The contract that the Phillies signed with Scott Kingery is the kind of shrewd accounting move that can pay enormous dividends a few years from now, when payroll space is at a premium and Matt Klentak is reckoning with the inflated cost of chasing marginal wins. The deal, which will reportedly pay Kingery $24 million over six years before a trio of team options that can buy out his first three years of free agency for a total of $42 million, was a no-brainer for a couple of reasons:
1) The risk is absurdly low
Let’s start with the worst-case scenario. Kingery steps into the box for his first big-league at-bat and prompts a gasp from members of the Phillies front office as they realize he is holding the bat the wrong way. He hits the disabled list with shoulder soreness and disappears, resurfacing periodically in shaky smart-phone videos that make it look like he kinda, sorta, maybe remembers how to swing a bat. In that case, the Phillies end up wasting $24 million, which is $1.5 million more than they spent on Clay Buchholz and Michael Saunders last season. But that $24 million is spread over six years, which means it accounts for just $4 million in official payroll spending per year over the life of the deal. On this year’s free-agent market, $4 million would have bought you a 34-year-old Doug Fister coming off a 90-inning season in which he posted a 4.88 ERA.
Again, that’s rock bottom. Now, let’s assume that Kingery does not forget how to play baseball, but falls well short of the expectations he has set for himself over the last year. Let’s say it is 2023 and he is entering the final year of his deal with a career batting line of .245/.287/.372 and an OPS+ that puts him at 22 percent below league average. Let’s say, in other words, that he is Freddy Galvis. Such a trajectory would have had the Phillies’ spending something north of $15 million on Kingery’s six seasons of club control. That’s how much Galvis will have earned in his career when he hits free agency next offseason for the first time in his career. So, if Scott Kingery turns out to be Freddy Galvis, then the Phillies will have wasted less than $9 million over six years — enough money to get you Joaquin Benoit and a chicken salad sub at Wawa.
2) The potential reward is absurdly high
Now let’s look at the best-case scenario. By the time Manny Machado hits free agency next offseason, the Orioles will have paid him $34 million for his six seasons of club control. Josh Donaldson will have earned $57 million. Nolan Arenado will have $36 million in career earnings by the end of this year with one more year of arbitration before free agency. Charlie Blackmon will have $26 million in career earnings.
From that perspective, the upside of the deal might not seem overwhelming. Even if Kingery turns into Machado, the Phillies would save only $10 million.
But that’s true only if you look at it from a cash-flow standpoint rather than a competitiveness standpoint. See, Machado cost the Orioles $16 million on this year’s payroll, and $11.5 million on last year’s, and $5 million in 2015. Kingery will cost the Phillies just $4 million per season in each of the next six years. So, if Kingery does turn into a 20-plus-home-run, .800-plus-OPS middle infielder, the Phillies will have tens of millions of dollars more in spending power in what would have been his arbitration years. If Machado had signed such a deal, the Orioles would have $12 million more in room underneath the luxury tax on this year’s payroll, and they would have had $7.5 million more last year.
Even if Kingery ends up being Galvis, the Phillies would still have roughly $3.1 million more in payroll space over the final two years of the deal than if they’d gone year-to-year in arbitration. That’s because arbitration salaries are one-year contracts that count in totality against the current year’s payroll. But multiyear contracts such as Kingery’s are averaged out over the life of the deal. So Kingery’s salary will count the same over the next couple of years, when the Phillies have more payroll space than they know what to do with, as it will over the final three years of the deal, when they expect to be contending and spending big in pursuit of marginal wins. A contract such as Kingery’s could be the difference between signing a veteran set-up man to a three-year, $36 million deal and not having enough room to do so.
Average Payroll Charge per Arbitration Year
Josh Donaldson: $15.8 million
Manny Machado: $10.1 million
Charlie Blackmon: $8.2 million
D.J. LeMahieu: $5.4 million
Freddy Galvis: $4.39 million
Scott Kingery: $4 million* (in 2021-23 dollars)
That potential reward increases only once those first six years are up and the Phillies have the ability to keep him around for the next three years via a series of options worth a total of $42 million. Zack Cozart, an infielder who had a .674 OPS in five seasons until he hit 24 home runs with a .933 OPS last season, landed three years and $38 million this offseason, and he is two years older than Kingery. Justin Turner signed for four years and $64 million last offseason. Even if Kingery doesn’t turn into a superstar, those three option years have the potential to offer excellent value. If he does turn into a superstar, the contract is a game-changer. And if he ends up as a bust, the Phillies simply decline the option and cut their losses at $24 million.
Among the reasons the Phillies were able to acquire so much talent via free agency after their 2008 World Series championship were contract extensions that Jimmy Rollins and Chase Utley signed that bought out years of free agency at what turned out to be extremely team-friendly rates.
That shouldn’t diminish the unknowns that surround Kingery as a player. He has never taken an at-bat at higher than Triple A. If the Phillies had given Maikel Franco the same contract before he arrived in the majors, it might not look so hot right now.
But in such a scenario, the real financial impact is little more than the cost of doing business.