The cost of doing business
SAN FRANCISCO -- At this point, you're almost tired of hearing about Ryan Howard's five-year, $125 million contract extension. Almost. First, the links from Tuesday's Inquirer: The news: Phils' Howard gets megadeal Bob Brookover goes Inside the Phillies: After Howard's extension, eyes turn to Werth, Rollins Phil Sheridan: Phils' Howard brings more than big numbers Now, one more take: Will the Phillies regret this deal in a few seasons? Absolutely. There is no question. But go ahead and name to me the baseball contracts that were universally free of regret. There aren't many. It's called the cost of doing business. Now, in this case, it's a steep price. The Phillies will be paying Howard $25 million per season when he is 34, 35 and 36 years old. Will he be a shell of his former self by then? No one knows. But we can say with great certainty that Howard will not be performing at the high rate he currently is -- let alone at a rate worth $25 million annually. Howard's contract is effectively immovable. He has a limited no-trade clause that permits him to pick nine teams every year he would accept a trade to. In 2015, he will become a 10-and-5 man, meaning he has 10 years of service time in the majors and five with one club. At that point, he holds full veto rights to any trade. Consider the hefty salary in 2014-16 as paying for past performance. Should contracts do that? No. Is that an acceptable business model? No. Is it possible to do a deal without paying for past performance? Usually not. So why, on some level, is this deal OK for the Phillies? The Phillies get Howard from 2012-13 (and 2011 if you want to include the final year of his old deal) at $20 million per season. He was a late bloomer. (In fact, Howard laughed Monday at the idea of beginning his current training regimen at age 25. If he had done that, the pay day would have come much sooner.) So Howard's peak still has at least a few years to play out. We think. Phillies GM Ruben Amaro Jr. said he only entertained the idea of pursuing a long-term deal with Howard after he saw what his first baseman did off the field in his conditioning program. He's in better shape than he ever has been and beginning in 2009, Howard's defensive play matured significantly. Early in 2010, he has been very impressive at first. From 2011-13, Howard's earnings are suitable for the Phillies. Howard didn't take an immediate raise in yearly salary, meaning the Phillies have a tad bit more flexibility (but not much) with the rest of their payroll. Make no mistake, the Phillies didn't receive any sort of discount from Howard, though. He will average $25 million per season from 2012-2016. Only one player in baseball is making more: Alex Rodriguez. But if the Phillies wanted to keep Ryan Howard, this is the deal they had to sign. His last contract was three years, $54 million. He wasn't signing another three-year deal. He wasn't taking a pay cut to stay. And, really, did the Phillies have any other option? They could have waited. Yes, they definitely could have. There was no need to set the market with this sort of deal. But who's to say the price doesn't go up later? Albert Pujols and Prince Fielder could be on the market. (The guess here is that whoever trades for Adrian Gonzalez will sign him before the end of the 2011 season.) If the Phillies let Howard walk, do they replace him with either Pujols or Fielder? No. Both of them are going to get similar dollars, if not more. Do they move Chase Utley to first base and find a second baseman? Possibly, but second base can be an even trickier hole to fill than first. The Phillies chose Howard and they paid for it. A lot. Will Ryan Howard be the next Mo Vaughn, Cecil Fielder or David Ortiz? It's quite possible. Even if he isn't, will the Phillies one day regret this deal? Likely yes. But if the Phillies wanted to keep Howard, this was the cost of doing business.
The cost of doing business
Matt Gelb, Inquirer Staff Writer
SAN FRANCISCO -- At this point, you're almost tired of hearing about Ryan Howard's five-year, $125 million contract extension. Almost.
First, the links from Tuesday's Inquirer:
The news: Phils' Howard gets megadeal
Bob Brookover goes Inside the Phillies: After Howard's extension, eyes turn to Werth, Rollins
Phil Sheridan: Phils' Howard brings more than big numbers
Now, one more take:
Will the Phillies regret this deal in a few seasons? Absolutely. There is no question.
But go ahead and name to me the baseball contracts that were universally free of regret. There aren't many.
It's called the cost of doing business.
