2013 Phillies - Crossing the Luxury Tax Threshold

Eric Seidman at Phillies Nation has written a couple of pieces in the wake of the historic 6 year, $144 million extension that was granted to Cole Hamels explaining why he feels that the Phillies need to consider trading Hunter Pence or Cliff Lee.  The historic pact made Hamels the highest paid athlete in Philadelphia sports history.  The implications of the signing are that the Phillies, who will be paying four pitchers $78.5 million in 2013 (Roy Halladay, Cliff Lee, Cole Hamels and Jonathan Papelbon), will be forced to be creative to stay within the threshold of the MLB Luxury Tax salary cap ($178 million).  Seidman has been vying for a Cliff Lee or Hunter Pence trade to help the team field a competitive ball club next season.  His assertion was that the Phillies could not fill all of the holes on their current roster with the money that they'd have left after spending $71 million on their top three starters, $12.5 million on their closer and another $50 on Ryan Howard, Chase Utley, Jimmy Rollins and Hunter Pence.  But his assertion was based on the Phillies not crossing that $178 million mark.

To expand this discussion, I decided to take a closer look at the Phillies roster to see what holes the Phillies would need to fill in 2013 and which players they could use to fill those holes internally.  What I found is that they are absolutely right at that threshold and the options to fill those holes will be very limited... you can check out my nifty spreadsheet below which gives you an idea of what I think the Phillies roster could look like in 2013 if they choose not to go over the luxury tax cap (filling gaps internally and avoiding high-priced free-agents).  The bolded/italicized players indicate that the player could be replaced with a similar internal option that would not drastically affect the bottom line.

My conclusion after looking at the situation, and the conclusion that many others have come to, is that they will likely need to go over the luxury tax threshold to field a championship caliber team.

Looking at the current 25-man roster, there are only two noteworthy free-agents heading into next season - Shane Victorino and Joe Blanton.  Unfortunately, it's very unlikely at this point that either player will be back in 2013.

The other names worth mentioning here are Placido Polanco and Ty Wigginton because the Phillies have club options on both of these players and likely will only have the capacity and desire to keep one.  Polanco can be brought back for $5 million and Wigginton for $4 million.  Alternatively, the Phillies could choose to write checks to cut ties with either (or both) of these players ($1 million for Polanco and $500,000 to Wigginton).

So realistically, the Phillies need to address who will be their fifth starter, who will play third base and who will play center field this off season.

FIFTH STARTER - KENDRICK or CLOYD

Let's start with Blanton... the simplest solution here would be to transition Kyle Kendrick back into the starting rotation.  He's been there and done that and will give you innings as a fifth starter.  If you don't want to do that, maybe you take a chance with Tyler Cloyd.  Regardless, I'm a firm believer that if your biggest concern is your fifth starter, you really have nothing to worry about.

CENTER FIELD - MAYBERRY or JAMES/GILLIES or Peter Bourjos-type (via trade) or FREE- AGENT

Victorino's spot in center field is going to be a little tougher to fill and the painful reality here is that this is one of the casualties of the Roy Oswalt trade a few years ago (Anthony Gose would look really nice right about now).  John Mayberry, Jr. has logged plenty of innings in center field this year but you have to wonder whether he is capable of playing out there every day (less range than most center fielders and his bat hasn't proven to be major league worthy).  There are certainly worse options out there than John Mayberry, Jr. but that solution wouldn't be my preference.

On the farm, Jiwan James is a guy that I look at and think, "Why not?"  He's a polished defender and a likeable guy, by all accounts.  He's not going to give you much offense but he will cover a lot of ground in center field and is a very good base runner.  Tyson Gillies is another decent center field prospect but he just can't seem to keep himself out of trouble so I'm leaning towards James, for now (this could be something to watch in Spring Training).

I think we could address this position internally but perhaps a trade could be made to address this spot.  In my opinion, the most interesting name that has come up in some trade rumors (yet, not immediately linked to Philadelphia) is Peter Bourjos, who is blocked in LA by Mike Trout.  If the Angels are motivated to move Bourjos, the Phillies could possibly work out a deal for Joe Blanton and a prospect... that's probably a pie in the sky idea but I don't see any other trade options out there that are going to bring back a young center fielder.

There are going to be some interesting center fielders on the free-agent market next year.  Michael Bourn and BJ Upton will draw attention and Shane Victorino will certainly be on a lot of radars but without committing to go over the luxury tax threshold, these players will be out of reach for the Phils.

THIRD BASE - POLLY/WIGGINTON or FONTENOT/MARTINEZ/GALVIS or Mike Olt (via trade) or FREE-AGENT SLOP

Polanco, when healthy, is definitely a better option at third base than Wigginton but Polly's health issues have caused his offensive numbers to decline and have severely hindered his ability to stay on the field.  Like most, I expect the Phillies to exercise the buyout option with Polly but if he has a strong off season, they could bring him back.

