The Dodgers Should Claim Cliff Lee

While this kind of thing is expected, there’s still some news today from Jeff Passan of of Yahoo Sports.

Source: Phillies have placed Cliff Lee on waivers. Executives expect him to clear Friday afternoon, be eligible for trade.

— Jeff Passan (@JeffPassan) August 2, 2012

Most teams run nearly their entire rosters through waivers in August, just on the off chance that someone gets through and they can end up making a deal with a contender in a seller’s market. Probably every big name player in baseball is going to be put on waivers at some point in the next few weeks, and so Lee is no different in that regard.

He is somewhat different, though, in that his contract makes it likely that he’ll actually clear waivers, and a team putting in a claim would force the Phillies to make a pretty interesting decision.

Lee is due about $6 million over the remainder of the 2012 season, then is under contract for $25 million in each of the next three years. The contract gets a little sticky in 2016, as its currently a club option for $27.5 million with a $12.5 million buyout, but it becomes guaranteed if he’s not on the DL at the end of the 2015 season and threw either 200 innings in 2015 or 400 combined in 2014 and 2015. Given that, an acquiring team would probably need to treat that final year as essentially guaranteed as well, and treat Lee like he’s owed about $110 million over the next 4 1/2 seasons. That’s a lot of money for anyone, much less a pitcher who is a month away from his 34th birthday.

At that price, most teams in baseball are probably going to take a pass on putting in a claim. The Dodgers, however, should take the gamble and put the ball in the Phillies court.

The Dodgers new ownership has already flexed significant financial muscle since taking over for Frank McCourt in the spring. They signed Andre Ethier to a five year, $85 million contract that was probably a bit of an overpay, took on all of the ~$36 million still owed to Hanley Ramirez through 2014, and signed 21-year-old Cuban outfielder Yasiel Puig to a $42 million contract that was considered to be a wild overpay by those who follow the international market closely.

While the Dodgers might not have unlimited resources, the new ownership group clearly intends to make the organization of the big spenders in baseball, taking full advantage of their television market to establish something like Yankees West. If the Dodgers run out an opening day payroll of $175 million next year, I don’t think anyone would be too terribly surprised.

Based on the contracts currently on the books, the Dodgers have $135 million already allocated to players under team control for 2013, while A.J. Ellis is their only significant arbitration eligible player. So, if their payroll target was $175 million (which, keep in mind, is a number I pulled out of thin air, and may not actually represent their budget), that would leave them about $35 million to spend to fill out the roster, meaning they could take Cliff Lee’s contract and still have enough left to buy a new first baseman. While Lee’s contract would be a budget buster for most organizations, it might not prevent the Dodgers from making further upgrades in other areas as well.

And, to be honest, there’s probably not a better use of that money available in free agency this winter. Before the season started, the assumption was that the Dodgers would make a huge push for either Cole Hamels or Joey Votto — or both — but they have since re-signed with their clubs, eliminating them from possible consideration. That leaves the big name targets this winter as Josh Hamilton, Melky Cabrera, B.J. Upton, Shane Victorino, Mike Napoli, Nick Swisher, Anibal Sanchez, Edwin Jackson, and potentially Zack Greinke, if he doesn’t re-sign with the Angels first. There’s certainly some nice players in there, but besides Greinke and Hamilton, no one in that group has the potential impact that Lee would have, and both of those guys come with their own set of risks as well.

And, of course, there’s also the fact that signing a free agent this winter does nothing to help you win in 2012. Yes, if you think you could get Greinke for something close to that same $110 million you’d be committing to Lee, then you might prefer the younger pitcher, but present value has to be a factor as well, and the contending Dodgers are in the sweet spot where every marginal upgrade represents a significant return.

The upgrade would over Stephen Fife — who has racked up a whopping seven strikeouts in three starts since being recalled from Triple-A — would likely add about +1.5 wins to the Dodgers regular season total, and Lee would represent a substantial upgrade to their potential playoff rotation as well. Going from second place finisher to NL West champions could return as much as $30 to $40 million in additional revenues if the Dodgers made a World Series run. Even a first round playoff victory probably nets the team an additional $5 to $10 million in revenue from future ticket sales and the attendance boost that goes with generating excitement in the fan base.

So, while Lee’s marginal cost is probably a bit higher than what he’d sign for as a free agent this winter, that’s not really the appropriate comparison, because it ignores the actual value that Lee could bring to the Dodgers before we get to the off-season. Given the Dodgers spot on the playoff bubble, they should be valuing each additional win added very highly, and should probably see the remainder of Lee’s 2012 performance as worth at least $10 million, so the future value proposition is more along the lines of 4/100 than 4/110.

Is 4/100 a gross overpay for Lee for a team with massive revenues? I don’t think so. He probably won’t be worth that money, and it could even be pretty ugly by the last year of the deal, but Lee’s still an excellent pitcher right now and projects to remain one for the next several years. Given the significant difference he could make to the Dodgers organization right now and the mediocre alternatives that they’ll have to consider overpaying this winter, claiming Lee on waivers is a risk the Dodgers should take.

Maybe the Phillies won’t let him go for nothing, but they should at least dare Ruben Amaro to have to make that call.