Phillies Have Spent Their Way Into Payroll Problem

Ken Rosenthal had an article up on FOX Sports regarding how the Phillies will have a tough time re-signing Cole Hamels due to how the Phillies have managed their payroll structure. So let’s shine some light on it.

Let’s take a look at how the Phillies payroll has grown over the last five seasons:

2007: $89,428,213
2008: $98,269,880
2009: $113,004,046
2010: $138,178,379
2011: $165,976,381

That’s right: In only four seasons, the Phillies basically doubled their payroll. No other team has made a jump like Philadelphia has, trying to take full advantage of their infield core and push for multiple title runs. Now, they did win one World Series in 2008 (with Hamels as their rotation anchor, of all things) and have gone to three of the last four National League Championship Series, so if you base that as a success, seems like the plan has worked. But as basically all great payroll increases have shown in recent times, spending money doesn’t breed a championship team so much as spending money correctly breeds championship teams.

The payroll increase came initially thanks to the first big extension that the Phillies made: a 5 year, $40 million commitment to Jimmy Rollins with a club option for this past season, making him a free agent for 2012. The team committed to the good young shortstop during his last year of arbitration, coming off 17.2 fWAR in the first five seasons of his career. It was a sound decision for a team that was going to get good value for one of the best shortstops in baseabll going into his prime.

The next season, the Phillies decided to do something similar with their prized second baseman, Chase Utley. That deal was for seven years and $85 million, and was the largest contract ever given to a second baseman at the time. Whereas the Phillies gave Rollins five years of arbitration to try and get his big contract, Utley’s tremendous seasons in 2005 (7.5 fWAR) and 2006 (7.3) forced the Phillies hand to get his contract going early as to show their loyalty to their future Hall of Famer. That contract has been more valuable even than the Rollins contract.

It should be known that thanks to these contracts and staying in arbitration with Ryan Howard, the Phillies built a core that would get them that World Series championship in 2008, but it also should be pointed out that the architect of that title winning team, Pat Gillick, retired after the season and handed the reigns over to Ruben Amaro, Jr., hopefully to build the team in the way that Gillick before him had done, as he had now ran three championship teams in his storied career (two in Toronto and then Philadelphia).

His first big signing post-title win was a very good one in classic Gillick style: He locked up Hamels to a 3 year, $20.5 million deal fresh after his fantastic 2008 season that saw him shine in the playoffs. It was another great move to lock up a young part of the team as they went into a prolonged period of contention in the National League.

The problem, however, came to be with the contract of Howard, who had twice gone to arbitration and was given a $10 million win in 2008, $3 million more than what the Phillies were willing to pay him. Howard had been hoping the money would come to him sooner, seeing as he won the National League MVP in 2006, his first full season in the Major Leagues. He had another great year in 2007, and if you took a quick glance at his stats, it should have been easy to re-sign him.

2006: .313/.425/.629, 58 HR, 167 OPS+, 108/181 BB/K ratio
2007: .268/.392/.584, 47 HR, 147 OPS+, 107/199 BB/K ratio

But unlike Rollins, Utley or Hamels, who were heading towards their primes, Ryan was already in his prime, heading into his age 28 season. While the sabermetric buzzphrase “old player skills” were bandied about, the claims were totally substantiated in Howard’s case. He didn’t hit lefties very well, he had very high strikeout numbers (which are fine if they are offset by walks) and he wasn’t that good of an athlete at first base, the bottom of the defensive spectrum. If Howard continued to strike out and couldn’t figure out lefties while losing any semblance of plate discipline, his value would plummet.

