The economics of keeping Jayson Werth

As a regular reader, you know that I generally (almost always) discourage talking about the big league team here. This site was started with a very targeted purpose, to focus solely on the minor leagues. There are some situations where it is important to discuss the big league team, ie, how current prospects fit in to the big league team, or if a player gets injured and the speculation is to who replaces him. But in general, I don’t really care about the latest Phillies game with regard to this site. We’re here to focus on the Phillies minor league system. That said, when I see something consistently get brought up over and over again, and it does tie in somewhat directly with the minor league system, I feel it does warrant attention and discussion. This is the case with the idea of Jayson Werth’s future in the Phillies organization. In my opinion, the “analysis” of Werth’s future beyond 2010 has been somewhat shoddy. So I’m going to do my best to explain why I think its far more likely that Werth re-signs here than goes elsewhere. After that, you can make a judgment, but hopefully when someone brings it up and uses the incorrect assumptions, you correct them and maybe show them this post. I’m going to try and be as detailed as possible. Check below for more

There have been two common assumptions made after the Ryan Howard extension. I’m going to debunk them at the same time.

Assumption 1: Ryan Howard’s extension means there is no money left for Werth.
Assumption 2: The Phillies are maxed out with payroll.

Ryan Howard was already signed for 2011, and his contract extension that he signed (5/$125) does not kick in until 2012. The Phillies already had financial certainty with Howard for 2011. In fact, the Phillies have financial certainty for most of their roster in 2011.

Looking at this, the Phillies will have about $133.5M committed to 18 players. I believe based on service time, JA Happ will be short of Super 2 status and will be eligible to be renewed. Kyle Kendrick will be arb eligible if he remains in the majors all season, but with Moyer being paid what he’s paid in 2010, it seems plausible that the Phillies would send Kendrick down if Happ comes back strong. Even still, should Kendrick qualify as a Super 2, he isn’t going to be making a whole lot more than the minimum. This projection assumes the Phillies pick up Castro’s option, which seems like a decent bet. I’ve put Ross Gload in as an OF, which seems like the best placement for him, because he can’t play 3B like Dobbs can now. But the Phillies could use Castro to cover 3B, use Gload in the OF and carry an extra OF for the league minimum, maybe a Quintin Berry type. That means that essentially the only players not figured into this projection are the starting RF and 4 relievers. All 5 SP would be set, the back of the bullpen would be set. If the Phillies keep Herndon all year, he could be the long man for the league minimum. Young relievers like Stutes, Bastardo, Escalona and others all figure in here at the league minimum. Francisco’s arbitration might be interesting, but because hes not playing every day, its going to limit his numbers and limit his leverage. I have a hard time believing he’ll make more than $1.5M next year. Add all of this up, and you are probably at like $136M with just the RF spot to fill. If you took all of these figures and then added Werth’s 2010 salary ($7M), you get like $143M, which is about 4.5M more than the current payroll, and the current payroll involves dead money on the books for Adam Eaton, Geoff Jenkins, and Pedro Feliz.

The Phillies were recently ranked the 6th most valuable team in baseball, at $537M. This is, of course, a huge return on investment from the 1981 purchase of the team for $30M. You can see all the details in the Forbes article here. I want to focus on two metrics here, the revenue and the payroll. Forbes’ methods for determining this information is, as best as I can tell, an educated guess. Privately held corporations aren’t generally in the habit of telling everyone how they make all of their money, where they spend their money, etc etc. But I think these numbers are fair enough estimates. The 2010 numbers listed on the Forbes site for revenue are projections, I believe, but will be fine for this exercise. Here is a quick chart I put together, based on these numbers

Let’s look at a few things in this chart. The Phillies saw a big jump in revenue from 2008 to 2009 for obvious reasons. The Phillies were coming off a World Series title. They drew 3.422M fans in 2008, 97.1% of capacity, but upped that to 3.600M in 2009, 102.2% of capacity when you factor in SRO tickets. The average attendance in 2009 was 44,453. In 2010, the Phillies lead MLB by a wide margin in average attendance, drawing 45,034 per game, and the sellout streak continues. The projected “dip” in revenue increase is likely based on slightly less merchandise sold relative to the 2009 season when all of the 2008 World Series gear was factored in. Then again, I don’t believe the Forbes numbers account for potential playoff game revenue in 2010. The standard back of the envelope calculations I’ve seen place the value of a home playoff game at approximately $1M. The Phillies played 8 home playoff games in 2009, so you can posit that those 8 games meant an extra $8M in revenue. Not all of this is money made, since you have to pay workers additional salary, etc etc, but its still a big chunk of money.

So anyway, back to the chart. Forbes was assuming a growth in revenue of about 8% from 2009 to 2010. When I tried to estimate the 2011 revenue, I figured I slight bump up, 0.3%, to 252 million. This would assume an uptick in attendance. The Phillies are averaging 45,034 per game this year. 67 more home games, at 45,000 per, would be 3,015,000 + the 630,488 they have already drawn = 3,645,488 in attendance, or about 103% capacity. When you factor in an extra 645,000 tickets sold, if you assume a very conservative $25 per ticket when factoring in concessions, parking and other ballpark spending, you get $16,125,000. Again, not all of this will be pocketed, there will be expenses to be paid. But its not an insignificant chunk of money. Add in another 5-8 home playoff games, and you’re looking at an extra $25M or so before tax/expenses on top of the Forbes projected figure. So when I project a very slight 0.3% increase in revenue growth, I think I’m in line.

The next key factor to look at is the growth in payroll. In 2006, the Phillies cut payroll by 1.9%, but then raised payroll by 3.7% in 2007, 4.4% in 2008, and a whopping 11.7% in 2009 then 7.9% in 2010. Numerically, this went from 106 to 104, then up to 108, up to 113, up to 128 and up to 138. Forbes listed the Phillies payroll as 143M in 2010, but this does not factor in the money coming from Toronto to offset Halladay’s pay, so I’ve gone with the correct figure, which is essentially almost $139M. When estimating the 2011 payroll, I increased the payroll by the same rate revenue was projected to increase, and I’ll explain that more in one second.

The single biggest takeaway on this chart is the payroll as a percentage of revenue. Teams don’t just set an arbitrary number and say “Payroll will be $50M” or “Payroll will be $150M”. There have been many articles written that indicate teams will set their payroll as X percentage of the revenue they bring in. By looking at this chart, its obvious that the Phillies generally aim to set payroll at 60% of gross revenue. Since 2005, payroll as a percentage of revenue has consistently sat with one percentage point, right in the 59.5% range. To me, this is the biggest tell when thinking about future payroll. The Phillies are minting money right now. The stadium is literally overflowing with fans, they continue to raise the prices of things like parking, merchandise and tickets. They will continue to look for areas to exploit revenue, whether it be in the licensing of club seating or possibly pursuing a Phillies-exclusive network. But the message here is simple. Teams that establish themselves as a brand, which the Phillies are doing, are able to market that brand much more effectively than a team that is just considered a team, not a brand. The Pittsburgh Pirates are a team. The Philadelphia Phillies are a brand. While its tough to find more places to fit fans into the park, the immense popularity and success of the team means that the Phillies will be able to continue to raise ticket prices, especially for the more exclusive seats, and this will continue to pad the revenue totals. The game of baseball saw a dip last season as the broader economy dipped, but with things maybe beginning to turn around, and with a projected rebound over the next 5-10 years, there’s no reason to assume MLB will see declining revenues, whether it be in the TV money or anything else related to the sport.

Now that we’ve established that the Phillies payroll will remain basically 60% of their projected revenue for the year, we can figure out what next year’s payroll will look like. I’ve projected the payroll for 2011 to sit at $151M. The only other consideration for the Phillies, outside of the payroll as a percentage of revenue, is MLB’s imposed luxury tax, which must be paid if your payroll exceeds a certain amount. That amount is estimated to be in the neighborhood of $175M in 2011, something the Phillies will obviously not have to worry about. My projection of $151M assumes a revenue growth of 8.2% from 2010 to 2011. The Phillies revenue increase from 2008 to 2009, ie, coming off a World Series win, was 12.5%. Last year, coming off a World Series loss, it was 7.9%. If the Phillies win the World Series in 2010, a 12.5% increase in revenue from 2010′s projected number of $233M would be $262M. Should that happen, the Phillies could conceivably run out a payroll of up to $157M and still be in that 59.5% range. Let’s quickly look at the other side. Right now I’m assuming revenue growth of 8.2% from 2010 to 2011. What if revenue growth slows to, say, 4.5%? If revenue were to increase by 4.5% from 2010 to 2011, 2011 projected revenue would be about $244M. That would bring the target payroll down to, say, $146M, which would be 59.8% of revenue. How about we split the difference from 4.5% growth and 8.3% growth and assume 6.0% growth. That would bring revenue to $247M, and the reaction would be payroll rising to $148M, which would be 59.9% of revenue. So here is the takeaway chart you have to focus on

If 2011 projected revenue growth is

4.5% –> Payroll of $146M
6.0% –> Payroll of $148M
8.2% –> Payroll of $151M
12.5% –> Payroll of $157M

So the range of outcomes is about $11M, based on the projected revenue growth for the team. If they make another deep run, win another pennant, and sell out CBP from here on out, there is no reason the payroll won’t realistically be $150M next year. Of course there is a lot of luck involved. Bad weather can drive down attendance, a few injuries could derail the team. But I think the “worst case scenario” involves that 4.5% number, which means a 2011 payroll of about $146M.

