The Phillies and the luxury tax: What we know

After signing Zack Wheeler to a five-year contract worth $118 million, the Philadelphia Phillies are left with roughly $18 million before they exceed the luxury tax threshold of $208 million. With several holes still left to be filled, it is unclear what the Phillies plans will be in dealing with the luxury tax entering the MLB Winter Meetings this week.

The Phillies have not gone over the luxury tax since it was first introduced in 1997. Although the penalties for first time offenders is just a 20% tax on every dollar spent over the threshold for the first $20 million over, they become more severe for repeat offenders. The Phillies do have some money coming off the books following the likely departures of Jake Arrieta and David Robertson after 2020, so they could reasonably go over in 2020 and get back under in 2021 to avoid the harsher penalties.

During the press conference following the team’s firing of Gabe Kapler, Phillies managing partner John Middleton answered a question regarding his willingness to go over the tax:

“I’m not going to go over the luxury tax so we have a better chance of being the second wild card team. That’s not going to happen. I think you go over the luxury tax when you’re fighitng for the World Series.”

John Middleton on whether he’s willing to go over the luxury tax pic.twitter.com/BAJtjfpLWq

— Dave Uram (@MrUram) October 11, 2019

Middleton was instrumental in adding Bryce Harper and his lucrative $330 million contract last offseason, so it certainly follows that he would be willing to enter the tax under the right circumstances. But what he made clear is that the team would not enter the tax unless it was to become a World Series contender.

Following the Wheeler signing, reports from The Athletic’s Matt Gelb and MLB.com‘s Todd Zolecki have both indicated that the team does not plan to go over the $208 million luxury tax threshold.

According to Gelb, “The front office is operating under a directive to remain below the $208 million threshold that triggers the luxury tax, according to multiple team sources.” And, on MLB Network, Zolecki made clear that he did not believe the team was looking to hand out another gigantic contract after signing Harper to one last offseason.

Disputing these was a report from USA Today‘s Bob Nightengale, who said that the Phillies were targeting third baseman Anthony Rendon with Josh Donaldson as their backup plan. This certainly goes against what Gelb and Zolecki said, as signing either player would put the team over the treshold. Additionally, RADIO.COM‘s Jon Heyman linked the Phillies to Gerrit Cole and Stephen Strasburg, also indicating that the team would enter the tax for a superstar.

While these differing reports make the team’s intentions somewhat unclear, it does seem certain that the Phillies will not enter the luxury tax unless it is to sign a big name, which narrows things down to Rendon, Donaldson, Cole and Strasburg. If they do not target one of these guys, Matt Klentak will have to get creative to build a playoff-caliber team while staying under the tax, with a starting infielder, another starting pitcher and multiple relievers all still needed.

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