But Amaro wanted to keep the big guy happy, possibly due to the problems with the arbitration process the year before, and signed him to a three year, $54 million deal, including a $15 million salary for 2009, raising up to $20 million in 2011. This made him the highest paid member of the team even though he didn’t have the value at their positions that Rollins and Utley did, and with the extension signed mid-season in 2008 of closer Brad Lidge and the pay increase to much-maligned starter Brett Myers (Gillick couldn’t win them all) the 2009 salary numbers now saw a flawed slugger, a very flawed starter and a closer prone to collapse in the top three payroll slots. On top of that, Amaro bet that Raul Ibañez could continue his late-30’s career resurrection act, and not just for one, but for THREE seasons at 3 years and $31.5 million, where his defensive skills were downright bad in left field and he didn’t have the liberty of being slotted into a DH role.

So instead of letting the young, home-grown players develop and allow free agents to simply augment as opposed to take over that core, the Phillies went into that Yankees/Red Sox mindset of trying to buy a team and hope for the best with the flaws each player brought to the table. The Phillies made the World Series for the second straight year and coincidentally faced the Yankees, who themselves had followed a similar mindset with three huge offseasons signings of their own in C.C. Sabathia, Mark Teixeira and A.J. Burnett. It was the Yankees who won out this time, however, slimly defeating the Phillies in six games.

The team already had a fantastic core around them and although they had overpaid for some players they shouldn’t have, the Phillies were still the team to beat in the National League. But another season had gone with that same core that got them their the year before, and after Amaro made a brilliant in-season trade to get emerging ace Cliff Lee, Philadelphia had a good 1-2 punch at the top of the rotation and the best National League, he wanted to improve on his pitching staff. So he went out and got Roy Halladay from the Blue Jays in exchange for three top prospects and quickly signed him to a three year, $60 million extension, locking up the consensus best pitcher in baseball through the same time as Utley.

Then Amaro made the puzzling move of concurrently sending Lee to the Mariners in exchange for three prospects that were nowhere near the talent level he sent away for Halladay, hopefully trying to upgrade both positions at once, when it was apparent that had Lee stayed another year, the trio of Halladay, Lee and Hamels could have wreaked havoc all over the National League. What made that even worse was that he essentially chose those three prospects and Joe Blanton over Lee, signing Blanton to a 3-year, $24 million deal soon afterwords. He then extended both Carlos Ruiz and Shane Victorino to avoid arbitration, but in hindsight, had he decided to stick with Lee and offer him a Halladay-style extension while paying Ruiz and Victorino in arbitration, he would have been better off (and you’ll see why in a minute.) Amaro did make a good deal with Placido Polanco for a 3-year, $18 million pact, hoping that the defense he provided at third and his contact approach at the plate would pay off.

At the beginning of the 2010 season, Philadelphia made the move that basically killed any chance of payroll stability for a period of five years: They extended Ryan Howard for five years and $125 million dollars, with the extension kicking in during the 2012 season. You think Howard’s first extension was shaky deal? This one was downright ludicrous, as he DID decline after the initial extension signing and has been about league average according to fWAR throughout it: 4.6 in 2009, followed by 1.4 and then 1.6 this past season. Then, all of a sudden, the Phillies thought that they needed another pitcher because they couldn’t get by with just Halladay and Hamels. (Duh.) So they looked to the Houston Astros and traded for Roy Oswalt, who was not happy with how the Astros were doing, but under team control through 2011. The players Philadelphia traded away for Oswalt weren’t nearly what they traded for Halladay, but they weren’t what they got in return for Cliff Lee either, causing Lee to somehow be valued below Oswalt, who was clearly not the pitcher he once was. So in case you’re scoring at home, the Phillies essentially traded away Cliff Lee and six prospects (four that were amongst the best in their system) for the Roy Halladay, a declining Roy Oswalt and three prospects (with only one being anywhere close to Major League caliber) . When they could have had Halladay, Lee, Hamels and Blanton 1-4 in that rotation.

The Phillies then went on to lose in the 2010 NLCS to the San Francisco Giants, and to make matters worse, the Giants went on to face the Texas Rangers, who themselves went out and did what Philadelphia had done in 2009: Trade midseason for Cliff Lee and get to the World Series. The Phillies had increased payroll by $40 million dollars above their norm, they had been to the NLCS three straight years, but after having only one World Series title win to their credit, they had hoped to have done even better than that. There was just one problem: The team now was not as young as it was at the beginning of the run.