Now rewind back to my payroll breakdown for 2011. I figured 17 roster spots at $133M. Add another 2 players with small raises (Kendrick, Francisco), and then young reliever with under 2 years of service time for the minimum. That brings you to 20 players under contract for somewhere in the neighborhood of $136M. Which means you need to fill 5 roster spots, 3 of which are bullpen spots, the starting RF spot, and a cheap corner infielder/outfielder, depending on the placement of Ross Gload on the spreadsheet. If you go on the assumption of a $146M payroll (worst case scenario) this gives the team $10M to fill those needs. If you figure on the more middle of the road projection (8.2% increase), you are looking at about $15M to fill those spots.

I think its best here to look at what Jayson Werth’s current contract looks like. He signed a 2 year deal in 2009 that looked like this

2009: $2M
2010: $7M
With a $1M signing bonus that was presumably split in half between both seasons.

So what did the Phillies and Werth do? They realized that they had payroll limitations in 2009, but they wanted to make a deal that would help both sides. So Werth asked for $4M in arbitration, the Phillies offered $3M. Instead of going 1 year, the Phillies compromised and gave Werth more AAV, but backloaded the deal, paying him only $2M in 2009 (when they offered $3M in arbitration) and Werth ended up getting a higher per year valued deal, just spread differently over the two years. Baseball, unlike football, has guaranteed contracts. So for these players, when negotiating, they are considering a number of factors.

1. When this deal expires, how old will I be?
2. What is the market for my services now, and what will it be the next time I’m potentially a free agent?
3. What is my current circumstance in terms of my team and my playing time

Lets try and answer these questions.

1. Werth turns 31 in a few weeks, so he’ll be 31 as he potentially hits the open market this winter. Last year, Matt Holliday was 29 and turned 30 in January, right around the time he signed his 7 year deal. Jason Bay turned 31 in September, and then signed his 4 year deal in December. So he’s a closer comp to Werth from an age perspective than Holliday.

2. Werth potentially enters the free agent market as the 2nd best outfielder available, behind the younger Carl Crawford. Some would argue Werth is more valuable, but in a way, they are similar players. Both are excellent hitters, Werth has more power but makes less contact and has less speed. Both are gold glove caliber defenders, but Werth plays the slightly tougher RF and has a better arm. Werth has better plate discipline, and is one of the most disciplined hitters in baseball. Crawford will turn 29 in August, so he will be 2 years younger (not quite) than Werth as both hit free agency.

3. He’s never had anything but positive things to say about Philadelphia, from what I can tell. He’s always been the first guy to profess his love for his teammates, deflecting away all of the compliments coming his way to praise his teammates. He’s become a vital part of the team, and more importantly, hasn’t caused any problems off the field. Since becoming a regular, he’s shed some of the concerns about his health.

Now you come down to the bottom line. What will it take to sign him? There are still some perceptions that Werth is an injury prone player, even though he’s been healthy for the last 3 seasons. Crawford does not have those concerns, just as Holliday didn’t have those concerns last winter, while the Red Sox somewhat openly questioned Jason Bay’s health, ultimately seeing him sign with the Mets. The Phillies, if you’ve noticed, have done a good job locking up their own guys. In the last few seasons, they have signed Jimmy Rollins, Ryan Howard, Chase Utley, Shane Victorino (who is technically one of their own, since he’s played the bulk of his ML career in the org), Carlos Ruiz, Ryan Madson, and Cole Hamels to multi-year contracts. The Phillies of old, who had to trade away their better players because they couldn’t afford them, or because the players didn’t want to be there, are a thing of the past. Though most fans seem to think the Phillies can’t afford Werth, or that he’s dying to be a free agent.

Last winter, Charlie Manuel openly admitted he wanted to keep Cliff Lee and Roy Halladay, and Amaro said no. I don’t see the Werth discussion going the same way. Everyone in the Phillies organization knows what Jayson Werth means to the team, starting at the top and going all the way down. Everyone around baseball knows. And that brings us to Domonic Brown, and how this whole thing impacts the Phillies in 2011 and beyond. Most of the lazy analysis has just been “Brown is their best prospect, hes an OF, Werth is an impending free agent, Brown replaces him even though hes a LHB, next topic”. I don’t see it like this at all. Brown is the Phillies best prospect, by a fair distance. He’s assaulting AA pitching right now in a big way. But there are a few things to think about here.

A. Brown is just 22, and turns 23 in September. He’s age appropriate for AA, and will be age appropriate for AAA next season. He has to be protected on the 40 man roster this winter (a no brainer, obviously), and will have to burn one of his 3 option years next year if he doesn’t open up as a starter for the big league team. But…

B. The Phillies track record, especially over the last few seasons, isn’t to throw guys into every day starting jobs when they are 23. Howard’s half season that saw him win ROY came at age 25. Chase Utley’s half season came at age 25, and his first full season didn’t come until age 26. What this did was give the Phillies essentially a finished product who was ready to play every day and didn’t need as much of a learning curve. The standard has changed from the Jimmy Rollins promotion, when he was given a full season in the big leagues at age 22. That team wasn’t very good. This current team is arguably one of the 3 best in baseball. The way you integrate your younger players into a team changes with the fortunes of the big league team.

C. The lefthandedness matters, but is somewhat overblown. The Phillies are a good hitting team, and actually hit lefties just as good if not better than righthanders. But where it does have a real impact is the last few innings of games, where managers are able to match up with relievers. By having a RHB in between Howard and Ibanez, it forces the other manager to either leave in the lefty to face Werth, or burn 2 guys, using a RHP for Werth and then having a lefty face Ibanez. If Brown were to replace Werth, you’d have to bat him at the bottom of the order and put Victorino between Howard and Ibanez, a place he doesn’t fit, as Polanco is rooted to the 2 spot it would seem, and Rollins will continue to hit leadoff.

Any way you look at any of these scenarios, Werth is a vital part of the lineup. Ibanez will likely be gone after the 2011 season, and that is the point where Brown would step right into the lineup and take his spot, both in the field and in the batting order. If the Phillies decide to make this move, Brown would have an entire season in AAA to get acclimated to left field after playing RF for most of his career.

To do this, the Phillies would need to configure Werth’s contract in a way that would both give him the AAV he is looking for, while giving themselves the freedom to operate and organize the rest of the roster. Going back to the scenario I mapped out. If the Phillies projected revenue does increase by my projected 8.2%, the estimated payroll will be $151M in 2011. That means that the Phillies have $15M to sign Jayson Werth, sign 3 relievers, and find a backup who can either play 3B or the OF, if Castro is deemed the backup 3B as well as backup MI. This can easily be done by structuring the contract in this manner

2011: $8M
2012: $16M
2013: $18M
2014: $19M
2015: $19M

This means it is a 5 year deal at $80M total. You immediately look at this and say “my god, paying him $18, $19M, and $19M per year for the final 3 years could be a disaster”…..and you’re right. It could be. Or revenue could continue to rise, as prices continue to rise, and the team continues to win. 8 years ago, if you’d said the 2010 payroll would be $139M, and the country would be in the middle of a huge recession, most baseball people would have laughed. The Phillies have completely reformed their image, and have gone from doormats to dominant force in baseball. It really always makes sense to backload contracts for as long as you can. You hope that revenue continues to rise, and what looks big now ($19M for Werth in 2015), looks like an average deal in 2015. Lots of Phillies fans were surprised the Phillies gave Rollins a 5/40 deal in 2006. Now that deal looks like a big bargain. Utley’s 7/85 deal stacked up next to Holliday’s 7/120?

