Cole Hamels and the bigger picture
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Cole Hamels and the bigger picture
Matt Gelb
If indeed the Phillies have extended an offer of six years to Cole Hamels, as reported by numerous national outlets, a deal could be close. The sticking point, ever since spring training when the Phillies insisted on a Jered Weaver-type contract, has always been length.
John Boggs, Hamels' agent, has posited that his client be paid like an elite pitcher. In actuality, he was demanding the Phillies show a commitment worthy of an elite pitcher. They gave five years to a 32-year-old Cliff Lee and that immediately set the bar.
So, 11 days before a mythical deadline, the two sides may have finally reached common ground. The Phillies were always willing to pay Hamels an annual salary commensurate with their other aces, Roy Halladay and Lee. It will probably take something in the $24 million range yearly.
How would adding a salary like that affect the bigger picture? If anything, it increases the urgency to creep under the luxury tax threshold of $178 million in 2012. That would necessitate salary dumps like Shane Victorino, Placido Polanco and Joe Blanton.
More on that later.
If $24 million is Hamels' figure, the Phillies would commit $68 million to three pitchers in 2013 and approximately $137 million to 10 players for 2013. That is using average annual value (AAV) of contracts, the metric for accounting luxury tax commitments. (It is also assuming the Phillies exercise a $5 million team option on Carlos Ruiz.)
The Phillies have long maintained they do not want to pay a tax. (When Boston and New York are attempting to crawl under the limit, you know it's a big deal.) They avoided it by less than $1 million in 2011 and are most definitely over the $178 million limit in 2012. In addition to AAV for all uniformed players, there are other expenses that factor into the math. A boatload of injuries have forced the Phillies to sink a great deal of money into the disabled list in 2012. All of that goes toward luxury tax calculations.
If it's hard to see the Phillies staying under in 2012, it's nearly impossible to envision for 2013. The limit stays at the same level, $178 million, and Hamels would have a significant raise. (Even if the contract is backloaded in actual dollars, which it likely will be, the only important number is AAV.) Start at $178 million, subtract the typical $14 million in other expenses, then the $137 million for current commitments and that leaves $27 million for 15 (!) players. Heck, Hunter Pence could command about $14 million of that through arbitration.
But 2013 is the most logical season to surpass the luxury tax limit. If the Phillies can stay under in 2012, they would be taxed 17.5 percent in 2013 for every penny over and subject to fewer revenue sharing payouts. In 2014, the limit increases to $189 million. Once a team returns to non-offending status, the slate is wiped clean.
Penalties for repeat offenders, however, are punitive. If the Phillies go over in 2012, they are taxed at a 20 percent rate this year, then at 30 percent if over in 2013.
It's unclear how far above the threshold the Phillies currently are. The official calculations are not done by Major League Baseball until after the postseason. At opening day, The Inquirer roughly estimated a $184 million payroll for luxury tax purposes.
That's where salary dumps enter the picture. Victorino, Polanco and Blanton are impending free agents. It's unlikely any returns to Philadelphia. They are rental players in possible trades and would not command top prospects. So the Phillies could simply ask for salary relief from acquiring teams. Victorino's tax hit is $7.3 million, Polanco's is $6 million and Blanton's is $8 million. Prorated for two months, two of those players could save the Phillies almost $6 million in 2012 if dealt.
Save the money now, and there is less reluctance to be frugal in 2013. The wheels are put in motion with a Hamels contract. With 11 days, there appears to be real progress.
Have a question? Send it to Matt Gelb's Mailbag.
