Contract negotiations. Mandatory Credit: Howard Smith-US PRESSWIRE
Earlier this year, Cole Hamels hit Bryce Harper in the back with a pitch at Nationals Park. Cole Hamels has faced 5,064 batters in his career. He has hit 27, or somewhat less than 1 out of 200. During the game, it appeared that it was intentional. After the game, Hamels told everyone that it was and removed all doubt. Why?
At the time I couldn't remember a time when Hamels hit a batter intentionally. I still can't think of one. After hitting Harper, Hamels rationalized it to the press with a ridiculous "prestigious baseball" excuse. Everyone in baseball said he was an idiot for admitting he intentionally hit Harper, and said he should have kept his mouth shut. The Cool Californian suddenly turned into Bob Gibson because Harper annoyed him or needed a baseball baptism? An intelligent player suddenly turned into Brett Myers? No way. Still, that was the cover story, and it was pretty thin.
I suspect that the real story is, "Hamels hit Harper to make more money." We've joked about Hamels being an assassin. How right we were, but we didn't really realize the extent of it.
One of the epic free agency negotiations in the last decade of baseball is well underway. The financial stakes could be worth hundreds of millions of dollars to Hamels, the Phillies, and third parties. I have no smoking gun and no sources. I am a part-time blogger far removed from Philadelphia, and all I can show is means, motive, and opportunity. It's a case of circumstantial evidence, but walk through it with me.
I have a couple of themes to share here. First is that Hamels hit Harper to make more money. The second is that the Phillies need to mortgage their future for the next few years to maximize their TV contract. Third, Phillies can't trade Hamels at the deadline. All of this came to a head in Washington a month ago, and resulted in a 19 year old prodigy taking a curveball in the ribs because of contract negotiations and billions of dollars of media money. I'm glad he wasn't hurt, and I hope he realizes that it wasn't personal. It was just business.
Let's go down the rabbit hole, shall we?
The Phillies are salivating about the end of a legacy TV contract that expires in 2015, since the current one pays out about $24 million a year (see the linked article). A new deal could be in place sooner than we realize. In 2010, the Rangers signed a new TV deal that starts paying out in 2015 after the current deal ends in 2014. Reports varied, but the one linked above put the deal at about $80,000,000.00 per year. There is no reason that the Phillies might not be sizing up suitors right now.
The Phillies are in a bigger market than the Rangers, and, given inflation and the constant pressure of DVRs inflating the value of real-time sports (which make ad-skipping harder), it is likely that they will get a bigger deal. If the deal is a similar length (20 years), it is not hard to imagine that the Phillies are looking at hitting the register for $2 billion or more. The Angels got $3 billion. The Phillies may plausibly get a total value in the neighborhood of what the Angels received.
If the Phillies have a competitive team when the contract is bid, it will be worth more money. This is all marginal. A contract with the Phillies having a "bad" team is still going to be huge, but having a "good" team at the outset is a better TV property and it will mean more money. The common sense adage is that "a bird in hand is worth two in the bush." In financial terms, that is called "time value of money" - the idea that getting $100.00 of return on an investment tomorrow is worth much more than getting $100.00 ten years from now.
Because baseball is a momentum sport where quick turnarounds are the exception rather than the rule, having a good team at the front end of the TV contract is better for the buyer of the TV rights. A media company buying the Phillies' TV rights for twenty years would prefer to have a good team now (and one that looks likely to continue to be good) rather than a rebuilding project with an uncertain future. Clearly, Big Media Corp (presumably Comcast) would pay more for the TV rights to the Phillies in 2008 than they would have in constant dollars in 2000, when they sucked. It is simple risk-reward, and this is pretty obvious.
What is more important than what Comcast thinks of the Phillies' future is what the eyeballs think of the Phillies' future. Knucklehead Vito the mouth-breathing fan from WIP or philly.com needs to watch them on TV or Comcast gets smoked after signing up for a bill of $100 million a year for ballgames. Maybe you and I can be convinced that young prospects slowly developing is good TV and good baseball management, but we aren't the Phillies' TV audience. Regular people are. And Comcast has to be sure that those people will watch. So Comcast is more interested in whether fans will find the Phillies to be compelling than they are about whether the Phillies are maximizing their team WAR over the first five years of the deal. Both factors are intertwined, but "fan interest" is more the ultimate issue than "will the Phillies be good?"