The bottom line is so simple. Payroll is determined based on team revenue. As revenue increases, payroll will increase, and the rate is essentially 60%. The Phillies are not “maxed out” on payroll at $139M, and the only way the payroll will remain at $139M is if there is some type of major setback for the team. The money to sign Jayson Werth is there. If Jayson Werth is willing to structure the deal to help the Phillies in 2011, like he structured his current deal to help the team in 2009, then there is nothing to me that indicates he will leave. If the Phillies try to lowball him and offer him something like 3/30, then sure, its likely that another team will come in and offer him the 4/65 or 5/80 deal. But I think the Phillies have proven over the last few seasons that they will lock up the players they deem to be worth the investment. Everyone will bring up Cliff Lee, but again it comes down to the payroll and revenue. Keeping Lee this year would have put them over their projected split between revenue and payroll. And then you can bring up Joe Blanton, but Blanton is cost controlled for the next 2 years, at likely half the amount that Lee will be making per year over a 5-6 year deal, and that is conservatively speaking.

If Jayson Werth wants to stay in Philadelphia as his first preference, and the Phillies continue to operate as they have over the last 5 years, then there is no reason at all that he won’t be back in Phillies white/red next year. The economics actually make perfect sense.

94 thoughts on “The economics of keeping Jayson Werth

  1. They need to release or trade Blanton before they end up paying a 6th starter or middle reliever 8.5MM. He had one brilliant run; that’s it. He’s not a shoo in as a top 5 starter, i don’t think – especially with Happ and Kendrick.

  2. Great point.

    Because Blanton’s xFIP last year was 4.07, while Cliff Lee’s xFIP was 3.69. So four tenths of a run difference in terms of their actual production on the field, when neutralizing for luck and balls in play. Yet Joe Blanton is a 6th starter. Weird world.

  3. Concise and compelling analysis. Certainly hope you’re right, and I can see it playing out this way.

    I’d raise two other considerations, one that probably works in favor of re-signing Werth and one that works against. The first is the prospect of freeing up some money by trading Ibanez this season. Obviously the Phils would have to eat a lot of that contract, and it’s unlikely they’d get much in return–but dealing Ibanez plus $6 million still saves them something like $5.5 million for 2011. I think Brown will be ready to take at least a platoon role next season, sharing time with Francisco or Mayberry (and if it’s Mayberry, trading Ben frees up a bit more cash). The tell there might be if Brown gets to play some LF if/when he’s promoted to triple-A later this year.

    I know that 2011 is somewhat incidental to this analysis, but I think it still helps to throw in a few more million in the first year of a deal.

    The other consideration, though, is whether there might be a long-term choice between retaining Werth and Jimmy Rollins. As you note, Jimmy’s last deal now looks like a huge bargain as well. Assuming he comes back from his current injury and puts up numbers close to what he did in 2008, he’ll want at least $12-14 million per for at least 3-4 years. That’s a lot for the age 33-36 seasons of a shortstop, but Rollins is a signature player who came up with the organization and a possible future Hall of Famer–both of which I think were considerations in the Howard deal. And while the Phils do have some prospect depth among outfielders, unless you believe that Freddy Galvis suddenly will learn how to hit or really like Jonathan Villar, there are no shortstops anywhere on the horizon.

    Werth is probably my favorite Phillie, I really want to see him retained, and I think your case is compelling. But if it’s a choice between Rollins and Werth, my guess is that they keep Jimmy.

  4. D’oh–by “trading Ibanez this season” of course I meant trading him *after* this season, assuming he comes through with a non-awful year.

  5. That is something to consider. But I don’t think Brown is going to be a platoon guy. He hit lefties better than righties last year, and is doing the same this year. He should be playing every day.

    If they could trade Ibanez and get a cheap reliever this winter while paying half his deal, that makes the economics of keeping Werth even easier and they wouldn’t have to backload the deal. But trading Ibanez does not seem realistic to me.

  6. What are you talkin about Andy? Kendrick isn’t even on the team once Happ comes back. Blanton is a very soild number #3 and frankly is even more vaulable because he is right handed. Hes not a “6th starter” or a middle reliever. If you think that, then you just flat out don’t know or watch baseball.

  7. I really hope some throwaway comment on Blanton doens’t derail the intentions of this post, but I can easily envision that happening. Yeah well, I tried.

  8. I agree with this analysis. The Phillies want to keep filling the stadium and Werth is a very popular player. They also know him, like his attitude, and his presence is a constant reminder of how management successfully found a gem on other teams’ scrap heap. They can afford to pay him. I don’t think his performance falls off drastically over the next 4 season. It may take 5 years to get the deal done. I think your higher revenue increase scenarios are likely correct. The economy in 2010 is better than the 2009 economy and 2011 is likely even better. Prices will be bumped up again and they will still sell out. Broadcast rights should also be higher as they continue to buff their brand and advertising dollars rise. The less than stellar performance of the other pro sports franchises in the city and the lack of appeal of the Mets, Orioles, and Pirates also can’t hurt as there is a chance to expand the market area, at least a little.

  9. I can see not one reason anyone would want Raul. And I am a fan. The man plays hard but its probably over. You could pay a big part of his salary. What would that do ? It’s not like we have prospects blocked.

  10. Another thing to consider. We currently have 84M locked up in 7 players for 2012 (including Lidge’s 1.5M buyout). That does not include Hamels or Rollins. Assuming you give Werth that contract, that’s 100M in 8 players. Count, say, 12M a year for J-Roll and 15M a year for Cole, that’s 127M in 10 players for 2012. Throw in, say, 4M for Happ in arbitration, and you’re at 131M for 11 players. Even projecting a 160M payroll in 2012, that’s 29M for 14 players. Even with Brown in LF, that still leaves you needing another starter, an entire bench, and an entire bullpen. That’s playing with fire. And this is only looking at 2012.

    Basically, even if you re-sign Werth to that contract, somebody’s going to have to go eventually or you’re putting a lot of pressure on the farm and bargain bin guys. Is Werth the best guy to let go? I don’t know. But I do know that somebody’s gotta go eventually unless our farm system hits at an unbelieveable rate.

  11. I did some calculations a few days ago and I figure the Phillies’ 2011 payroll obligations are around $135 million. That includes players under contract, buyouts and the league minimum for unclaimed roster spots. Thanks to Domonic Brown, I can easily see Werth sticking around. Brown would only make the minimum his first three seasons, a huge savings. If Werth is willing to backload the contract, I can see the Phillies retaining him.

    One thing that worries me about the Phillies though is they are filling too many roster spots with future, guaranteed money. Especially when it comes to filling out the bench.

  12. great article and thank for you time PP. It is exactly – or close – to the only way I thouht they could resign Werth. You went a little further then me but basically it is use Moyer and other expiring contracts to pay him next year then use Ibanez and others to pay him the next 3 years. Great points, alot of work and thanks again.

  13. Here’s a New York Times article about the Rangers missing the playoffs, but the relevant portions from it for the purposes of this article are the revenue implications.

    Obviously the Rangers don’t get money for parking and MSG’s seating capacity is lower, so there would be less concession revenue too.

    http://www.nytimes.com/2010/04/09/sports/hockey/09playoffs.html

    Per playoff game, the Rangers make about 2M in ticket revenue, half of which goes to the league. Each person spends about $18-$26 per game in concessions, about half of which goes to expenses. Each fan spends about $5 per game on merchandise. Add in parking at $20 a car.

    I don’t want to do the math, but someone could use those numbers at 45K fans and 15K cars to figure out per game playoff revenue.

  14. Fantastic job. Great analysis.

    Without all this work, re-signing Howard/Werth was the best reason I could come up with for the Lee deal.

    Your conclusion works for me!

  15. I LOVE THIS ARTICLE

    As for my two cents, I’ll keep it short and simple:

    1. The Phillies kept their signings and payroll this offseason short to keep money for Howard AND Werth.

    2. You don’t sign Ryan Howard for that much money to have Raul Ibanez hit behind him. That’s a waste of money.

    That’s how I see it. Werth is vital to the team, works well with the team, and has won with the team. As for what he gets paid, I’d rather the big money be up front, as I always do :P

    I’d love to see Werth back next season. But I’d also like to see the Phillies aggressively go after SS and 3B prospects in order to keep this team winning as their players get older. Jimmy Rollins’s injury doesn’t worry me, but he has always been a spotty hitter. I feel the Phillies need to focus on his and Polanco’s replacement soon. Hopefully, they focus on Latin America, and go after the bigger names (and not their normal “go for the unknown types”)

  16. In addition, one of these seasons, the Phillies are going to have to pay a bunch of money.

    In my mind, you restructure some contracts and have just one, giant payroll year. It’ll be tough to swallow, but it’ll really relieve tension for future years.

  17. I think Werth is offered 5/85 by someone. I think the Philles can get him back but I think it is for more than you think. Lidge comes off when they need to pay Rollins so I think that’s where that money comes from.
    This is a post about the farm system, because this will all not be posssible unless they get 2/3′s of their bench and bullpen guys from young, cheap organization players.

