My snap judgment is, I’d have rather it be someone else, because Santana has a ton of upside. The rational part of me says that this is fine, because Santana is a super high beta prospect. He has obvious upside, but his K rate is a huge red flag. Massive. I wish him the best and hope he turns in to a star. Pence hasn’t missed a beat with the Phillies, and the Astros package now represents almost all upside, with the exception of Zeid. This could end up being a massive hit for the Astros, or a stunning miss. Santana was looking like a good bet to remain in the Phillies top 10, so it is unfortunate, but it won’t break the farm system. At all. Anyone labeling this a disaster is just looking for attention or to try and create drama.

Astros fans, check out Santana’s player profile page here.

The deal is apparently Jon Singleton, Jarred Cosart and 2 players to be named later, per Ken Rosenthal. I’m going to write up a long analysis of this deal, from all sides. I’m sure you want to react quickly and say how much you love it or hate it. So do that here. And then check back later if you are curious for my take on the trade.

What is the difference between the July 31 deadline and the August 31 deadline?

All teams have the ability to trade any player in their organization to any team they like (assuming said player doesn’t have a no trade clause) without worrying about the waiver process before August 1. After July 31st, any player you wish to trade must be passed through waivers. When you put a player on waivers, any other team can put in a claim. If a team claims a player, the two teams can attempt to work out a deal within a given time window. If no deal is reached, the team that waived the player can either let him go for nothing or pull the player back. If the player is pulled back, he can’t be traded again during that season. As you can see, pulling off a trade before July 31st is the preferred option and removes multiple layers of complexity. Teams can still pull off a move after July 31, with the Phillies notably doing this in 2008 when they acquired Scott Eyre in August, a move that would greatly impact the Phillies postseason run.

Will the Phillies make a move?

I don’t know. Ruben Amaro will never be called timid. He’s delivered big moves the past two seasons, and also delivered Roy Halladay over the winter in 2009. He’s generally been a big game hunter, landing Cliff Lee and Roy Oswalt and hasn’t really filled in around the edges with the smaller deals Pat Gillick was famous for. The Phillies are one of the 3 best teams in baseball, you can argue they are the best team in the NL, and thus, not making a move does make some degree of sense. Lots of smart people have calculated the odds of a team winning a short series in the playoffs, and there is quite a bit of variance and luck involved. If the Phillies have a 60% chance of winning a random 5 game series against team X, the addition of one player (when factoring in the player he replaces) may only add 3-5% to a team’s chances of winning the series. That said, when a team has invested over $170M in payroll, you can bet Amaro is looking to give his team everything possible to win a World Series ring.

Who are the Phillies targeting?

As discussed above, Amaro tends to go big or go home. While you can argue that a little fine tuning around the edges is needed, that doesn’t fit the MO of our GM. I think it’s safe to say we’re not looking at Felix Hernandez or Ubaldo Jimenez, but I wouldn’t really rule out any extra talented every day player. When Amaro gets fixated on a player, he goes and gets him, no matter the cost. But it takes two to tango.

Who are the Phillies untouchable prospects?

This is a website devoted to Phillies prospects. I obsess over Phillies prospects more than anyone, and get attached to guys who become personal favorites, and I never want these guys traded. That said, no one in the system is untouchable, because there is no such thing as a “can’t miss” prospect. Every prospect is a future project. Some of them look a lot more likely to be stars, others seem a lot more rough around the edges. But all of them carry a value, just like a stock commodity. Like stock trading, the key is knowing which assets to hold on to, which to sell, and on the other side, which players in other organizations to “buy” at the right time. The same group of names will come up over the next 2 weeks: Jon Singleton, Jarred Cosart, Brody Colvin, Trevor May, Sebastian Valle, and others. All of these guys have strengths, all of these guys have flaws. Trading all of them would be a huge risk, obviously.

But the important thing to look at is the depth of the Phillies farm system. We may lack a position player like Mike Trout or a pitcher like Matt Moore, but our depth from prospect #1 to prospect #20 is very strong. After our first 7 guys, we have 10 more guys who are interesting. Not to mention we have quite a few interesting 2011 draft picks who are unsigned, but who will likely be signed by this time next month. According to a reader/contributor here, Tyler Greene, arguably the third best prospect we drafted, is going to sign. I’m sure we’ll pick up a few interesting guys in Latin America. The point of this diatribe is that our system is very deep.