Craziness abounds now and for next season. Ruben better be working 24/7 with Dave Montgomery at his side.— shawnmac- Nice work, MG. Best analysis of the current Hamels' deal. Let's hope you are right as I don't know how they will make the playoffs this year.— Clt Philly Fan
- What do they do to get better next year? This analysis just shows that they can tread water and maybe avoid a penalty. But how do they avoid becoming another year older and worse? — jtj06
- Less reluctance to be frugal?— TMcG
- They ran the Mets down in a month in 2007, they still have plenty of time as long as they start winning at a good clip. That is only possible if the team gets healthy and stays that way. So Halladay's return is a big deal. The team they need to catch is the Pirates, it's my feeling that the Pirates are playing over their heads, and will help a little by returning to form.— Paul SoTX
- they should trade pence while they still can. Start Pridie everyday.— palmyra21
- starting pridie everyday is quite possibly the worst idea ever on this comment section. please confirm you are joking.... — wobblie
- Paul, mathematically it is much more difficult to run down 7 teams than 1. For example, the Mets beat Washington yesterday. Is that good or bad for the Phillies circumstances? Look at tonight's slate of games- Marlins v. Pirates, Nationals v. Braves, Brewers v. Reds, Dodgers v. Mets- those games guarantee that tonight, there will be at least 4 teams that the Phillies can't gain ground on. If the Diamondbacks beat Houston and the Cardinals beat Chicago, that's two more. For each game there is a winner and loser. For the Phillies to pass all of those teams, the division leaders or bottom dwellers would have to collectively get hot. That's assuming the Phillies can do their part which isn't likely since they still can't hit.— jtj06
- To maintain that 3.5 million clicks at the gate next year, the Phillies have to go all out and all in. The kind of TV revenue that their following can generate when they are winning makes an extra few million worth it. They can lose more by sticking to the limits than they can by going for broke next year. The Yankees have been above the limit and are swimming in revenue because they go for a championship every year. With Cano's salary rising, they will have an almost $90 million dollar infield! If Cole Hamels does attain free agency, you can bet the Yankees will go for him regardless of cost. And, let's go after Hamilton too!— gotedge
- Matt, am I reading you right? I think you are saying that if they save the money now, they can be less frugal next year? If that is so, then you don't mean to say "there is less reluctance to be frugal in 2013." There will be less reluctance to spend in 2013.— PhillyfaninVirginia
- FINALLY! A positive vibe from the Hamels' situation! Get him signed and once again Ruben has shown his players that he is on THEIR side. I agree completely with gotedge - why not? Who wouldn't want Josh Hamilton in their lineup? WOW!— dwp66
- This just a dumb idea.Let Cole go get the best playes you can get.Phils have no every day players in there system.What will they do next season for thirdbase,secondbase,leftfield,THE BULLPEN.— tobyjoe
- It would be great if they could resign Hamels, however, I am afraid that it will have a negative impact on adding improvement to the offense in the future. Since they are locked into aging, declining players like Howard, Utley and Rollins, in order to get back into the playoff hunt next year they need salary flexibilty to improve at 3B, LF and CF. With Hamels on board, it really hinders their ability to improve at those three positions. If they traded Hamels to Texas for Olt, that could solve the 3b situation for years to come, and give them the opportunity to add a couple of free agents for LF and CF (Bourn and Hamilton??). Good luck to Amaro. He is in a difficult position.— jicook
- Cole Hamels is 4 years younger than was Cliff Lee when given a five year deal. Moreover, Cliff Lee had a much longer history of (physical) problems that Cole Hamels has had. If a six year deal for Cole Hamels were done, he'd be through the contract at the age when Cliff Lee will have three years remaining on his five year deal. Time to do it to it!
GOOD GRIEF!— BEMiller - in Hamels case, hard to compete over next 5 years when you won't otherwise have a single top-notch pitcher under age 35...Lee should be here long-term, and has his unhittable months followed by pedestrian ones, while Halladay has not shown the ability to be an elite pitcher any more this season and will probably be gone when his contract expires after 2013...Hamels is probably worth as much as any other pitcher given his career to date (consistently excellent except for 1 poor season 3 years ago) and the major risk is a career-affecting injury which unfortunately cannot be predicted but is the exception and not the rule— warbiscuit
