The aftermath of the Phillies signing of Jonathan Papelbon has produced a few predictable responses. Certain folks panned the deal, because they think that relievers, even closers, are fungible and that their volatility does not warrant long, lucrative contracts. Others praised Phillies GM Ruben Amaro for further shoring up his 2012 team and heading for another playoff run. Most relevant to the Yankees, speculation ran rampant about the Phillies’ financial situation. They now have $121.6 million committed to 11 players in 2012, with some big numbers due to Cole Hamels and Hunter Pence through arbitration. Might they be willing to deal Hamels, who will be a free agent next winter?
Yesterday Buster Olney (Insider-req’d) laid out a Hamels trade as one of the Phillies’ three options. The Phillies can hold onto Hamels for one more year and let him enter the 2013 free agent class, they can offer him an enormous extension, or they can trade him now and try to recoup some of his value — perhaps replenishing a farm system that they have somewhat depleted in the last two years while acquiring Cliff Lee, Roy Halladay, Roy Oswalt, and Pence. Yet the trade option seems entirely unlikely, given the current and future states of the Phillies.
The Phillies are, first and foremost, a win-now team. They have won the NL East every year since 2007, and for the last two years they have owned baseball’s best regular season record. In each of the three years following their 2008 World Series Championship they have raised payroll, adding $15 million in 2009, $25 million in 2010, and almost $28 million in 2011. As Matt Gelb of the Philadelphia Inquirer notes, it doesn’t appear that the Phillies will limit themselves when it comes to payroll issues. They sell out every game and led MLB in attendance last season. They pull better local TV ratings than any other team, which could lead to a huge media rights deal, perhaps larger than the one the Rangers currently signed. This all points to a rising payroll, perhaps even approaching pinstriped proportions.
Even if the Phillies realize that they don’t have the payroll to keep Hamels past 2012, trading him isn’t much of an option. A team in win-now mode cannot afford to deal a pitcher of Hamels’ caliber. Olney speculates that they’ll get 90 cents on the dollar if trading him this winter, but even that seems optimistic. Moshe recently wrote about the troubles of dealing for an ace. This applies directly to Hamels, whether or not you consider him a true ace (whatever that means). Look back at recent deals for aces: Johan Santana, Roy Halladay, CC Sabathia, and Cliff Lee. How much are the players traded helping their teams? This matters even more in a Hamels deal, since he’s coming from a contending team. The Phillies need players who can help them win now, and even a package of three helpful players will not equal what Hamels can provide.
It is probably in the Phillies’ best interest, then, to retain Hamels for at least the 2012 season. In this scenario Olney warns that, because first-round free agent compensation could disappear next off-season, “they would run significant risk of watching a homegrown, talented pitcher walk away with almost nothing to show for it (other than their 2008 championship rings.)” That’s always a risk, for any team with an impending free agent. The Phillies, however, are in a position to add a 2012 championship banner, and they’re in a much better position for that with Hamels than without. Another championship could also further boost the team’s financial strength.
If the Phillies do wish to retain Hamels, chances are they’ll approach him this winter with an extension offer in hand. How much would it take? Hamels will be 29 in 2013, which makes him comparable to CC Sabathia in age and ability. From 2001 through 2008 Sabathia produced an ERA-* of 83. In his three years leading into free agency he produced an ERA- of 69, which was second best in the majors to Johan Santana (min. 450 IP). In his career to date Hamels has an ERA- of 80 and in his last two seasons it’s 74. Add in another high-quality season and he’s right at Sabathia’s level. On the open market next winter that could easily fetch him a six- or seven-year deal in the $140 to $160 million range. In buying out his last year of arbitration, perhaps the Phillies could get away with a seven-year deal in the $150 million range, or six years and $140 million at best.
*ERA- is like ERA+, but in reverse. It also creates easier comparison scales between players. That is, you can say that at an 83 ERA-, Sabathia was 17 percent better than average. This is not necessarily true of a 117 ERA+. If you want an esoteric explanation of why, read this article by Patriot.
And yet, it seems as though the Phillies have the payroll for that. They clearly have it this year; Papelbon’s salary merely replaces the departing Brad Lidge’s, so there’s no big change there. With Hamels at $23 million, the Phillies would have $118 million committed to six players in 2013, with Jimmy Rollins as a possible seventh player (likely bringing payroll to near $130 million). If that sounds awful Yankee-like, well, it is. They have $127 million committed to six players in 2013. With another sellout season in 2012, which is all but guaranteed, plus a deep playoff run, the Phillies could easily justify the continuing rise of their payroll into Yankee territory. If that is indeed the case, signing Hamels makes all the sense in the world. (Remember, Roy Halladay’s deal expires after 2013.)
The 2013 free agent market for starting pitchers once appeared a gold mine of talent. Little by little that will dwindle. Jered Weaver is already off the board, and Hamels could be next. That leaves Matt Cain, John Danks, Zack Greinke, and Anibal Sanchez: a good group, for certain, but not the class that we had once envisioned. There still remains the chance that Hamels reaches that point and becomes the most coveted starter on the 2013 market. But given the Phillies position that seems unlikely. They’re going to need Hamels in the future if they’re going to maintain their high payroll and winning winning ways. That means that they’ll almost certainly hang onto Hamels this winter, no matter what a few national writers might speculate.