The Major League team is old, we can’t trade prospects

I’ve seen this sentiment in a number of places, and on the surface, I agree. However, a few things need to be considered. Outside of bullpen arms, the Phillies have no impact prospects at AA or above. The Phillies, over the last 5-6 years, haven’t made a habit out of rushing position player prospects to the majors. Singleton, just 19, is probably 3-4 years away from being a regular on the Phillies team, barring some crazy development. That doesn’t mean he should be traded for just anyone. However, this brings up another angle. Prospects can be traded for proven major league players in their prime. The Indians couldn’t afford losing Cliff Lee to free agency, they didn’t feel they could afford him long term, so they traded him to the Phillies in 2009. The Phillies turned a few prospects into Cliff Lee. At this point, none of those prospects are coming close to replicating what Cliff Lee is giving the Phillies.

Yes, we can’t stock the roster with 15 guys making $20M per year. But large market teams who are willing to max out their payroll aren’t going to rely on rookies to fill key lineup spots. The current major league roster is older, but none of these players (those who will be here next year, ie, not Ibanez) are declining just yet. Howard, Utley, Halladay, Lee, Hamels, Victorino, and Rollins are still in the prime or the tail of their prime years, and are likely to be there for at least 3-4 more years. As these players grow old and come off the books, they will be replaced by new players. The Phillies have stepped up payroll wise. They are no longer a small market club in any sense, and they aren’t acting like one. Small market clubs cling to all of their prospects, dreaming of putting together a team of cheap players who win a World Series for pennies. This rarely ever happens.

Conclusion

You may misinterpret this as me saying “trade everyone”, and that isn’t my message. I wouldn’t be too keen on trading 2 of the Big 7 for Mike Adams. All I’m saying is, the Phillies are going to leverage their assets to maximize the 25 man roster heading in to the playoffs. This is a special team, with a potentially historic pitching staff, and it would be a shame to look back in 5 years and say “we could have had player X, but we wouldn’t give up prospect Y” and that being the difference between winning a pennant and winning a World Series. When the inevitable trade is made, just take a deep breath and let the dust settle before we pick it apart.

Update 7:34 PM –> It was a long day. If there are typos, try and get past them. If I made any errors, I’ll correct them at the bottom of the post after you point them out. Thanks.

I’m going to try and stay on point here. I started thinking about how to write this piece last night, when we just had very sketchy details. In my head I wrote an intro which went about explaining why it was okay to trade Jon Singleton for Oswalt, or why it would be okay to trade Jarred Cosart for him. I wrote lots of different variations in my head, and then we got the actual deal, and I just kind of scrapped what I was thinking about and started over. I’ll divide my analysis up into very easy to read sections. I could easily write 10,000 words on this deal, because of the bigger picture items, but I’m going to try and summarize those and then dig into the more philosophical stuff at a later date.

The Phillies get Roy Oswalt

Over the last few weeks, I’ve read a lot of puzzling things about Oswalt, most of them passing remarks, and the consensus seemed to be that Oswalt was an over the hill, mediocre starter at the end of his career. Roy Edward Oswalt is 32, and will turn 33 at the end of August. Harry Leroy Halladay is 3 months older than Oswalt. Is Roy Halladay at the end of his career? I’ve also heard that Oswalt is injury prone and can’t be relied on. From 2004-2009, he averaged 217 IP per season. Yes, his IP have been declining, but last year was his lowest innings total since 2003, and he pitched 181 innings. Last year was Oswalt’s worst since that 2003 season, as he posted a 102 ERA+ with a 4.12 ERA in 181 IP, with 138 K and 42 BB. This season, he has already thrown 129 innings, with a 3.42 ERA, 1.11 WHIP, and 120 K to go with 34 BB. Oswalt’s xFIP of 3.45 this year is right in line with his career mark of 3.57. Oswalt is not Roy Halladay, he’s not Tim Lincecum. But he’s a damn good pitcher.

$11M in cash. Which is one of the most staggering parts of this deal. Oswalt makes $15M this year, $16M next year, and then has an option that is now complicated for 2012. For now, just focus on 2010 and 2011. The financial obligation to Oswalt, should he opt out of his option in 2012 (or the Phillies decline) is about $23.5M. Figure $5.6M for the rest of 2010, $16M in 2011, and then at the minimum, $2M for his buyout. The Astros sent $11M in an armored truck. That means that you can wipe the $5.6M he’s owed for the rest of this year. And $5.4M off his 2011 contract, meaning he’ll only really earn about $10.5M next year. According to Fangraphs’ WAR valuation, Oswalt has been worth 2.7 wins so far in 2010, and is on pace to pitch another 80 or so regular season innings. Projecting out his past performance in 2010 to the rest of his 2010, he’d be worth another 1.7 wins, give or take. If you assume the value of a win is $5M (which seems to be the conventional thought these days), Oswalt will be “worth” about $8.5M for the rest of 2010, and that’s regular season wise. If he’s a 4 win pitcher next year, he’s “worth” $20M. The Phillies will be paying about half of that.