Some small fraction of fans know who Jesse Biddle and Trevor May are, but every single one knows who Cole Hamels is. Even casual fans see the standings - they are all painfully aware that the Phillies are in last place. Almost no fans I have talked to, other than people here, have any idea that the Phillies have been exceptionally unlucky this year. Instead, they see a tired, old, injured team losing gut-wrenching game after gut-wrenching game.
Dajafi wrote a great piece on whether the Phillies should buy or sell at the trade deadline this year. One of the big unknowns is what the team will do with Cole Hamels at the deadline. They aren't going to trade him. While Amaro can make a hard decision, such as when Cliff Lee was traded to make the Roy Halladay deal possible, trading Hamels, especially for prospects, just can't happen. The Phillies can't afford to lose the next couple of seasons rebuilding or even substantially retooling.
Looking at "trade Hamels or not" is useful from the perspective of "good baseball" and "making the team better" analysis, but it is an academic exercise unless the $2 Billion Dollar Question is considered at the same time: what maximizes the value of the TV rights?
The Phillies are not in a position where they can let Cole Hamels go. He is the homegrown talent who the fans have loved, then hated, then loved. Hamels is a rational actor who knows this. He knows that his WAR likely values his contract at $20 - $25 million a year for probably 5 or 6 years. But he has leverage, and he is working to increase it.
Hamels, masterful on the mound, has been masterful in his negotiations with the Phillies. He is the face of the Phillies. Not Rollins, who is in decline. Not Utley, who is invisible this year. Not Howard. Nope. It's the 2008 World Series MVP that we have all been emotionally invested in since 2006. He knows that the Phillies cannot hope to be a credible playoff team without him over the next 2 - 3 years, especially if they only get prospects back for him. He also knows that Philadelphia fans seeing Hamels wearing Dodger Blue would be an enormous blow to the prestige of this team, and that fans would be exceptionally unhappy with the Phillies as a result. Imagine trading Hamels for the ambiguous prospect haul that came back in the Lee deal, and then watching Hamels continue to put up 4.0 - 5.0 WAR seasons for, say, the Dodgers while the Phillies are mired in the second division.
Hamels is not a hothead or a knucklehead, and he never has been. He is a craftsman who has improved his game consistently. He is clearly intelligent and he learns. He is obviously very cognizant of his own brand, and he has worked diligently on his brand in conjunction with his game. Part of "the game" in professional baseball is playing the sport. Another part is playing the brand game to maximize the likely return on your career.
Why does he have a foundation? He's a good guy, yes, but it's good for him, too. Why is he a good sport who does a fashion show, though he clearly is a fish out of water on the catwalk? Why did he agree to be interviewed by Awesome Emma? He's a good guy, but he's also courting fans this season. Why didn't he do an interview for ZWR *last* year? He was presumably just as "good" a guy. It's because he is executing a strategic marketing campaign designed to maximize his value.
And that is why he hit Bryce Harper in the back. He is acutely aware that Harper is perceived as being a little too precocious for his own good. Hamels has heard every one of those "soft" taunts over the years. He knows that the Phillies need a top of the rotation starter for the next 5 - 7 years to help convince Comcast to pony up as much as possible in the TV contract so that the first years are likely to have better payouts. Even if the Phillies just have to retool a little bit, doing it with Hamels is likely to make the process shorter and less painful, and Hamels knows this.
Hamels was criticized for "admitting" that he hit Harper, and old timey baseball people were pretty much unanimous in saying that he should have kept his mouth shut. But this really had nothing to do with Harper or the league. This was a straight-up Sister Souljah moment where Hamels did something in a very public way to define his brand. His audience was fans of the Phillies. Just like the Awesome Emma interview, this was brand management designed to burnish and consolidate his reputation with fans of the team and to make the idea of losing him to free agency that much more painful to management.
While this particular tactic probably appealed mostly to the regrettable part of the fanbase, there's no way that you can honestly say that it didn't have its appeal to a lot of people. Just like Bill Clinton reaching values voters with Siter Souljah, Hamels probably needed the most help with the "bay for blood" type fans, and it seems like it worked, at least a little. And marginal, constant gains are the name of the marketing game. And he's making more hay now with the "Fake Tough" t-shirts, though Hunter Pence bankrolled those. Regardless of the source, Hamels can still capitalize on it since the incident still has legs, and will continue to have legs every time the Phillies and Nationals play this year.