  18. Great job as usual, PP.

    I think you have nailed how we can keep Werth.

    We also want to keep Rollins and Hamels. To do so, we may have to move Victorino and Polanco at some point and find replacements through the farm, directly or indirectly.

    We could also use help from the farm to fill the closer role and as many as two SPs beginning in 2012.

  19. I was Anonymous above an d somebody also mentioned my next thought. Lidge – They will use part of his contract to cover worth. Basically it may come down to Hit Hit Hit and hope the Bullpen holds

  20. Thank you for all the thought and the hard work – it’s all very interesting. I need some time to take this in. I don’t disagree with how much Werth means to the team, how much they want him or your basic revenue/cost analysis – all of that seems pretty sound.

    But here’s the rub – Werth is simply the first of several Phillies players that may need to be renewed, and there will be several others starting in 2012. Rollins, Utley and Hamels will also be up for renewal and some of the other players will be getting closer to big money. I need to think those issues through and see how it affects your overall conclusion (which, as I understand it, is “don’t worry, team revenues are expected to grow to a sufficient extent where affording Werth is more feasible – true enough, but can/will they afford everyone else too?).

    One thing I believe, however, is this. The team should work creatively now to get some players signed to below market deals where the team is taking a risk on the player (long-term money and commitment) and the player is taking a risk on losing some upside. When Werth hit 24 homers the other year, my instinct told me that they might have had the opportunity to sign him to a contract that looked a little like J-Roll’s contract – maybe not exactly like that, but I’m guessing it would have been close. The Phils, I think, wanted to make sure Werth’s health was there and he was not a one-year wonder. I suspect they lost an opportunity there, although, of course, I cannot prove it.

    Now, I believe, a similar window of opportunity exists to sign Cole Hamels. If the Pat Gillick camp is still influential, I guarantee they are telling the front office guys to wait because pitchers get hurt, pitchers are inconsistent, you should never sign a pitcher to more than a three year deal, blah, blah, blah . . . . I tell you now that it’s a bunch of nonsense. You cannot apply those rules to every single player. Sometimes you have to leave your comfort zone to get a good deal and tie up a player who, I believe, will return to greatness with a vengeance. Ruben, if you’re listing, get that Cole Hamels signed to an extension as soon as you can. Extend him out 3 or 4 years and bargain for an option year. Trust me, you won’t regret it.

    The other issue is whether a potential Rollins signing and Utley extension might create a possible conflict with a Werth signing. I’m just not sure.

  21. Does anyone know when the Phillies contract with CSN comes up? They should demand more money for more ratings. It’s not the solution Boston or the Yankees have, but it’ll help increase our payroll.

  22. I don’t know – I thought someone said in one of the posts that it’s up for renewal this year – I have no idea if that’s true, however. Whenever it is renewed, however, it has to be worth a heck of a lot more money. Ratings are, I understand, going through the roof, which is what one would expect.

  23. Will people stop counting Jaime Moyer’s money towards signing Jason Werth. Moyer’s money essentially goes to Roy Halladay. Halladay, Hamels and Blanton get raises next year, that will eat up ALL of Moyer, Romero and Durbin’s expiring contracts.
    Also, someone mentioned Hamels in 2012. He will still have 1 arbitration year left for the 2012 season. Hamels will not be a Free agent until 2013.
    2011 is the tough year. 2012 everything gets easier when Lidge, Ibanez and Madson’s 27 million dollars come off the books and they’re replaced by Domonic Brown, Aumont and Schwimer/Mathieson. (Hope)

  24. I think the Phillies could handle a little more than 60% of the revenue going to salary. Not too much more, but 61%-62% would seem reasonable under these scenarios. As team revenue rises, it is logical that some non-salary expenses do not rise at the same rate. Scouts get a little more, but they are probably not getting 10% raises. An extra $5 million in salary makes keeping Werth a great deal easier.

    I do worry a little about the overall team age with committing 5 years to Werth. I was not a fan of the Howard re-signing for that reason. 3 years would have been much better there IMO and he is at a position where he could be replaced fairly easily with a player 90% as productive.

    Back to Werth, I still think they should explore dealing Ibanez and moving up Brown next year. Brown looks like he is ready. He should hit AAA next month and be a potential September callup. If they could pay half of Ibanez’ salary for someone to take him, then Werth fits in much easier. Hopefully Raul rebounds to the 800 OPS level so he is tradeable.

  25. This is quite possibly the best, and most comprehensive, look at the strategy employed by the Phillies front office regarding Payroll in relation to Revenue. Absolutely oustanding work PP. I’ve been a reader/follower of this site since its inception and I truly believe this is some of the best work you’ve ever done (which is saying A LOT). I have no doubt that the Phillies will lock up Werth. After Utley, I believe he is the most important hitter in the lineup. The manner in which he is able to work counts and manipulate pitchers is second to none. It has become apparent that opposing pitchers fear him. You get absolutely no respite after facing the murderers row of Rollins-Polanco-Utley-Howard. Instead, you get an incredibly disciplined and patient right-handed hitter who has power to all fields. Defensively, he’s about as prototypical a right fielder as they come. Great arm, good instincts, and a toughness that makes him a fan favorite. It’s a no-brainer to me that the Phillies sign him long-term.

    An outfield of Brown-Vic-Werth is almost too good to be true. It would be bar-none the best defensive OF in baseball, and arguably the most dynamic offensively. I get anxious thinking about the prospects of our 2012 lineup. Werth will be here to stay.

  26. Like most of the other posters on this site, I just wanted to say great job PP. You’ve really done a great job at the analysis on how this could possibly get done.

    With that said, I’m a bit concerned, not so much about 2011, but 2012 – 2015. Maybe I’m worried about nothing, and the increased revenue from tickets/concessions/TV deals will allow the Phillies to gradually increase to the 160-170M area in payroll for those years, but I think we’re still going to have to let one of the key guys go in that stretch.

    I know everyone hates to hear it, but I think that guy will be J-Roll. I think it might come down to him vs. Hamels. Personally, even with everything that Hamels has gone through in the past year or so, I’d still rather have Hamels here for the long term.

    Maybe a project for later this year is projecting the 2012 – 2015 payroll? Totally understand if you feel that’s outside of the scope of this site, but you do such good work I’m sure we’d all love to see it.

  27. Awesome stuff, James. Very cogent and well-thought out piece.

  28. That was a great read. What do you do for a living? You should work in the Phillies front office.

  29. Couple quick thoughts. First, I think it’s interesting that your analysis actually tracks pretty closely the analysis of some of us who think they WON’T re-sign him, except when you get to the bottom line you assume (hopefully correctly) that they will structure the contract in such a way to get around the fact that pretty clearly he would NOT fit into the 2011 salary structure. It’s an option that none of us had considered, and it might work. Assuming your projections about 2011 payroll are correct (they sound reasonable but of course are somewhat speculative) they can afford 8 million for him, but not 15 -18 million, the likely average value of any contract he gets.

    On Brown, I think you’re doing most of your readers a bit of a disservice. I agree with you that he is unlikely to be with the club next year. But even those people who think he might be a regular next year mostly don’t see him replacing Werth – they see him replacing a traded Ibanez. That’s also unrealistic, but for different reasons.

    I also think that IF there was a spot open for him, the chance that the Phillies would promote him (as a regular – you are certainly correct that he won’t platoon) are a little better than you think. The comparison with Utley and Howard is a little inapt, in that they were college kids and followed a somewhat different development pattern. They also were not regarded quite as highly as Brown is – both of them, especially Utley, somewhat exceeded their perceived ceilings.

    Finally, back to Werth – I agree with other posters that the contract you propose does also raise some issues post 2011. I’m not quite as upset that at some point a key piece will have to be let go after 2011 – it happens to every team, and in any event if they try to keep EVERY key piece, they are going to find themselves with a seriously aging team circa 2012 to 2013. But they are going to somewhat lack payroll flexibility to replace those players, and even letting (say) Rollins go, they are going to be getting seriously old post-2011. Under your scenario, they will have 103 million committed to just 8 players in 2012. And those 8 players will be 31, 31, 32, 32, 33, 33, 34 and 36.

  30. I meant to write “would otherwise NOT fit into the 2011 salary structure.” That is, it all comes down to how the contract is structured.