In 2011, things didn’t get much better for the payroll, as it increased thanks to the combination Halladay’s extension kicking in, raises for Howard, Oswalt, Ibañez, Lidge and Blanton, along with Rollins’ club option. But Amaro figured that they needed to make one final move thanks to their disappointment in the NLCS the year before, as the Giants pitching staff outclassed theirs.

So he signed Cliff Lee. Five years, $120 million, with him taking less in the first year before getting a 2x raise in 2012. Yes, the same Cliff Lee who Amaro chose Blanton over because of monetary woes. Yes, the same Cliff Lee for whom he got three middling prospects in return. Yes, it’s Simmonsian, but Phillies fans, you may now throw up directly on your shoes. 

And what did the Phillies get for that big signing? A dominating 102-60 season in 2011, the best season in the history of the franchise thanks to the Fearsome Foursome of Halladay, Lee, Hamels and Oswalt (when healthy) and shoe-in as the team to beat in all of baseball. But during that season, Philadelphia decided that Domonic Brown wasn’t the answer in right field, so they traded FOUR prospects (Yes, more than any of the trades for the pitchers) to Houston for Hunter Pence, who went off during his time as a Phillie and turned into a great trade at the time for Philadelphia, even with them trading away two guys who could help out at the Major League level down the road.

But then the Phillies lost to eventual World Champion St. Louis in the playoffs, this time not even getting out of the Division Series. To make matters worse, Howard tore his Achilles tendon on the final swing of the season, a meek groundout to first that saw him crumple to the ground, a somewhat ironic image of the player Philadelphia will now pay out $25 million per over the next five seasons.

So the peak of this five year period saw them win a World Series in 2008 thanks to some savvy extensions throughout arbitration, good foresight on role players being able to step up and a knack for player development. But after that peak, the Phillies didn’t stay with that mindset, instead deciding to try and tack on superstar players through trades and free agency instead of trusting the player development that allowed them to have such a good young core in their championship run. They nearly doubled their payroll after the Rollins extension, but now, all their money has seen production steadily decline.

And now, the nadir of that decline comes with the report from Rosenthal, as the Phillies need to figure out how they’re going to pay Hamels in his final year of arbitration and beyond. Their payroll is expected to climb even higher in 2012, thanks in part to the Jonathan Papelbon deal that was an overpay and then some. And this is coming from a team that was ready to pay Ryan Madson a similar amount over a four-year period. Trading Hamels would close out a troubling period for the Phillies, depending now on a large group of players in their 30s to carry a team whose window closes more rapidly as time progresses.

That’s why I don’t understand why the Phillies spent their way into a corner like this. Utley will still be great, Halladay and Lee are at the top of the class when it comes to pitching in baseball today, but you’re still deciding that Howard, Blanton and Papelbon are worth way more than the contracts they are given. There are still really good contracts on this team (Victorino, Polanco and Ruiz to name a few), but the Phillies haven’t developed any young players that you could hang the franchise on once this core goes away. The Phillies are now seeing their young core decline going into the twilights of some very good careers, and unfortunately, they have the money tied up in bad contracts for players that won’t be nearly as good as the contracts they have signed for them.

If Cole Hamels does get traded, I’m not sure they’ll get the true value a pitcher of his caliber deserves, but even then, the players they’d get back wouldn’t keep the team in contention anytime soon. Take a good look at this team, Phillies fans. They’ll be good this year, probably next year, too. But when you have to try and re-sign Halladay, deal with Utley’s final years and figure out what to do when Ruiz and Victorino deserve their big raises, you’ll be looking at $38 million dollars per year combined with Howard and Papelbon thinking, “We could have had more.”

And you’ll be right.

About Derek Hanson

Doctor by day, blogger by night, Derek Hanson is the founder of the Bloguin Network and has been a Patriots fan for more than 20 years.