The Astros receive LHP JA Happ, OF Anthony Gose, and SS Jonathan Villar

As a big believer in advanced metrics, notably defense independent pitching statistics, I was always skeptical of JA Happ. Michael Schwimer, esteemed minor leaguer and phuturephillies contributor, presented his theory on why JA Happ is successful, and it certainly deserves merit, yet I was always skeptical. Happ features an average fastball which he likes to elevate, as well as a good changeup and a fringe slider. He served the Phillies well in 2009, pitching 166 innings and logging a 2.93 ERA despite modest peripherals. This season he’s battled injuries since spring training, and has only just recently made it back to the majors after struggling on his minor league rehab assignments. Happ, 27, is older than most people think, as he is often labeled a “cheap, young option”, and while he is cheap, he isn’t really that young anymore. 2011 will be Happ’s age 28 season, and he is a finished product with limited upside. Still, he will be a good #4 in a rotation like Houston’s, and he shouldn’t be arbitration eligible until 2012, and he won’t be a free agent until 2015. Happ is the type of guy who provides you good value until he reaches his 2nd arbitration year, when his contract may start to outpace his modest, #4 starter production. A 4th round pick in 2004, the Phillies certainly got maximum value out of a slot signing.

Anthony Gose, a 2nd round pick in 2008, drew a somewhat surprising assignment to Lakewood in 2009 and put up a solid season, stealing a whopping 76 bases in 96 attempts, while posting a .676 OPS. Moved up to Clearwater in 2010, he’s improved in several facets of his game, hitting for a higher average, drawing walks at a greater rate, and hitting for more raw power despite playing in a very pitcher friendly league. The one aspect of his game that has gone backwards is his base stealing, as he’s stolen 36 bases but has been thrown out 27 times. Recent reports indicate that Gose is continuing to learn the base stealing trade, realizing he needs to steal bases more on technique and feel now instead of just his raw speed. His outfield defense is well above average, and he has a cannon for an arm. He profiles offensively as a center fielder, but he has the arm of a right fielder as well as elite range. At just 19 (turning 20 in August) he is very young for the FSL, and has tons of time to figure out the rest of his game. He has elite upside and has drawn Carl Crawford comparisons for his physical tools. Of course, the gap between where he is now and Carl Crawford is immense. I ranked Gose 5th on my pre-season Top 30 prospects list, and kept him 5th in my midseason Top 15.

Jonathan Villar, signed for $105,000 out of the Dominican Republic in 2008, has proven to be an incredible find for the Phillies. Despite being one of the youngest players in the NYPL last season, he posted an encouraging .700 OPS showing good speed, the ability to draw a few walks, and getting solid reviews for his defensive chops. The Phillies moved him to Lakewood this season, where he was again very young for his league, and he responded by improving his game across the board, stealing 38 bases in 51 attempts. Villar’s raw tools are excellent, and despite the 42 errors, scouts love his defensive ability, citing excellent range and a really strong arm. He’s still very young and will make the occasional mental mistake, but he has the tools to be a solid starter in the big leagues. Like Gose, the gap in his present status and his future projection is massive. I ranked Villar 18th heading into the 2010 season, and bumped him up to 13th in my mid-season Top 15.

How does this deal help the Phillies?

This part should be obvious. The Phillies acquired a solid #2 caliber starter and will pay him substantially less than he should be worth over the next 1.5 seasons, maybe more, and to do so they gave up a #4/5 starter and 2 prospects. In the playoffs, the depth of your rotation is not as important as the quality at the top of your rotation, which the Yankees displayed last year by not using a 4th and 5th starter at all. This year, however, 4th starters will be more important with the re-configured schedule. Oswalt bumps Joe Blanton to the 4th spot. Blanton has been really unlucky this season on balls in play, and has been the victim of an unsustainably (thankfully!) high home run per fly ball rate. Over his last 6 or so starts he’s started to pitch better, and you have to assume, based on his track record, he’s closer to a 4.25 ERA pitcher than a 6.50 ERA pitcher. Missing a month at the beginning of the season didn’t help. ANYWAY, the Phillies now sport one of the best Top 3′s in baseball, and Oswalt should give them an excellent chance of reaching the playoffs and then doing damage if they get there. Oswalt essentially replaces Happ, who was coming off an injury and who looked rather shaky in his last start. There is no way to know how Happ would have pitched in Philly, only how he will pitch in Houston, and we’ll see how Oswalt pitches. But its an upgrade not only for 2010, but also for 2011, where the Phillies will be getting a potential $20-25M pitcher for about $10.5M. Thats important because…