  31. Werth is simply not replaceable in this lineup. That it was reported after the Howard signing that talks with Werth’s agent had reached an impasse suggests that the Phillies FO knows this too. It was also reported in the Daily News’ recent fan research that the majority of fans would be OK with a ticket price increase to keep core players also works toward the perception that he will be re-signed.
    On your more tangible financial research the percent of revenue as indicator of payroll is, I think, spot on.
    I also don’t think Ibanez is going to be traded no matter how much salary the Phils might pay. That HR he hit the other night showed me he still has enough bat speed to hit major league pitching and that he will at least start in 2011 with the proviso that he will have to produce or be replaced by Brown midseason.
    Rollins will be re-signed because no replacement is viable.
    Victorino will leave when his contract expires to be replaced by Gillies or maybe Gose.
    Bottom line: I think Werth will be re-signed before the year is over or shortly after the World Series.

  32. The big key for teams that spend a lot of money is to not make the big mistake on the mediocre player. The Yankees, when they hit their little “drought” were paid big money contracts for mediocre guys like Jared Wright and Carl Pavano, and it blew up on them. The Yankees, unlike every other team, can afford to just brush those mistakes away. But every other team in baseball can’t do that. Teams that operate under a relative budget are really hamstrung when they are paying $20M+ a year on guys who are producing zero, or even worse, negative value.

    The Phillies did this with guys like Adam Eaton, Geoff Jenkins and others, and they ended up paying another team for 3 years to take Jim Thome. Obviously that cleared the way for Ryan Howard, but that money was still money that could have been better spent. The Phillies one blind spot still appears to be paying big money for middle relievers. They did a bit better this year, giving Baez a very affordable deal, and giving Contreras one year, but the Romero/Madson deals should not be happening, generally speaking. Relievers are the most volatile players in baseball, and see their performance fluctuate more from year to year than any other set of players. And this isn’t even digging into the Brad Lidge contract, which seems like a huge anchor on the payroll at this point. Giving 2 years to Jamie Moyer, etc etc.

    The smart move is to pay the biggest money to your best players for as long as they are productive. I have no problem allotting the biggest chunk of the payroll to guys like Howard, Utley, Rollins, Halladay, Hamels and Werth, because they are the superstar core of the team. The task for Amaro is keeping a steady stream of young players who can fill in for a relatively cheap price. Adding Ben Francisco last year as a throw in was a great case of this. If someone gets hurt, he has a chance to be a league average outfielder, making near the league minimum. When he gets more expensive, it makes sense to move him on, because hes not a star, hes not an elite caliber player, so he shouldn’t be paid like one.

    I digress. Anyway, I’m not really too worried about 2012 or 2013 or 2014. The Phillies have established themselves as a big market team with big ambitions. Is it going to come to the point where they need to unload some of their players, reload with some younger guys, and maybe go through a two or three year transition period? Most teams do. But if they continue to apply themselves in the draft and spend money, there is no reason why it has to be a complete overhaul. The team is configured with studs for the next 3-4 years. In 4 years time, the next wave may be ready to take over. Lets worry about 2010 and 2011 first.

  33. I agree with Rick Wise Guy on pretty much all of his points.

    Again, we are quibbling at the margins, but PP’s overall analysis was fantastic – a real critical appraisal of the situation with sensible conclusions – better than any piece I’ve ever read in local newspapers or national publications.

  34. Your comments about “superstar core” brought to mind this recent post after the death of Robin Roberts, http://www.lawyersgunsmoneyblog.com/2010/05/robin-roberts-and-the-whiz-kids#comments , which includes the following: “The 1950 Phillies won the pennant with a very young team whose young core went on to long, productive careers — and yet never came close to winning again. On an interesting recent discussion on his pay site, Bill James argues that this was a product of lazy roster construction: the Phillies kept falling behind because they didn’t care how good the supporting cast was,.. “. Your comment could be interpreted to imply exactly that for the current Phillies. The post goes on to say, “..today’s Phillies have taken over their division by learning this lesson: they’re actually supplemented their impressive core with some care and attention..”

    Not that anyone ever argues with Bill James, of course.

    One can take care in hiring a low cost supporting cast, but it involves some judicious talent choices.

  35. Rick Wise Guy brings up a good point. I don’t think Ibanez needs to be traded for Brown to take over the starting job in left. I don’t think the Phillies would have any problems giving that job to Brown and making Ibanez a left hand bat off the bench. Assuming that they would have to pay a good portion of his deal anyway in a trade.

  36. I think its just a case of what you value when constructing a team. Charlie Manuel, it’s no surprise, is a fan of veteran relievers, and he generally finds a guy he trusts and then sticks with him. But veteran relievers are a double edged sword. On one hand, they are experienced and know what the deal is. On the other hand, they are normally without minor league options, and thus, signed to guaranteed deals and can’t go anywhere if they suck on epic levels. As I mentioned above, relievers are really volatile, not just from year to year, but from month to month. For every reliable guy like Mariano Rivera, there are 200 guys who are great one year and terrible the next. Because of this, if I was constructing a roster, I’d want to have, at most, 3 relievers out of my 7 who are on guaranteed, no movement type deals. I’d use the other spots in the pen for hard throwing, young controllable relievers. If a guy struggles, he gets optioned down, and you replace him with another hard throwing arm. Cheap relievers in this day and age are so easy to find, it seems like a huge waste to spend $4.5M on a guy who will throw 65 innings a year and can’t be optioned down to the minors when hes struggling.

    The supporting cast on this current team (Ibanez, Blanton, Polanco, Ruiz) is certainly very good.

  37. Great stuff as usual James. You were an economics major right? Jayson Werth continually proves his value to this team and he’s arguably growing to be one of the most popular players on the team. Does anyone know where we can find jersey sales info? I’d bet he’s top 3 this year.

  38. I don’t understand why they don’t release more Werth memorabilia to pay him.

    Or, back when Howard wanted more money, have the Phillies get deals for him in advertising to increase his money. The Phillies could do the same with Werth if they can’t get money to pay him directly, though I doubt it.

  39. The TV money could be a big kicker, current deal with Comcast is held tighter than the guy carrying the dailynuke codes.

    What is known is that comcast lost an FCC ruling (and appeal). They “must” offer their product, including Phillie ball, to satellites.

    This generates higher revenue as a result of an increasing national fan base of a “branded” franchise.

  40. The scenario seems plausible, but another scenario that may allow us to keep Werth and keep the payroll in check would be moving Shane Victorino after the year is over. He is a valuable defender and high energy player, but he has a relatively inexpensive contract, is locked up for two more years, and has made a name nationally, which means we could get more pitching help in return than he may be worth.
    Jayson Werth could slide to center in 2011 at $16 million, Brown in right for $440,000 and Ibanez in left at $11 million…this would be $6.5 million less than an outfield with Victoriono still in it. In 2012 Werth could slide to left field to save his body and legs, Brown could stay in right, and either Gillies or Gose could be ready to step in defensively to centerfield at $440,000. The 2012 starting outfield could have a value under $17 million total.
    2011
    outfield: ibanez, werth, victorino…$34 million
    outfield: ibanez, werth, brown…$27.5 million

    2012
    outfield: werth, gose/gillies, brown…$16.8 million

  41. PP, regarding your 10:49 comment, I don’t fundamentally disagree with most of it on a theoretical level. Pay big for your stars & build around them.

    But teams don’t JUST go wrong on the mid level guys. I think it’s fair to say that MOST long term contracts to over 30 players, even “stars,” end up being regretted at some level. The exception is mainly the super elite guys, and on the Phillies only Utley and Halladay really fit that bill. Though honestly looking at the Phillies in particular, the biggest potential problem contract is Howard’s.

    Setting aside questions about contracts and payroll, though, I think that the down period/reloading period is going to come sooner than you & others expect. I think you underestimate the aging factor, though to a lesser extent than many of the people here. Which isn’t necessarily an argument over signing Werth – I’m inclined to think that, if he can be signed for 5/80, he’s a pretty good risk. Unless everything breaks right, I see them most likely out of the post season in 2012-2014, whether or not they re-sign Werth.

  42. Brilliant, well thought out post Phuture.

    Werth is a Rook on our Chessboard, it is wonderful that he
    has been able to grow, and to be able to watch him grow as
    a player after he was saved and believed in, by Pat Gillick
    after he was released by the Dodgers and his wrist injury.

    Unless there is a frenzy which can never be predicted,
    your analysis is perfect.

    When you have something to say – this format and the ability for
    fans to respond with well thought out and not so well thought out
    responses is perfect within your philosophy for the site.

    I hope you have the time and things on your mind to talk about
    on a Fortnightly Basis.

    Many Thanks.

  43. Oh, one more thing:

    “Lets worry about 2010 and 2011 first.”

    The thing about that is that, when discussing a contract that will commit the team to a huge contract through 2014 or 2015, I think you need to think about the whole length of the contract.

