Wednesday, October 1, 2014
Inquirer Daily News

Money, Cash, Pros: A look at the Phillies' finances

There is no other pro sport in America in which money and performance are so inextricably linked. So it makes sense that over the last week, we have heard a lot about the Phillies payroll, and how it likely played a role in Cliff Lee heading to Seattle and Roy Halladay arriving in Philly. So as we wait for the Phillies' official announcement of the "Deal of the Century" -- I don't expect the press conference to be held until later this afternoon or early this evening, since Ruben Amaro Jr. and several other key figures are participating in a charity event at Noon -- it makes sense to take a look at exactly where the Phillies stand, both this season and in seasons to come.

Money, Cash, Pros: A look at the Phillies' finances

How much of a factor was payroll in Ruben Amaro Jr.´s decisions to unload Cliff Lee and acquire Roy Halladay? (Ed Hille/Staff file photo)
How much of a factor was payroll in Ruben Amaro Jr.'s decisions to unload Cliff Lee and acquire Roy Halladay? (Ed Hille/Staff file photo)

There is no other pro sport in America in which money and performance are so inextricably linked. So it makes sense that over the last week, we have heard a lot about the Phillies payroll, and how it likely played a role in Cliff Lee heading to Seattle and Roy Halladay arriving in Philly. So as we wait for the Phillies' official announcement of the "Deal of the Century" -- I don't expect the press conference to be held until later this afternoon or early this evening, since Ruben Amaro Jr. and several other key figures are participating in a charity event at Noon -- it makes sense to take a look at exactly where the Phillies stand, both this season and in seasons to come.

I. Keeping up with the Joneses (and Steinbrenners)

RAJ has all but said the Phillies are operating under a hard cap of $140 million. Many fans are incredulous how the Phillies, who have raised ticket prices this season and are coming off two straight World Series, might be limited in the money department. And, truth be told, we don't know exactly how limited they are, or what their definition of "limited" entails. But keep in mind that $140 million is a sizeable amount when compared to the payrolls of other teams in the league.

Tracking payrolls is a difficult task, since the definition of "payroll" varies from source to source. Last year, for example, Major League Baseball's official figures listed the Phillies' Opening Day payroll at just over $113 million. But for official purposes, MLB does not take into consideration salaries that are owed player who are not on the active roster. So salaries for Adam Eaton, Geoff Jenkins and Jim Thome were not included. Similarly, at least according to my understanding, signing bonuses are spread over the life of the contract. So while the Phillies' budget likely factored Raul Ibanez's signing bonus into his 2009 salary, the "official" figure factored it over the life of his contract.

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In terms of true expenses, the Phillies' Opening Day payroll was closer to $132 million. Regardless, we'll stick with the official figures when comparing the Phillies, because while we know the Phillies' true salary expenses on Opening Day, we don't have the figures for the other 29 teams.

As it is, the Phillies entered last season with the seventh-highest payroll in the majors:

  1. Yankees - $201.5
  2. Mets: $135.8
  3. Cubs: $135.0
  4. Red Sox: $122.7
  5. Tigers: $115.1
  6. Angels: $113.7
  7. Phillies: $113.0
  8. Astros: $103.0
  9. Dodgers: $100.5
  10. Mariners: $98.9

So, as you can see, the only team who entered 2009 with a payroll of larger than $140 million was the Yankees. And the Phillies $140 million figure this season will be composed entirely of money being paid to players on the active roster (the one exception potentially being Jamie Moyer, depending on how the fifth starter spot shakes out). Given Boston's signings of John Lackey and Mike Cameron, they seem destined to eclipse $140 million. But the Phillies would appear to have a very good chance at entering the season with the third-largest payroll in the majors. Obviously, there will still be a sizeable gap between them and the Yankees -- certainly sizeable enough to fit Cliff Lee's salary in. But it's hard to label them "cheap," given the fact that 27 other major league teams will likely be spending less this year.