The economics of the deal

The Phillies have a ton of money tied up into their major league roster for 2011, 2012 and beyond. The Phillies would not have been able to sign a free agent this winter of Oswalt’s caliber, for a 1 year $10.5M deal (or 1 year, $12.5M if you count the potential buyout), and they weren’t going to get a player of Oswalt’s ability for free for the rest of the year without giving up talent. This deal, with the $11M in cash, allows the Phillies to retain everyone on their current roster for the rest of the season, and it also allows Amaro to potentially add a bullpen arm, a bench bat, or something else heading into the July 31 deadline and then the August waiver deadline. As we’ve seen in the past, these guys (Scott Eyre comes to mind) can have a huge impact. Getting the money from Houston certainly helps this year and next year. The Phillies do not have an unlimited budget, and even if payroll rises to $150M like I projected a while back, they still need to save where they can.

For so long, the Phillies were considered a cheap organization. They now sport one of the highest payrolls in baseball, even with teams sending them cash. Its actually amazing, when you think about it, that the Blue Jays and Astros are paying the Phillies to have Roy Halladay and Roy Oswalt in the starting rotation. The Phillies paid in prospects, of course, but getting the money kicked in is certainly a tangible asset that has to be accounted for.

The impact on the farm system

As I mentioned above, I had Gose ranked #5 heading into the season, and Villar #18. I kept Gose at 5 and moved Villar up to #13 in my updated mid-season ranking. Which means the Phillies were able to protect all of their elite prospects; Domonic Brown (still a prospect), Jarred Cosart, Jon Singleton and Brody Colvin. Villar was the Phillies best middle infield prospect by a sizeable margin, but the gap in where he was and the majors is vast, and he can be replaced at some point. Gose is one of many high upside outfielders in the system, a group which still contains Jiwan James, Tyson Gillies, Domingo Santana, Aaron Altherr, and Kyrell Hudson, and that list doesn’t include the 2010 draft picks. There was no mortgaging of the farm. No elite prospects were traded.

At this time last season, when the Phillies were trading for Cliff Lee, people were convinced the farm was in big trouble after trading 4 guys. Then, when Amaro traded Drabek, Taylor, and D’Arnaud for Halladay, it was again going to be a gutting of the system. Then, when the 3 prospects acquired for Cliff Lee got off to slow starts, the Phillies system was again on the downswing. And yet, here we are, and the Phillies still possess 4 elite prospects in Brown, Singleton, Cosart and Colvin. If Brown loses his eligibility this season, the Phillies top 3 is still Cosart (top 25 in baseball, or close), Singleton (to 50-75ish), and Colvin (Top 100). It really is amazing. The Phillies have traded for 3 elite starting pitchers, and still have an extremely strong system, both in terms of current elite guys, and guys who could become elite prospects. At this time last year, Jon Singleton wasn’t on anyone’s radar. Even last winter, Kevin Goldstein said to temper expectations. And now, there’s no stopping him, and he’s untouchable to many. Which brings me to…

The real purpose of prospects

I think some people here tend to lose sight of the fact that the goal of any organization is to win games at the big league level. Everyone loves falling in love with prospects. Seeing a guy like Domonic Brown come through the system, then make it to the majors is a really rewarding feeling. But for every Domonic Brown, there are 50 guys who will never make it, or never contribute. Prospects are like stocks. You do your research (scouting), you decide whether to buy the stock (drafting/signing international market), and then you continue to do your research and decide whether to keep the stock or sell it. If you buy the right stocks, and everything goes as planned, you hold onto that stock. The Phillies did this with Chase Utley, Ryan Howard, Cole Hamels and others. In some cases, you realize that the stock you have might be valuable to trade for another stock. You look at the value of what you’re giving up, compared to what you’re getting. If something happens to the value of your asset before you have a chance to trade it for another valuable asset, you may never get a chance to receive value for it. The Phillies spent $200,000 on Jon Singleton, $772,000 on Anthony Gose and $105,000 on Jonathan Villar, in terms of signing bonuses. They turned that $1.1M investment (and the $175K or so Happ got way back in 2004) into Roy Oswalt and $11M in cash. Anthony Gose may turn into a star. He may provide $50M in value (to the Blue Jays, not the Astros, since he’s been traded again) and the Phillies may end up not getting the max for him, but if Roy Oswalt helps them win division title #4 and #5, and World Series #2, the Phillies won’t concern themselves with what Gose ends up being worth.