Wigginton is a little more complicated.  He's still a serviceable option at third base as well as first base and he's fairly reliable.  Is he worth $4 million?  That is debatable.  Should he be the everyday third baseman of the Phillies next season?  As a fan, I'd hope not but looking at the upcoming free-agent market, there's not going to be much out there after David Wright (who will break the bank for someone).  If Polly is done, I think you have to consider bringing back Wigginton.

Outside of those two, the Phillies should have the ability to bring back Mike Fontenot (or a comparable utility man) and Michael Martinez is still hanging around the organization so they have some decent utility guys around to compliment Wigginton but I doubt that anyone is going to get excited about either of those players (or comparable players).  If you're heading into the season with Ty Wigginton slated to be your every day third baseman, utility men will be very important.

Prospecting... slick-fielding Freddy Galvis became an instant hit in Philadelphia filling in for Chase Utley but his injuries and off-the-field concerns make his spot a little less firm next season and it's unclear whether he could even play third base (something Charlie Manuel hinted at earlier this season).  Aside from Galvis, the Phillies don't have many prospects playing at a high-level on the left-side of the diamond.

So there are definite question marks at third base but unless you're getting an MLB-ready prospect like Mike Olt from the Rangers, there's not going to be a clear answer at third base no matter where you look or what you do (the free-agent crop is just so weak it's not worth looking at... if you don't believe me, check it out yourself).  If there's no real solution, then it becomes a situation that you are going to have to live with, regardless.

BUST A CAP

The Phillies are in a very curious spot but unless a trade can be made for Olt, I don't see how trading Lee or Pence is going to help you.

Least of their concerns - fifth starter.

Greatest concern - third base.  The problem at third base is lack of viable options on the free agent market (at least none worth pursuing) or on the farm.  Futher, the Phillies would have to offer up Cliff Lee just to have a shot of landing Mike Olt (and that might not even make your ball club better) so I'm afraid they'll have to go with what they've got at third base.

Most likely area they'll be able to address - center field.  Realistically, they'll need about $6 million to get a decent center fielder or they'll have to find a way to package some guys for a decent MLB-ready prospect like Peter Bourjos.

THE BOTTOM LINE... DO WHATEVER NEEDS TO BE DONE

Morris Buttermaker, a long-time Phillies Nation commenter, voiced his disdain for Eric's idea to trade Lee by calling it "loser-talk."  He doesn't see why any right-minded Phillies fan would bring up the need to trade away Cliff Lee because they've signed Cole Hamels... I feel you, Morris.


Fans need to stop acting like they're paying for Hamels and his $144 million contract.  The reality is, as fans, we should care about one thing and one thing only - being fans.  Why shouldn't we set our sights higher?  


If a deal can be reached to bring a young center fielder here for one of those rentals we've got wasting time on our roster, then you explore those options but if Cliff Lee makes our team better (which he does) then why would we advocate trading him to free up money that isn't ours?  And I don't see how trading Cliff Lee to free up cap room in order to add a mediocre third-baseman and a mediocre fourth starter is going to help the Phillies.  Is Shawn Marcum and Maicer Izturis better than Cliff Lee and Ty Wigginton?  No way.  If you want to add a center fielder, you can get a guy like Angel Pagan for $7 million per year... if you buy out Wigginton and Polanco (and go with Galvis/Martinez) that might put you $5 million over the cap, meaning the ownership would have to pay $1.125 million in luxury tax... in my opinion, this is the cost of doing business for a team that is committed to winning (which they are).  


Furthermore, this ownership group has every reason to keep this train rolling even if it means going over the luxury tax threshold and (very quickly) I'll give you two compelling reasons why.  

The first reason, is franchise value.  The Dodgers franchise was sold at more than 2x what most economists expected... if the Phillies ownership wanted to sell the franchise, they would all stand to make a lot of money (none of that would be making its way into my pocket).  So maybe the owners will be forced to put a few extra bucks into the kitty in the short-term (maybe the franchise isn't cash flow positive for them... boo hoo... it wasn't last year, either), they're getting their ongoing investment back TEN FOLD on the back end because 275 consecutive sell outs and TV ratings through the roof means exponential franchise valuations.  And the luxury tax issue is really a one-year concern because Chase Utley and Hunter Pence come off the books next year, freeing up $28 million.

The second reason we shouldn't care about the luxury cap is the 2015 expiring TV contract.  When that contract expires... and if the fans are still selling out... the Phillies will be able to write their own check on a renegotiated deal (or create their own network).  If the Phillies end up $10 million over the cap (a very realistic outcome given where things stand), they'll make the 22.5% first-time offender tax back in one year on a new TV deal.  They have every incentive to field the best team possible over the next three years and we shouldn't let them off the hook for anything less than that.