Now, in this case, it's a steep price. The Phillies will be paying Howard $25 million per season when he is 34, 35 and 36 years old. Will he be a shell of his former self by then? No one knows. But we can say with great certainty that Howard will not be performing at the high rate he currently is -- let alone at a rate worth $25 million annually.
Howard's contract is effectively immovable. He has a limited no-trade clause that permits him to pick nine teams every year he would accept a trade to. In 2015, he will become a 10-and-5 man, meaning he has 10 years of service time in the majors and five with one club. At that point, he holds full veto rights to any trade.
Consider the hefty salary in 2014-16 as paying for past performance. Should contracts do that? No. Is that an acceptable business model? No. Is it possible to do a deal without paying for past performance? Usually not.
So why, on some level, is this deal OK for the Phillies?
The Phillies get Howard from 2012-13 (and 2011 if you want to include the final year of his old deal) at $20 million per season. He was a late bloomer. (In fact, Howard laughed Monday at the idea of beginning his current training regimen at age 25. If he had done that, the pay day would have come much sooner.) So Howard's peak still has at least a few years to play out. We think.
Phillies GM Ruben Amaro Jr. said he only entertained the idea of pursuing a long-term deal with Howard after he saw what his first baseman did off the field in his conditioning program. He's in better shape than he ever has been and beginning in 2009, Howard's defensive play matured significantly. Early in 2010, he has been very impressive at first.
From 2011-13, Howard's earnings are suitable for the Phillies. Howard didn't take an immediate raise in yearly salary, meaning the Phillies have a tad bit more flexibility (but not much) with the rest of their payroll.
Make no mistake, the Phillies didn't receive any sort of discount from Howard, though. He will average $25 million per season from 2012-2016. Only one player in baseball is making more: Alex Rodriguez.
But if the Phillies wanted to keep Ryan Howard, this is the deal they had to sign. His last contract was three years, $54 million. He wasn't signing another three-year deal. He wasn't taking a pay cut to stay.
And, really, did the Phillies have any other option?
They could have waited. Yes, they definitely could have. There was no need to set the market with this sort of deal.
But who's to say the price doesn't go up later? Albert Pujols and Prince Fielder could be on the market. (The guess here is that whoever trades for Adrian Gonzalez will sign him before the end of the 2011 season.) If the Phillies let Howard walk, do they replace him with either Pujols or Fielder? No. Both of them are going to get similar dollars, if not more.
Do they move Chase Utley to first base and find a second baseman? Possibly, but second base can be an even trickier hole to fill than first.
The Phillies chose Howard and they paid for it. A lot.
Will Ryan Howard be the next Mo Vaughn, Cecil Fielder or David Ortiz? It's quite possible. Even if he isn't, will the Phillies one day regret this deal? Likely yes.
But if the Phillies wanted to keep Howard, this was the cost of doing business.
Comment removed.
I think this is about business and not baseball. Maybe ownership is looking to sell and thinks the team will be more marketable with star-certainty. Maybe their contract with Comcast is expiring soon and the Phils are betting that they can get a sweeter deal with Howard locked up than without. Or maybe there was a hint of truth to the Pujols for Howard rumor and the Phillies are locking up Howard to create cost certainty to make him more attractive to the Cards than Pujols who might easily command $30MM per (which presumably the Phillies would have to be prepared to pay).— Mills- From the moment he started playing for the Phils, Ryan Howard has been one of the most dominant players in baseball. Significantly, he is still a work in progress. His hitting has become more consistent and he has become one of the best 1B glovemen in the majors. With time, his throwing arm will follow suit. To see him run the bases and barrel across home plate on a close play is to realize that this man came to play. To see him end games with tapemeasure home runs is to realize that this man came to win. Signing him to an extended contract was not just a smart move, it was the only move. The $140 million budget the Phils management keeps mentioning is not written in stone. You've got to spend money to make money, and with guys like Howard, Halladay and Werth around for the forseeable future, the Phils money will be money well spent. To be able to afford its current cast, the Phils will need to rethink its budget. With time, management will figure out that MLB ticket prices are already ridiculously high, and that the fans who are are currently causing every home game to be a sell-out will contribute to do the same even if ticket prices are raised. Management will also figure out that increased ticket prices beget increased parking fees, food and drink prices, and souvenir costs. Ryan Howard didn't create MLBs irrational economy, nor will Jason Werth. Fortunately for the Phils, these guys will earn the salaries that economy has commanded, and in the process, keep Phillie fans abundantly interested in and supportive of their team for many years to come.