But what about Cliff Lee?

If you’re a regular here, you know that I’m tired of discussing Cliff Lee. But the lazy journalists out there keep bringing it up. They keep saying things like “they could have just kept Cliff Lee”, ignoring the fact that that the Oswalt deal is just as much about 2011 as it is 2010, and that Cliff Lee would not have given the Phillies more than 2 draft picks in 2011. They ignore that the Phillies had a budget, and that with Lee here, Joe Blanton isn’t extended, and we only have 2 potential starters locked up in 2011. They lose sight of the fact that the 3 prospects the Phillies received for Lee have not been given adequate opportunity to show their future worth. Just as Anthony Gose may turn into a star for the Blue Jays, any of the 3 guys the Phillies received for Lee may turn into a star.

Look, heres the thing. And if you take only one thing from this piece, I hope this is it. The Cliff Lee deal is done. Most people agree that Amaro should have either a.) Kept Lee or b.) Gotten more in return. But that deal is done. Its not going to be undone. So since Amaro may have botched that deal, should he not bother trying to make other deals to improve the team? As a GM, every deal you make needs to be evaluated in a vacuum. Does this deal make our team better should be the driving force. The Roy Oswalt deal makes the Phillies better, so its a deal you should make. Keeping Cliff Lee would have made the 2010 Phillies better. So that was a missed chance. But its done. You move forward, and if you’re Ruben Amaro, you continue to try and make the team better. And he did. Not every move is going to work out. But I’m someone who appreciates the process as much (or more) than the results, and I think Amaro’s approach in the case of Oswalt is fine. When you’re proactive and aggressive, you’ll make mistakes. But if you do your best to rectify the mistakes, its hard to find fault in your approach.

I guess I can only beg and plead so many times. Just move on. Cliff Lee isn’t pitching for the Phillies this year. And he’s not going to pitch here next year. That’s because the Phillies don’t give out more than 3 years guaranteed to pitchers, and Lee is going to get at least 5 years. Cliff Lee is awesome. I’d have liked him here this year. But it didn’t happen. It won’t happen. And wishcasting isn’t going to make it happen. No one knows how he’d have pitched if he’d have been here. Its make believe land. In the real world, the Phillies just improved their team for 2010 and 2011, without mortgaging their future.

Conclusion

This deal is a clear win for the Phillies. Both prospects the Phillies gave up are 3-4 years away from making it to the major leagues, and probably even further away from being above average big leaguers. The beta, or the risk, is extremely high on both guys. Both could be stars, and both could end up getting stuck in AAA. The most common criticism I read is that the Phillies are “getting really old” and that they have to “keep their younger players”. I agree that young talent is needed to sustain this run of awesomeness. But the Phillies still have an abundance of talent in the minor leagues. If Jon Singleton continues to rake, he’ll maintain his elite trade value, and in 2 years, if the Phillies need a shorstop, or a left fielder, or a starter, or whatever else it is they need, they’ll have the prospects to go get them. Established major leaguers are a safer bet than prospects, no matter how much you love the prospect. For every elite stud, there are 50 guys that never make it, even though all the major prospect outlets were convinced they were on the way to stardom. The path to the hall of fame, or even an above average big league career, is a path not often traveled.

Here is where I give you my unedited opinion. The Phillies are a model franchise, and if you can’t appreciate what they are doing, then I think you’ll never appreciate anything the franchise does. 3 straight division titles. A World Series ring. The best pitcher in baseball begging to come to your team and signing a below market level deal. A stocked farm system. One of the best scouting departments out there, which consistently finds under the radar bargains and steals in the draft, and a Latin American program churning out solid prospects for $100-300K a pop, while other teams are spending huge 7 figure amounts and seeing less return for their investment. A packed ballpark, and a payroll near the top of baseball. 10 years ago, the Phillies had to beg overpriced, average free agents to come to the team. Now, players can’t wait to play here. This trade sets the Phillies up to make a big run at another division, another pennant, and another world series ring. And they kept their best prospects. This was an awesome trade.

There are plenty of places to read about Happ. If you want to read about Anthony Gose, check here, and you can also check out my Top 30 prospects from this past winter to read about Jonathan Villar.

In my midseason Top 15, I ranked Gose #5 and Villar #13 in the system.

I will provide full analysis of the deal later this evening, so if you want to hear my take, check back later. In the meantime, use this post to discuss the deal.