able to afford the insurance. I would expect the MLBPA to go after the AAV and insurance aspects in the new BA. We shall see.

      • schmenkman

        November 8, 2018 at 6:08 pm

        Another benefit of front-loading is that between two contracts of a given total amount, the one that is more front loaded is more attractive to the player.

  2. Dale

    November 9, 2018 at 6:55 pm

    Hoskins, Kingery, Harper, Trout. Sign me up!!

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