What Are the Phillies Waiting For?

The Phillies don’t look like a very good team this season. They haven’t looked like a very good team in some time, really. That said, they aren’t all that far from contention in a muddled NL Wild Card race. After enduring 96 losses in 2017, the club enters the upcoming campaign with an improved roster, having replaced Freddy Galvis with J.P. Crawford and Tommy Joseph with Carlos Santana. They’re poised to receive a full season from Rhys Hoskins. They’ve also added Tommy Hunter to the bullpen.

The result of those additions to last year’s returnees is a projection for 74 wins. Improving by eight games in a single offseason is pretty impressive. The Phillies aren’t really expected to do that, though. By BaseRuns, which removes sequencing from a team’s run-scoring and -prevention, Philadelphia was actually a 70-win team last year. So the gain this offseason is more like four wins. Still, it’s something.

It’s also something that has come at little expense. Yes, the team added free-agent Carlos Santana this winter for an average of $20 million per season. Given the team’s financial wherewithal and the potential to compete now, however, it’s fair to wonder why the Phillies haven’t done more.

In recent weeks, Philadelphia has been connected both with Jake Arrieta and Lance Lynn but appear reluctant to continue moving forward this offseason. While a 74-win team will get nowhere near the playoffs, the current state of the club’s rotation means that the Phillies could easily spend their way to something closer to contention this season without greatly impacting their ability to contend in future years. In November, Travis Sawchik wondered when the Phillies would spend. With pitching still available in the free-agent market and a relatively mediocre set of Wild Card candidates, the time for the Phillies to spend at least a little bit of their reserves should be now.

Before getting to the Phillies’ present finances, let’s take a brief step back and remember where the club has been. Here are Opening Day payrolls for Philadelphia since they moved into Citizens Bank Park in 2004.

From 2010 to 2014, the Phillies’ payroll placed among the top four in the majors. It went down a bit in 2015, followed by a huge dip in 2016, and then another big drop this year. For some perspective, consider the Houston Astros’ tank-job, for which that club has been criticized. From 2009 to 2011, Astros payrolls averaged $91 million. Then, while tanking between 2012 and -14, the average payroll dropped 57% to $39 million. By comparison, the Phillies’ average payroll from 2013 to 2015 was $161 million, a figure which dropped 48% to $84 million in 2016-18. Philadelphia’s drop in payroll has been nearly as severe as the Astros’ own decline earlier this decade.

The Phillies have also seen a precipitous drop in attendance over the last few years, as the team has failed to perform on the field. From 2007 to 2013, the team averaged 3.5 million fans per year. That number decreased to just over 3 million in 2013, fell to 2.4 million in 2014, and has come in right around 1.9 million the last three years. While we don’t have precise figures for how payroll and attendance figures have affected the bottom line, we can take a look at the estimates from Forbes. Here are the estimates for operating income through the 2016 season.

From 2004 to 2010, the Phillies made a bunch of money; from 2011 to 2015, they gave most of those profits back. From 2015 to 2016, the Philly’s attendance was flat, yet they improved from roughly a $9 million loss to nearly $90 million in profits.

Two things happened to change the Phillies’ fortunes. First, they lowered payroll by about $40 million. Then, their $2.5 billion television deal kicked in. That deal, which includes a 25% ownership stake in the channel, meant a huge increase in revenue for the organization. Forbes hasn’t released their estimates for last season yet, but that television money isn’t going to decline. Meanwhile, attendance was roughly the same while the team paid about $15 million more in payroll. If we wanted to guess, $60 million in profits seems like a reasonable number. This year, with payroll down about $40 million from last year, it wouldn’t be too far-fetched to think the Phillies were going to take in $100 million in profits this season. The kicker here is that, in the period from 2004 to 2017, the value of the franchise has increased at a rate of 15% per year according to Forbes, going from $392 million in 2005 to $1.65 billion last year.

We don’t know the exact asking price on Jake Arrieta and Lance Lynn, but let’s say the cost for the two combined is something like $150 million ($100 million for Arrieta, $50 million for Lynn) over the next four years. Even if Philadelphia signed both of them, the result would be a 2018 payroll roughly equivalent to last year’s — and, at the moment, current payroll commitments over the next three years (2019-21) are just $42 million, $29 million, and $11 million, respectively. The team can easily afford to bring in two pitchers without hurting its long-term plans.

If money isn’t what’s preventing Philadelphia from acting, there are two other possible arguments against making such a pair of moves. First is that improving from 74 to 79 wins doesn’t exactly render a club instant contenders. With regard to that comment, however, consider the current projected win totals in the National League.

Move the Phillies up to 79 wins and they are absolutely Wild Card contenders. The Cardinals look to have the inside track at one Wild Card spot, but there are currently five teams in the 78- to 82-win range potentially contending for the second one. It’s also possible that the Phillies are better than a 74-win team on paper: Baseball Prospectus, for example, currently situates them at 78 wins right now.

Of course, spending a ton of money just to make a team a Wild Card contender might not appear to be a good use of funds. For a club that’s averaged 69 wins over the past five seasons, however, entering the competitive fray while doing nothing to close a future window of contention — as opposed to otherwise letting massive sums of money just sit around — makes a lot of sense.

The other argument against bringing in Arrieta and Lynn (or Alex Cobb) is that they might block potentially better pitchers at some point. The Phillies, in fact, do have some very good pitching prospects in Franklyn Kilome, Adonis Medina, and Sixto Sanchez, but all three are multiple years away, and there will always be five rotation spots to fill.

Right now, the Phillies have Aaron Nola at the top of the rotation with some combination of Jerad Eickhoff, Mark Leiter, Nick Pivetta, and Vince Velasquez after the Phillies ace. Slotting Arrieta and Lynn after Nola and letting the other four battle for two spots would vastly improve the rotation, and the increased depth would also help as the season wears on.

The Phillies signed Carlos Santana this winter, but they aren’t trying to win this season. Given their financial power, the free agents available, and their proximity to contention, there really isn’t a good reason for the franchise to be so quiet. They will lose a few more draft picks, but they’ve been picking at the top of the draft for years, and they will still have the No. 3 pick overall in June. The Phillies aren’t that far away, and nothing they do this offseason would prevent them from going big next winter. The team has an opportunity to win, and they should take advantage.