A conventional contract is worth a player's likely projected free agent WAR value, discounted by time value of money and the possibility of injury. Certain players can add to that by being more than hired guns. Cal Ripken, Jr., was more to the Orioles, especially at the end, than his WAR. So were Tony Gwynn and Ozzie Smith. Hamels is trying to push his envelope past what he is -- a 4 - 5 WAR pitcher.
The territory he is staking out is this: If the Phillies lose Hamels, they likely will not replace him with equivalent value in at least the first 3 years after the deal, even if any prospects pan out. The team is likely to perform worse at the major league level. Comcast will not be as willing to pony up for a team running out what will be an increasingly aged Cliff Lee, Kyle Kendrick, Vance Worley, and waiver wire dreck. No baby aces are likely to be helpful in this short-term window. Fans will be alienated that a good guy, good player, and one who "stands up" for "Phillies-ness" was cashiered by a miserly management despite management knowing that they had a huge pot of gold coming.
What Hamels is shooting for here is that this leverage can convince the Phillies to overpay him with an extra year or two or a few extra million dollars a year, or both, to keep him. Again, both sides know that the Phillies are likely to be pulling in $100 million+ per year in TV money in 2016, which will be the fourth year of any contract, and backloading the deal may make it palatable to the Phillies, and that is doable by adding the extra year or extra money at the back end, or both. Both sides know that his value to the team in the next 2 - 3 years will affect how much Comcast money is in the pot for the next two decades. Hamels wants his share, especially considering this is his best shot at free agency and since he has been underpaid compared to performance. While that last point is a structural defect of baseball compensation because of team control and compulsory arbitration, it doesn't make it any less true.
While pitchers aren't "draws" to individual baseball games, the perception of the Phillies by casual fans if Hamels is dealt or unsigned will be profoundly negative. Hamels' effect on the team on a given day isn't the issue - it's the popular perception of the team that matters. It's the effect the perception of the handling of Hamels free agency has on the team's brand that's the issue.
So Hamels hit Harper, and goosed the sleazy nerves of the worst sorts of Philadelphia fans in an attempt to make sure that they want to see him come back, just like fanbois like me. And he is playing footsie with management, making them see how he is regarded among even the fans who used to criticize him. This wasn't "I hit Harper and I make millions!" calculus - that's simplistic. The Harper incident was similar to a public pronouncement in a high profile court case that gets litigated in the court of public opinion. It won't make or break anything, but it was calculated and part of the costant Hamels drumbeat that, in addition to his pitching, gives him mindshare among Phillies fans. Do you doubt it? Why didn't he belt Jason Heyward a couple of years ago to welcome him to "prestigious baseball"?
You can imagine the pitch: If Hamels goes, they are cheapskates again, relegating the team to dark years. This perception would likely affect what Comcast is willing to pay - if fans are alienated, the property is not worth as much, and the team loses an enormous amount of money in years long after Cole Hamels is gone and irrelevant to baseball.
Like a pitcher trying to induce a popup from an overeager hitter with a high fastball, Hamels is playing a brand game with a goal of convincing the Phillies that overpaying him during his next contract is far better than the risk of letting him go and potentially losing marginally on 20 years' worth of money because the ratings slide in the near term. There is no indication that Amaro would ever panic and go, "Wow -- everyone loves Hamels, we'd better sign him now for $30 million a year!" That, too, is simplistic. This is a battle being fought at the margins. Can the team swallow $26 million? How about $27 million? Five years? Six? That's what is happening.
It isn't that simple, though. Hamels has this leverage over the Phillies, but no other suitors. The Phillies know that, too. Each side has to decide whether the risk of an overpay of a few million a year or an extra year or two on the contract is worth it to buy down the risk of a diminished Comcast TV contract. The whole Hamels salary is not the issue -- the overpay is the issue. The rest, presumably, you get the actual return on via standard WAR analysis. The rest is risk hedging. Part of that risk hedging may also be the Phillies waiting out the season to see if Hamels gets hurt, or if Cliff Lee gets hurt, or if Halladay can be extended to fill in that near-term window. It's like a game of chicken between glaciers.
Both sides know the stakes here. You think Hamels hit Harper for baseball or because he has a grudge against Harper? Not a chance in hell. He did it as part of a cold, calculated process to get money. And he talked about it for money. Nothing personal, Harper - it was just business.