II. The 2010 payroll

Here is how we project the current Opening Day payroll. With Halladay and the recent signing of Ross Gload, the Phillies have $113.205 million guaranteed to 16 players. After that, a decent amount of projecting is involved. For the Phillies' four arbitration-eligible players, we've estimated salaries of $7.0 million for Joe Blanton, $6.5 million for Shane Victorino, $2.0 million for Chad Durbin, and $1.5 million for Carlos Ruiz. In previous post, we've explained how we reached those figures. I'm pretty confident in the first three, give or take $500,000. In a nut shell, Blanton compares to guys like Doug Davis, Erik Bedard, Nate Robertson, and other pitchers with five-plus years of servce and vaguely similar performance, all of whom eventually signed for salaries in the neighborhood of $7 million. Victorino compares roughly with Kevin Youklis, who ended up with $7 million. The one case I haven't looked extensively at is that of Carlos Ruiz, so there is a chance that he ends up getting more. But for now, we'll stick with those figures.

Add in an estimated $500,000 salary for J.A. Happ (that's what Cole Hamels received after his first full season), and $700,000 for Ben Francisco, and we project the Phillies to be on the hook for $131.5 million for 22 players. So that leaves them with $8.5 million to spend on their three open roster spots -- all relievers -- as well as another starter to compete with Moyer and Kyle Kendrick for the fifth spot in the rotation.

As you can see, money is pretty tight, at least when operating under a hard cap of $140 million. The Phillies still must add another bullpen arm that is capable of pitching in the eighth or ninth inning. They reportedly offered Chan Ho Park $3 million for one season. But the market suggests they will likely have to go higher. Consider: Matt Capps, the former Pirates closer whom the Pirates non-tendered, was planning on asking for $3.4 million in arbitration, the Pittsburgh Post-Gazette reported. And Brandon Lyon, who was one of the Phillies targets, received an average annual value of $5 million a year. So deductive reasoning suggests the Phillies will end up paying somewhere between $3.5 and $5 million at the minimum for one of their bullpen pieces, which would leave them between $4.5 and $5.5 million to spend on everything else. I expect one of these slots to filled by a young guy like Antonio Bastardo, who will be making n the neighborhood of $400,000. But that still leaves another reliever - Scott Eyre, one hopeful, made $2 million last season - as well as a starter.

Long story short, the Phillies certainly can use the $2 million they saved by trading Cliff Lee instead of trading or non-tendering Joe Blanton.

Here is the breakdown of the payroll for 2010:

Starters
Roy Halladay - 9
Cole Hamels - 6.65
Jamie Moyer - 8
Joe Blanton - Arb/7
J.A. Happ - .500
GUARANTEED: 3 players, 23.65
PROJECTED: 2 players, 7.50

Regulars
Ryan Howard - 19
Chase Utley - 15
Jimmy Rollins - 7.5
Placido Polanco - 5.5
Shane Victorino - Arb/6.5
Jayson Werth - 7
Raul Ibanez - 11.5
Carlos Ruiz - Arb/1.5
GUARANTEED: 6 players, 65.5
PROJECTED: 2 players, 8.0

Relievers
Brad Lidge - 11.5
J.C. Romero - 4
Ryan Madson - 4.5
Chad Durbin - Arb/2
GUARANTEED: 3 players, 20
PROJECTED: 1 player, 2

Bench
Greg Dobbs - 1.35
Ross Gload - 1
Brian Schneider - 1
Juan Castro - .750
Ben Francisco - .750
GUARANTEED: 4 players, 4.1
PROJECTED: 1 player, .750

