Sign An Ace, Deal An Ace

Though the Phillies have shown signs of improvement recently — especially in terms of coming back from deficits — they are still very unlikely to make the playoffs this season. While I’m not trying to Debbie Downer the situation after the last couple of wins, that type of sobering outlook is merited when the trade deadline is merely a week away.

Ruben Amaro and company are currently balancing the the odds of contending next season with many members of the current roster with the need to extract value from potential free agents or trade targets.

Cole Hamels has been the talk of the baseball world, but many executives and analysts figured he would eventually agree to an extension with the Phillies. Hamels and the Phillies agreed to a six-year, $144 million extension this morning.

Given the assumptions pointed towards Hamels, some insiders felt that it was never realistic for the Phillies to trade him, or that they would get never get anywhere near commensurate value for a player of his caliber with the new collective bargaining agreement in place — compensation picks aren’t received for players who leave after not spending the entire season with a team (IE, a rental player).

With that in mind, the idea was floated that the Phillies could instead look to deal Cliff Lee. The idea comes off a bit shocking, but that doesn’t mean it lacks merit. Removing emotion from the equation and putting the current and future needs of the organization at the forefront, would trading Lee actually constitute a wise business decision?

To properly answer, we need to explore where the team is headed, payroll ramifications of any such move or non-move, and a comparison of what is gained from dealing him to the loss of guaranteed production that accompanies such a transaction.

Team payroll is the first area of interest here, and the Hamels extension looms large. With Hamels making approximately $24 million annually, the Phillies will have a hard time avoiding the luxury tax if the goal is to field a legitimately competitive team next season. If they manage to stay below the $178 million threshold, their ability to maneuver in-season will be greatly hindered. As we discussed a couple of weeks ago, the luxury tax calculable payroll is what matters here, not actual payroll, because the Phillies haven’t mandated an internal salary cap, and the only penalties they could incur come in the form of that tax. Luxury tax payroll is calculated a bit differently, and with a $24 million/year Hamels added to the mix, the Phils figure to stand at $143 million through just 10 players next season. Sure, minor leaguers or youngsters making the league minimum could fill out most of the remaining spots, but that goes against the goal of fielding a legitimately competitive team.

The main reason why it goes against that goal is that the Phils farm system ranks towards the bottom of the sport. While there are certainly solid players throughout — mainly starting pitchers — the system lacks offensive firepower. The best batting prospects were dealt for Hunter Pence, and other potential impact players are either blocked, years away from contributing, or both. Using a surplus of youngsters wouldn’t really help, because if they were performing better, the farm system wouldn’t rank as poorly.

With so much money tied up in so few players, the Phillies will have a difficult time making important and necessary moves. And they will likely enter the 2013 season without a centerfielder, without a full-time third baseman, and with a couple of questions in left field.

It stands to reason that trading one of those high-priced players could kill two birds with one stone. The Phils would free up money that could get allocated to a few different areas of need and bring back solid prospects that are ready, or close to being ready, for the major leagues. But not every high-priced player is viewed the same. Hamels isn’t going anywhere. Teams aren’t exactly flooding the phone lines to inquire about Ryan Howard. Chase Utley has a relatively expensive year left and numerous questions surrounding his health. Many teams are shying away from signing closers like Jonathan Papelbon to lucrative deals, and the Phillies have no motivation to move Jimmy Rollins. Pence might provide one of salary relief or a prospect infusion, but not both, as he is viewed as a non-elite player who makes a great deal despite being under team control.

That leaves Cliff Lee and Roy Halladay as two high-priced, elite players that could help the Phillies accomplish the stone-bird-killing metaphor. Since Halladay has one guaranteed year left on his deal after this one, and his current health status is up in the air, Lee is realistically the only player the Phillies could move that would afford them long-term salary relief as well as an infusion of talented prospects.