    Looking at 2012 in particular, if they sign Werth, you’re looking pretty much at the current 8 regulars, minus Ibanez and maybe Rollins. Everyone will be on the wrong side of 30. I think we can reasonably expect about a 5% drop off from the returning 6 (I didn’t just pick that number out of the air – 5% over 2 years in the early 30s is from what I’ve seen about what the research shows). Will the other two spots make up for it? No. Brown over Ibanez will likely be an upgrade, but I wouldn’t expect it to be a huge upgrade in 2012. And at SS, without a ton of money to sign a top FA, we’re looking at re-signing a two years older Rollins, or a mid-priced FA. Either would be a downgrade.

    So, 5% fewer runs from the lineup – not to mention possible declining defense. Can they make it up on the pitching side? No $$ for high priced FAs, so we’re looking at the current starters, plus maybe one of the prospects, plus maybe a cheap 5th starter. Since pitchers tend to age a little more gracefully (but of course are also more volatile), we can reasonably expect (hope) for no decline, but not likely an improvement.

    We can hope for an upgrade at the closer spot from current prospects, but that won’t outweigh the offensive decline.

    Now, if re-signing Werth significantly increases their chance of winning in 2011 – and IMO it would – and if they are looking at a rough spot in 2012-2014 anyway – then maybe signing Werth would be … worth it. As a fan I’m rooting for them to get the contract done.

  44. I’m think what happens to Werth is not dependent on the Phillies willingness to pay. If you read any press out there, there are teams that LOVE him (i.e. Boston). This is conjecture, but I have an itching suspicion Werth is like Cliff Lee – he’s going to be a free agent and wants to be bid on. And more power to him. His success in MLB came later than other stars; while Utley and Howard have cashed in; his time has come. I’ll be sad to see him go.

    If the Phillie’s season is a down one; Werth is gone by the trade deadline. If the Phillies are borderline and a deal yields Major League ready prospects, he’s gone. Otherwise, we’re going to the playoffs and getting draft picks…

  45. Agree that a deal ‘could’ happen. But for reasons already mentioned it is certainly a big risk.

    Team age will be a big problem and Werth is not ‘home grown. Rollins needs to be extended and Utley deserves the highest salary of anyone on the team. Howard is already locked up for huge money and plays the most replaceable position on the field.

    I do not think of Werth as a superstar. How’s that Vernon Wells contract look? Many Phillies contracts seems to be one year too many (Moyer, Ibanez, Polanco). All these vets will have no value at the end of their contract (Ibanez) so there is no arbitration draft pick option for them either.

    I’d really want Werth instead of Ibanez but we’re stuck with Ibanez and have many OF prospects that hopefully one of them can step up. The future success of the team will have to come from the young pitching currently in the minors because of the expense and decline of the position players.

  46. Kudos on mentioning that they can structure the payments differently. That’s one thing that hasn’t been mentioned much anywhere else and it always bugs me.

  47. I agree… That’s why I qualified my statement… I think the phillies will be in contention… So draft picks

  48. Age 30 is not when good players decline in the modern era. In fact, good players maintain their peak performance through age 33. As Lichtman’s analysis of aging shows (see THT articles), you don’t have to worry about good players until age 35.

    That 8-figure salaries are becoming commonplace is, I believe, an important factor on the subject of aging.

  49. derekcarstairs,

    Wrong. Did you even read the Lichtman articles? [b]The 5% over 2 years figure was taken from his work.[/b] It would have been steeper 20 or more years ago, but now that’s about right. The peak is now 29 rather than 27, and the decline is less steep, especially pre-35, but it’s still there. No one who has analyzed the problem has concluded differently, least of all Lichtman.

    Whatever the cause of 8 figure contracts, more often than not they end up decreasing thewin totals of the the team that sign players to them. Except for some younger players & superstars (often the same players fit in both categories).

  50. No one mentioned it, but a few weeks ago in the Philly paper (I believe it was Paul Hagan) it was mentioned that the Phils could add an area for 3,000 SRO patrons to an upper deck area along the right field line. Montgomery stated it was not in the plands at this time, but was being considered for the future. I’ve never been to CBP yet, so maybe you guys would know more about the feasibility of this than I do.
    I’ve also come to the conclusion that Trevor May be ready for a spot in the rotation for 2013.

  51. LarryM

    You must read Lichtman’s article more closely. The main purpose of the article is to refute Bradbury’s argument about the aging of all players. Bradbury looked at ballplayers with 5,000 PAs, analyzed how they age, and then tried to draw some conclusions about all ballplayers age. Lichtman found fault with Bradbury’s work and argued effectively that all ballplayers peak at age 29.

    But I am not talking about all ballplayers. I am talking about good ballplayers, defined, for purposes of this discussion, as players with 5,000 PAs.

    Take a look at Chart VI in Part 2 of the Lichtman article. Lichtman has found that players with 5,000 PAs since 1980 age as I stated previously.

  52. Why would Werth want to go to Boston? They are on the decline and aging. And they must contend with TB and the Yanks yearly. The Phils organization has surpassed Boston as the place to be.

  53. derek,

    Thanks for the reasonably diplomatic response, and sorry that mine was a little snippy. That said, I’m still (mostly) right. There are a number of reasons to be very cautious about drawing conclusions from that one chart – and Lichtman, in his own conclusions, is appropriately cautious about doing so. Among other things, there are methodological issues which might make his results optimistic (for example, by using a group of players with 5000 AB you’re introducing some serious selection bias).

    Recall also that my original comments didn’t merely focus on guys like Utley and Howard, who will get 5000 AB. Diaz likely won’t get 5000 AB, Victorino might not, Polanco has but is now on the wrong side of 35, and Werth with his late start might not get 5000. In fact, Werth is a good example of the selection bias in the chart. If he ages gracefully, he’ll get 5000 AB. If he doesn’t (and he might not – every player is different and Lichtman can only look at averages), he might not.

    It’s of course an interesting side note that 4 of 5 years of Howard’s contract, and 3 of 5 years of the (proposed) Werth contract occur after 33, when even using that chart the significant decline begins.

  54. LarryM

    I am not just taking issue with you about how ballplayers age. I am taking issue with all those (and there are many) who would lump together a zillion fringe players with a few stars and draw conclusions about aging that applies to both groups. If I were a front-office guy, I would be more interested in how good ballplayers age than how the universe of all ballplayers age. That’s where I am going to put most of my money.

    The Lichtman analysis is the only one I have seen on the aging of good ballplayers. Admittedly, more work needs to be done. For example, I would define good players in terms of career WAR or career wOBA rather than PAs. For another, I would like to see analysis that reflects solely the aging of good players in the era of 8-figure salaries.

    The players being discussed here primarily are the Phillies core group (Werth, Howard, Rollins, and Utley). These are the players many of us want to keep, and I think it’s premature to sound the alarm about their aging. I think the Lichtman chart that I cited gives a better idea of how these ballplayers will age than the one you cite that considers good players, bad players and everything in between.

    Regarding the 5,000 PA criterion. Rollins already has 5,000 PAs. Barring injury, Chase should get there by the end of 2011. Howard the end of 2012. Werth the end of 2013.

  55. The fact that Werth is still improving by leaps and … at age 30,31 (vs right hand pitchers especially) throws any prediction out of focus. He is what he is . different

  56. It is plausible that Werth could be re-signed by the Phils. Let’s hope the Yankees target Carl Crawford. But the Yanks could conceivably sign both Crawford and Werth.

  57. derek,

    You’re putting WAY more weight on one chart in one study than the author himself does. The results are simply not robust enough to support the conclusion that you want to reach. As the author says himself, this is a murky research area, one which has a number of statistical pitfalls – which he discusses at length. Sure, he tries to avoid the pitfalls, but there is no “perfect” method to study the question, and he doesn’t claim that his is perfect.

    Moreover, I’m skeptical of a result that (a) hasn’t been replicated, (b) is subject to at least some obvious methodological questions, and perhaps more that we can’t evaluate without knowing more details of this method (e.g., there isn’t enough information in the articles to determine if his delta method and adjustment for survivor bias are valid), (c) is based on a relatively small sample size (in terms of number of players in the chart that you cite, not overall) and (d) provides a counterintuitive result. Why should modern long-time regulars have such a dramatically different aging pattern?

    The most that you can say with any confidence is that there is some tendency for aging decline to be a little shallower (a) for players with long careers as regulars, and (b) for modern players. But no, the data presented doesn’t “prove” or even strongly indicate that modern star level players keep all or almost all of their peak skills until age 33.

    And you ignore a few more important points I made earlier. I won’t repeat them all, but for example, the Howard contract and the proposed Werth contract are both mostly (4/5 and 3/5) for years past the point where even the most literal reading of your chart starts showing a pretty significant drops. And while YOU may just be interested in the “stars” on the team, I’m interested in overall aging patterns (and in terms of my original point which started this about the team’s likely performance in 2012-2014, the overall pattern is what counts). So Ruiz, Victorino and Polanco enter into the conversation.