TOTAL: 22 players, 131.500
REMAINING: 3 relievers, 1 starter, 8.495

III. The 2011 Payroll

Here is where the long-term thinking behind the Halladay/Lee swap starts to come into play. The Phillies obviously felt they were more likely to sign Halladay to an extension than they were to sign Lee. Now, they have some cost certainty moving forward. Keep in mind they did not have to sign Halladay or Lee. A guy like Javier Vazquez will be available next year. Brandon Webb might be available too, along with Josh Beckett. But the Phillies have long been infatuated with Halladay -- and why wouldn't they be? In addition to being one of the top pitchers in the game, Halladay has shown amazing consistency over the last four years. He has a huge frame. Thus, the thinking goes, he is less succeptible to a breakdown. That said, the Phillies have a huge amount of money tied up for 2011 -- $99.35 million to 10 players -- when they will either have to re-sign Jayson Werth or find somebody to replace him in right field. Shane Victorino will also likely be due another big raise. Jimmy Rollins, J.C. Romero and Juan Castro also have options for 2011. At this point, Rollins is likely to return (His $8.5 million salary is manageable, and the $2.5 million buy-out he would be due is sizeable). So, after this season, the Phillies will need to find a starting right fielder (Francisco could factor in, along, perhaps, with a platoon-mate), two starting pitchers, and a fleet of relievers. Of course, it is virtually fruitless to project anything other than the guaranteed money this far into the future. So here is where it stands:

Starters
Roy Halladay - 20
Cole Hamels - 9.5
J.A. Happ - (Control or Arbitration)

Relievers
Brad Lidge - 11.5
Ryan Madson - 4.5
J.C. Romero - 4.5/.25

Regulars
Jimmy Rollins - 8.5/2.5
Placido Polanco - 5.25
Chase Utley - 15
Ryan Howard - 20
Raul Ibanez - 11.5
Shane Victorino - Arb
Carlos Ruiz - Arb

Bench
Ross Gload - 1.6
Ben Francisco - .600
Brian Schneider - 1.5
Juan Casto - .75/.05

GUARANTEED: 10 players, 99.35 million
UNDER CONTROL: Ruiz, Victorino, Francisco, Happ

IV. The 2012 Payroll

The only players guaranteed money are Halladay, Utley and Placido Polanco. Hamels will be arbitration eligible one last time (the extension he signed runs out a year before free agency), before becoming a free agent after 2012. Ruiz will also be arbitration eligible with free agency looming. Brad Lidge has a $12.5 million option and $1.5 million buy-out. Here is how 2012 looks at this point:

Roy Halladay - 20
Chase Utley - 15
Brad Lidge - 12.5/1.5
Cole Hamels - Arb/9.5
Placido Polanco - 6.25
Carlos Ruiz - Arb (5 yrs of service)
Ben Francisco - Arb (4 yrs of service)
J.A. Happ - Arb (3 yrs of service) 

V. And beyond. . .

With a No. 1 starter (Halladay) and No. 2 starter (Hamels) locked up for the next three seasons, the Phillies are in a position that few other teams in the majors can claim. Of course, this is assuming Halladay continues to pitch as he has throughout his career, and that Hamels rediscovers the form he displayed in his first two big league seasons. Having two stud starters atop the rotation is an excellent way to re-build a once power-heavy roster on the fly. Of course, this is where the debate over the merits of the deals come into play. Will Halladay remain dominant? Will Hamels re-discover his swagger? Will trading away guys like Taylor, D'Arnaud, Drabek, Knapp, Taylor, Donald, Carrasco and Marson hamper the Phillies' efforts to surround those two stud pitchers with cost-effective talent? Will guys like Tyson Gillies and Phillippe Aumont, acquired for Lee, prove to be cost-effective major league talent that will off-set the loss of some of the aforementioned Phillies prospects? Will the boost in long-term sustainability that Aumont and Gillies provide off-set the decision not to keep Lee and dramatically increase their chances at winning a World Series in 2010?

None of these questions will be able to be answered until years down the road. One thing is clear: it will be fascinating to watch both the finances and talent of this Phillies organization evolve.

David Murphy Daily News Staff Writer
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