However, pitchers like Lee — both in talent and contractual status — aren’t dealt all that often. Lee still has 3.5 years left on his deal, and is owed roughly $97.5 million over that period, including the $12.5 million buyout of his 2016 option. The contract doesn’t include any stipulation about that option vesting automatically upon being traded, so the same vests would apply unless something was worked out with a new team. If he stays healthy and pitches effectively, it’s entirely possible that his deal has 4.5 years and $112.5 million remaining.

Only a few teams could even realistically acquire Lee and pay most, if not all, of his remaining salary, and it’s unlikely that those teams would also surrender a great deal to bring in a pitcher at the value he actually signed for, without any type of discount. The Phillies would have to include money in the deal to enhance the return package, and the amount they include would obviously eat away at the potential salary savings that could get allocated to center field, third base, and any other area in need of an upgrade or reinforcement.

The Rangers make the most sense as a trade partner for Lee, because they have a deep farm system, the motivation to acquire an elite starter, and the money to pay him without incurring the tax. When Hamels was linked to the Rangers, Jamey Newberg of The Newberg Report speculated that the Phillies could ask for third base prospect Mike Olt, righty pitcher Cody Buckel, lefty pitcher Victor Payano and shortstop Hanser Alberto. Others like second baseman Rougned Odor lefty starter Martin Perez were also mentioned as possibilities. That type of package always felt too rich for 2-3 months of Hamels, especially given the CBA rules regarding compensation picks and rental players. But that package makes plenty of sense for 3.5-4.5 years of Lee.

If the Phillies could bring in legitimate prospects at second base, third base and shortstop and add a talented pitcher or two, while saving $14-$16 million per season after accounting for the money thrown in for Lee’s salary, it becomes far more palatable to embrace a move. And since Olt is basically major league ready, the money freed up is about the same as it would have been if the Phillies weren’t footing some of the bill, because they wouldn’t need to spend anything other than the league minimum to upgrade at third base.

With $16 million available just from Lee next season, the Phillies could make a run at Michael Bourn or B.J. Upton to replace Victorino. They could potentially look to sign someone like Anibal Sanchez, Brandon McCarthy, Edwin Jackson or Shaun Marcum to bolster the rotation. The bench could be improved with the additions of David Ross and Jeff Keppinger. The Phillies could probably sign a combination of Bourn ($12 mil), Marcum ($9 mil), Ross ($2 mil) and Keppinger ($2 mil) for exactly what Lee stands to make next season. The dropoff from him to anyone else in the rotation is material, but the upgrades across the diamond would likely more than cover that rotational shift.

Losing Lee would be difficult from the standpoint that he’s an elite starter on a team built around pitching, but the Phillies can remain pitching-oriented while improving their offense if given the financial opportunities that moving him would provide. Lee is the only realistic option capable of giving the Phillies prospects and salary relief, so dealing him could represent a very wise business decision. At the same time, however, there are a number of contingencies in play. Will Amaro actually get two or more of Olt, Odor and Alberto from the Rangers? Will the Rangers accept $7-$8 million per year from the Phillies? Will Amaro wisely spend his savings in a manner described above, or will he allocate $7 mil per year to another reliever like Mike Adams, who while phenomenal, is still a reliever?

The Phillies have certainly gone through the whole acquire an ace, deal an ace situation before, when Lee himself was dealt in a move ancillary to the Roy Halladay acquisition. The return for one year of Lee at $8 million was quite poor, but the entire situation felt rushed, as if Amaro just wanted to make a move and that offer was sitting on the table. A whole heck of a lot needs to go right for a Lee deal to benefit the Phillies as much as it could, and skepticism directed towards the front office on that front is certainly merited. But, in isolation, and assuming the money could be allocated properly and that someone like Olt would come back in the deal, the Phillies would remain competitive next year by shoring up a couple of key areas and improve their odds of succeeding in the future by trading one player.

While the initial thought of dealing Lee might have come off as shocking, what’s truly shocking is just how much dealing him makes sense.