  58. nowheels,

    That doesn’t necessarily logically follow. But my comments haven’t really been directed at Werth’s aging pattern in particular, and as I’ve said all along I would certainly be okay with PP’s proposed deal, though as (almost) always for players over 30, I’d sure be more comfortable with 3 or even 4 years than 5.

  59. I am concerned with Werth’s age but not to a huge degree. The risk of a 5-year deal is more about injury than anything else. I would feel better if it were limited to 4 years.

    Werth could easily be a late bloomer. Players tend to peak at age 27 or 28 because that is an age where they retain most of their athleticism but finally have enough at bats to learn the nuances of the game. Werth may still be learning some of that because of all the time he missed. And players with his athleticism tend to age very well. I suspect the days of him stealing lots of bases are gone, but I am fine with 5 SB and 35 HR for the future if that is the player he is evolving into.

    I am all for figuring out a way to keep Werth. One more pennant this year might be enough to secure the future revenue to allow the team to do that – thinking future local TV deal here.

  60. Andy I like to turn it around. Player with lesser athleticism who
    prospered on work and guts, seem to fall off quickly e.g. Morandini.

    “I am all for figuring out a way to keep Werth. One more pennant this year might be enough to secure the future revenue to allow the team to do that – thinking future local TV deal here.”
    I agree with this statement but not the management or they would of never traded Lee. What and how these people think is beyond me. Clearly the downside of this club is the winter meetings.

  61. Good break down here on Werth. I’ve been saying too that Brown would likely replace Ibanez’s lefthanded bat rather than put another lefty in the lineup replacing Werth. I can see the Phils renewing Werth even though it will cost alot. At some point they will need to cut some salary b ut this team should be good without much tinkering for the next 2+ years easily. They could be a top team for the next 4 without many changes too.

  62. Werth is a late bloomer, but, more importantly, he has what Bill James would describe as “young player” skills. He’s fast, athletic, has a strong arm, etc. . . . Historically, these players tend to age much slower. I would worry much less about giving Werth a long-term contract than I would about giving Howard similar terms. Seriously, as this entire salary situation evolves, I concur that the Howard contract appears to be a relatively risky proposition. Not due to the annual salaries, but due to the length and Howard’s skill set (more “old player” skills (not fast, limited to single defensive position, somewhat athletic but not in the same mold as Werth or Utley).

  63. http://www.philly.com/philly/sports/20100510_Phillies__Werth_s_on_a_roll__making_himself_expensive_free_agent.html

    “I definitely feel at home here in Philadelphia,” Werth said when asked about his future beyond this season. “I love playing for the Phillies. Coming to work with these guys every day could be tough to beat.

    “That said, this is a business. I’ve said it before, I’ve played my whole career for this season right here. I plan to see it through.”

  64. I think Boston will be the highest bidder because Epstein values players who see a lot of pitches and are strong on defense. Werth wants financial security first. It’s a pretty simple hypothesis, I understand… but that’s my guess.

  65. Boston has also been getting iffy production from their outfield this year, due to age and injuries mostly, so I could also see them making a big move to get Werth.

  66. Also, don’t rule out the Mets who will have money to spend and spots in their outfield.

  67. Thanks PP. This is by far the most well thought explanation of how a team might set their payroll that i’ve ever read. I hope it works out this way. If some team in the AL does offer him 7years/100mill it may be best for everyone to let him move on anyway.

  68. I read Jayson’s comments today too. In their totality, I view his take to be “look, I love it here and I want to stay here, but I’m not going to be stupid – I’ll consider a discount and give the team the benefit of the doubt, but I’ve been working my whole life to get this deal and I want to get fair value.” I think this is one deal that gets done.

  69. By the way, I think both Rollins and Utley will also be extended. Utley because he’s a Phillie for life – he’s our Cal Ripken or Tony Gwynn – he’s the face of the franchise and, when he retires, he’ll be as closely associated with the team as any player that has ever been here, including Mike Schmidt. I’m not sure what the Utley deal will be worth, but Utley won’t break anyone’s bank – I think he’s still tickled pink with his first contract, even if it was slightly below market. Rollins will be signed because they’ll all be reasonable and because his market value is not quite as high as the others – I’m thinking like a 3 year, $40 million extension with a significant buy-out option for the 4th year.

    I also think Hamels will be extended, preferably sometime this year, when his value is depressed.

    Okay, I’ll stop now, I know it’s a minor league site but, of course, it’s relevant to what we talk about. I mean, if Villar were on the cusp of being another star, we wouldn’t be talking about extending Rollins.

  70. By the way, if he leaves (and I doubt he will), I wouldn’t be surprised if Werth went to the Giants – what a HUGE upgrade he would be for them.

  71. Here’s the worry: if he does test the waters, which it sounds like he is inclined to do, and if the Yankees (say) offer him a front loaded 100 over 5 (possible, especially given the season he is having so far – though he is bound to cool off some), is he going to take a backloaded 80 over 5 from the Phillies? I’m now convinced that the Phillies can and probably should offer that, but will it get it done?

  72. 5/$80M might get it done but my guess is that he’ll want more early to sign now. Trading Victorino, who I really like and think he always comes up big in big games, will almost have to be traded to keep Werth. Vic has a lot of value and in the 7th spot, he can be replaced in the lineup, maybe with a platoon of Francisco and another guy not here today (not Brown). Rollins will be a FA the following year, and is also more valuable than Vic, and will want his money. These are the problems of a very good team in today’s baseball world.

  73. I’m going to stop worry about this (Werth signing) for the following reasons.

    First, I think this is going to get done b/f Werth hits free agency.

    Second, the Phils have a lot of money and, I think, will sign him if what he wants falls within a range of reasonableness (5/$90 is probably the furthest edge of that range).

    Third, if some teams offers him an unreasonable amount of money, we’ll have very good draft compensation picks, we’ll have Dom Brown coming up and anyway, and we’ll have a ton of money to spend on other players, including an effective rent-a-player to be a hitter in this line-up.

    Worry about Werth signing?

    Fuh-Get-About-it.

  74. There’s something we haven’t addressed. Would the Phillies dare not offer Werth arbitration in fear of the payroll hit?

  75. No, unless they’re nuts, they’ll offer him arbitration. Absent a full blown reenactment of the Great Depression, he’s not going to be tempted to sign a one-year deal with a sexy 4-7 year deal that he’s likely to get. Not going to happen.

  76. One other salary option I haven’t seen mentioned yet is the possibility moving Lidge during the off-season to free up some cash as well.

    Don’t think there will be any takers for the full $12M but it is possible that some team might take a chance for 1 year at $3M-$4M with the Phillies paying the rest. This would obviously require that Lidge have a good season in 2010.

    Add in a trade of Ibanez for 1/2 of his 2011 deal and that opens up around $8M-9M towards the 2011 payroll and would allow them to pay Werth around $14M without a significant change in payroll. Since 2011 is the crunch year, a $16-18M contract after that becomes much more manageable.

  77. If I’m paying $8-9 million of Brad Lidge, the contract, I think I’d rather also have Brad Lidge, the closer. Now, if someone would pay $7-9 million, that might be a different conversation.

  78. I am going to apologize – this string has now entered the realm of the irrelevant for this site. I’ll resist the urge to make further similar comments.

  79. Very comprehensive and well thought out analysis in this post. It’s why I keep coming back to this site!

  80. Crackerjack piece of work, James.

    Just a few things to add to the mix: non-player post-season ticket income goes into a pot that gets divided as follows: WS Champ, 36%; League Champ, 24%; LCS losers, 12% each; LDS losers, 3 each%; Non-WC 2nd place finishers 1 each%.

    Here is more detail and context through 2008 from Maury Brown on The Biz of Baseball:

    http://www.bizofbaseball.com/index.php?option=com_content&view=article&id=3081&Itemid=39

    This doesn’t have direct impact on your argument, but here is the players’ share for the 12 qualifying teams as of 2008:

    http://www.bizofbaseball.com/index.php?option=com_content&view=article&id=2662&Itemid=42

    I might also point out that I think the Phillies’ TV deal with Comcast, which I believe runs through 2013, is undervalued. The Phillies own 1/3 of CSN; they are the highest-rated team broadcasts in the entire USA; and while advertisers have multi-year deals as sponsors, those rates do get adjusted several times a year after Sweeps. In other words, I don’t think the Phillies are getting short-changed on TV revenue.

    Bottom line: I think you make a compelling argument that the Phillies can certainly offer Werth as much as a five-year deal as you outline.

  81. My basic problem with the analysis: You are looking at payroll as a percentage of total revenue. While you are demonstrating that the Phils seem to be looking at things that way, I would argue this is not the proper way to look at it.