- "Consider the hefty salary in 2014-16 as paying for past performance. Should contracts do that? No. Is that an acceptable business model? No. Is it possible to do a deal without paying for past performance? Usually not." That's a narrow-minded way to look at it. It's more like deferring some of his salary. They just back-loaded the contract to pay him more towards the end of the contract which gives them more financial flexibility towards the beginning of the contract. It's not paying for past performance. "He will average $25 million per season from 2012-2016" Not true. I have no idea why the media keeps misstating this. His salaries are 2012 and 2013 - $20 million and then 2014-2016 - $25 million. So from 2012-2016 that is a total of $115 million over 5 years for an average of $23 million. You guys are lumping in his $10 million buyout for 2007 into the 2012-2016 to overstate his average annual salary.— JimG
- This article is complete and utter nonsense. First of all, Ryan Howard's stats are still impressive and high considering the amount of strikeouts. The Phillies brass in my opinion made the right move by avoiding another arbitration. They are signing Howard long term which in the end will be cheaper than what he would command in two years. This article throws baseless assumptions all over the place that have no significance or correlation to Ryan Howard's ability and/or predicability. Please, what was the sense or point of this article? I feel like I just wasted five minutes of my life.— tkearney609
- I don't disagree with the signing, just the timing. Remember, this is a business. If the team wants to keep CB full, it must pay the investment, however, the idea of the Phillies beign a contender for the next few years is rediculous. With a pitching staff composed of Halladay, and pray for rain, I really don't see this team competing at all, not only this year, or next when thier only right handed hitter goes to New York. This "were building for the ability to be a contender for years ahead", makes no sense. You win now, not 3 years from now. The fact RA blew up his minor league for Halladay, simply to say he could do it, will come back to haunt this team.— SPBilly
- SPBilly, who did they have last year as far as pitching and they still repeated. Your statement is full of contridictions. You win now and you complain he gave up the minors for Halladay. Besides, when Big Joe comes back, Kendrick will be removed.— palmyra21
- Ryan, Jason, Chase, Shane, Carlos and Doc should all be kept/resigned as long as possible. Ryan, even if his skills erode some, will still be in the top 5 or 8 first basemen in MLB. Glad I'll be seeing him play for Philly for a few more years.
In the end we will still have Roy " Frontrunner" Halladay locked in for several dreadful seasons. Once he left Toronto the pitching staff there took off. He gives bad advice to any current team he is apart of, which is the reason why the Phillies rotation stinks.- Bottom line - Does Ryan Howard generate a helluva lot more than $25M per year of business for Phillies? Absolutely. No brainer.— Zeb
- lonewolf, get real. The staff was going to be the same whether Halladay was here or not. I don't see Toronto going anywhere.— mike l
- this is buisness.wait till its utley's turn.i still think if this is how they gonna conduct the 'business,WHY THE HELL DIDN'T THEY DO A DEAL WITH CLIFF LEE??i'm sorry but a lot of phillies fans question that business.fans were coming to the park,and sales of the team is going well,sowe'll see later down the road.u lockes up ryan,now the guys in front of him will have to get deals.the phil's have some ?'s coming down the road,and we'll see how business REALLY gets done!— t_darb_56
- wolf is an idiot— coloradoeagle
- Matt, normally I think you are one hell of a writer and 1000x better than the previous nitwit, Marino. However, I do not believe the Phillies will regret a single cent of this contract. Howard is a homerun monster and an absolute RBI King. He continues the kind of work ethic that Utley and Hallay demonstrate the kind that Philly fans embrace. Within the last two years, he has lost 30 lbs. and gotten considerably better defensively. I've had this argument with several people about which is better, Pujos vs. Howard. While Pujos is a more complete player and perhaps the best overall in the game, Howard is Mr. @#$@#@# Clutch. He is designed for this team. This team rides on his back every September. He is pure production and he has only been in the league since 2005. Overall Matt, keep up the good work - I think you are a very good writer.— PhilliesPhorever