    I’m a financial analyst, which is a fancy way of saying that I do cost accounting. What the Phils should be doing is breaking up the costs into either fixed or variable, then attempt to maximize their net profits based on that analysis. Simply grossing payroll at 60% of revenue is clumsy.

    Take the costs of running the stadium. Within reason (i.e. our attendance doesn’t fall by 50%), the costs will be basically the same no matter how many more fannies we put in the seats. Let’s estimate them.

    Back in 2006,we had revenues of 176 and payroll costs of 104. Let’s suppose that the team broke even that year, which means the non-payroll related costs would be about 72. The point is that while attendance and prices have shot up, the basic costs of running the Phils have not gone up with them, at least not much. Oh, you will have executive bonuses and such, but the real estate taxes won’t be a whole lot more, nor will the power bill. Let’s estimate the total costs went up 10% from then, so we are now at 79.

    In the meantime, revenues have shot up to 233 and payroll to 139, which leaves a surplus of 94 to offset our overhead. We are now looking at making 15 Mil instead of breaking even. Looking ahead, we can jack up payroll to more than 60% of total revenues, and still be better off due to our fixed costs staying fixed no matter what our payroll might be. If our revenues went up to 300, we could have payroll of 70%! (210) and have 90 to pay our fixed costs of 79, and come out with 11 in profits, which is better than where we were in 2006.

    You can run this little experiement and see that as long as your basic overhead does not go up, then as long as the next dollar you spend on salaries increases your revenue by more than a dollar, it will be in your best interestes to do so. If the Phils think that signing Werth for $100,000,000 will increase their revenues respective to not signing him by at least $100,000,001, then hypothetically they should do so, for they would then be better off by $1 for that decision.

    In reality, these numbers will have a lot of protection baked in, and they might run the numbers and see that if they pay Werth $80 (say) and this will increase their revenues by $120 vs letting him go, the $40 surplus is worth the risk. If the revenue difference is only $100, maybe the $20 isn’t worth it.

    As it is, I don’t see how they will easily be able to replace Werth’s production with anything less than what they would have to pay him to keep him around, therefore I think you’re right and they’ll offer him a back-end loaded deal, and let Raul walk next year. They can do it, and I can’t see a better plan for them, myself.

  82. This is obviously tremendous work, and it even makes me rethink some of the head-scratching 2 year deals the Phils made this last off season. Perhaps the Phils were planning for the future much like you’ve outlined here, and hoping that they could fit Werth in?

    For me, one of the biggest take-aways is that the Phils are likely to increase payroll to the $150M range next season, giving them something like $15M to fill “5 roster spots, 3 of which are bullpen spots…” That seems like a reasonable way to look at the 2011 off season. But from my perspective, the question is not “is this enough to sign Werth,” but “how can we best improve our club with $15M?”

    Looking at the roster, I’m struck that they will be awfully thin at the back of the rotation if they count on Kendrick to be the 5th guy. Basically, Kendrick is between replacement level and 1 WAR (not sure if WAR is the preferred stat around here). On the other hand (and I might be too bullish on Francisco/Gload/Mayberry) I bet you could get about average production out of some platoon combination of Francisco, Gload, and Mayberry. I’m pegging that average production at about 2 WAR. Werth looks to be a 4.5-5 WAR player.

    So here’s what I’m seeing. The Phils can put together a 5 year, $80M+ contract for Werth, and the end result is that in 2011 they will a 2.5-3 WAR upgrade over a combination of Francisco, Gload, and Mayberry. Or they could very likely take that same money and look to replace Kendrick’s production. Again, Kendrick is a 1 WAR player, if that, and there will be a number of veteran starters who will be around 3-4 WAR and looking for 2-3 year contracts. That last part is pretty important if you ask me: veteran SPs looking for 2-3 year contracts, the exact type of contracts the Phils love. Looking at MLBtraderumors, I’d say Lilly, Pavano, Vazquez, and hell, maybe even Webb fit the bill. This option is not nearly as sexy as trotting out an outfield of Werth, Vic, and Brown starting late 2011, but replacing Kendrick with a quality SP might be cheaper and might easily offset the lose of Werth, at least as far as WAR is concerned.

    Anyway, I want Werth back, but this team is getting loaded down pretty quickly with large contracts for guys in their 30s. My point is only to say that there may be better ways to spend the money that PhuturePhils has shown to be available.

  83. Phils enjoy largest ‘single team city’ benefits.

    Markets of more than 10 million people
    ——————————————————–

    21,199,865 New York Mets, New York Yankees
    16,373,645 Los Angeles Angels, Los Angeles Dodgers

    Markets of 5-10 million people
    ——————————————————–

    9,157,540 Chicago Cubs, Chicago White Sox
    7,608,070 Baltimore Orioles, Washington Nationals
    7,039,362 Oakland Athletics, San Francisco Giants
    6,188,463 Philadelphia Phillies
    5,819,100 Boston Red Sox
    5,456,428 Detroit Tigers
    5,221,801 Texas Rangers

    Markets of 3-5 million people
    ——————————————————–

    4,682,897 Toronto Blue Jays
    4,669,571 Houston Astros
    4,112,198 Atlanta Braves
    3,878,380 Florida Marlins
    3,554,760 Seattle Mariners
    3,426,350 Montréal, QC (NHL)
    3,251,876 Arizona Diamondbacks

    and so on….

    The point is ownership has not even scratched the surface of this captive market, baseball crazy city.

    Playoffs last year bear out the rating drubbing little old Philly put on double the household LA.

    http://www.projo.com/redsox/content/projo-20091020-philly-new-york.235884a75.html

    Werth is absolutely affordable. Keep the pressure where it belongs….ownership.

  84. If the Phils bump the average ticket price $5, with the big bump for premium seats and a lesser for others, that would be an extract $16MM in revenue/profit as there is no cost associated with a price increase. The Phillies have been pretty fair in their pricing making this logical, especial if there is another deep run. The cash is right there, ready for the taking.

  85. Would love to see an abridged update on this following the Dom Brown callup and the Oswalt deal. Would very much assume that they’d need to make a move to squeeze Werth in.

    Another great read though, thanks!

  86. Allow me to second that request, with some of the variables having been changed (Castro being released, Happ no longer an option although Worley could replace him, Oswalt being signed), would it be possible for the Phillies to sign Werth and maintain that $151 million payroll

    My prediction, if the Phillies at least make it to the World Series, they will see an increase in revenue somewhere on the order of 10-11%, which would allow them the flexibility to sign Werth

  87. At this rate and what Werth will command, even at a a $151 MM payroll, they can’t fit in Werth unless they moved other significant salaries.

  88. Taking the chart up there, I added:

    Oswalt – 10M (16 – 6 leftover from the cash we got this season)
    Bench Bat – 1M
    Francisco/Kendrick – 3M combined
    Brown – 400K
    4 RP – 400K each (1.6M) (take your pick of Mathieson, Bastardo, Schwimer, Carpenter, Herndon, Stutes, Rosenberg, etc. We have a lot of options)

    That puts the Phils at 149.5M. But no Werth. However, with a little manuevering…

    Trade Blanton for a B prospect without eating salary (should be doable for a guy with his track record) – minus 8.5M
    Replace Blanton with Worley (who, since being drafted, as been compared to Joe Blanton, and is coming on nicely) – 400K
    Trade Ibanez and half his salary for a really tasty brownie – minus 6.5M

    That puts the Phils at 135M. They could sign Werth for 15M a year and not be over the budget that James projects. Would it be risky going into the season with Kendrick/Worley in the rotation and all the young guys in the pen? I don’t think so, it’s not like we’re getting great production out of the guys they’d be replacing, and the Phils seem to have a ton of ML-ready bullpen guys to mix and match. If they backload Werth’s contract (or can unload Ibanez without paying half his contract), they could free up a few M to go out and get a slightly more reliable back of the rotation guy. Regardless, they certainly have options, and none that are too unrealistic.

  89. The Phillies won’t go with 4 rookie relief pitchers, so that blows a little bit of your equation. Also, if Ibanez were on another team, would you pay $6 million to acquire him? I wouldn’t.

  90. I was just messing around with the current contracts of the Philles and, with some admitted guesses for what some Philles would make in arbitration (Kendrick, Francisco), the Philles have about $149.5 million committed to 19 players next year. If you assume they fille out the roster with players at the Castro/Sweeney level, about $700,000, then that would bring the overall payroll to $153.7

    Ain’t no way they can keep Werth unless they clear some dollars off the books, like Ibanez and Blanton. I do not think you want to pay your 4th or 5th best starter $11MM a year, so a trade of some kind is likely

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