Do the Phillies still have a small market mentality?

The red pill or the blue pill? - Kim Klement-US PRESSWIRE

The Phillies opened the 2013 season with the third largest payroll in baseball, and that still didn't cut it. Lindros and Catz ask the question, should they be spending MORE?

As a result of the recent brouhaha over the Phillies’ hiring of ostensible ­analytics expert Scott Freedman, internal TGP Blogvassal debate has been spurred anew over just how the Phillies came to their success over the last half-decade or so, and why it hasn’t been sustained. Watching the analytical teams make smart decision after smart decision while the Phillies do…other things…has been incredibly frustrating as the Phillies team collapses around itself in a pile of discarded stitches and rehab bills. It’s clear that it didn’t have to be this way, but what might not be so clear is that even if the Phillies never really got behind advanced statistical analysis it still needn’t be this way.

Analytics or not, could the Phillies problem really be that they aren't spending ENOUGH money?

LINDROS:

Since 2009, when the Phillies and Yankees met in the Fall Classic, the Yankees have won 19 more games than the Phillies, nearly 5 more per season, which is saying something considering the Phils had the best record in baseball in '10 and '11. Neither team could be considered young or "up and coming." Neither has had a particularly robust minor league system. Neither is at the vanguard of the statistical revolution. The disparity in recent records comes down to the Phillies not recognizing that they’re a large-market team, while the Yankees have.

For all the caterwauling over the Yankees being too old, and too expensive, and too thin in the minors, the reality is they’ve only missed the playoffs twice since 1994. The Phillies, for comparison, have missed the playoffs twice since 2011. Throwing money at former stars who are now just good players isn’t the most efficient way to run a franchise, but it will often produce a lot of wins.

Teams like the A’s and Rays can succeed by being exceptionally analytical, gaining a competitive advantage over teams like the Phillies, who do it without in-depth analysis. Teams like the Yankees and Dodgers can succeed by being spendthrift, buying talent, however overpriced it may be. And teams like the Red Sox can succeed by doing a little of both. But what you absolutely cannot do to succeed is neither. An organization that built its successes through expensive acquisitions, analytics be damned, must not stop spending if they wish to continue winning.

It’s counterintuitive to claim that the team with the 3rd largest payroll in baseball has been overly frugal, and they haven’t been cheap per se. Their mistakes have been in making penny-wise but pound-foolish moves with respect to the way they fueled their division title runs. The Phillies’ payroll increased by 95% from 2006 through opening day 2012. Without that massive increase in payroll the Phillies don’t enjoy the success they had. They were essentially operating like a smaller version of the Yankees during that 6 year window. Unfortunately for Phillies fans, as the luxury tax approached the Phils foolishly took their foot off the throttle.

When trading for Oswalt and Pence the Phillies paid a higher price in prospects in exchange for Houston paying significant portions of their salaries. In trading Pence and Victorino in the summer of '12 the Phillies presumably took a lesser return in prospects for not picking up any of their salaries, looking at those moves as necessities to stay under the luxury tax rather than opportunities to restock the system, dollars be damned. The trades were motivated in the first place because the Phillies didn't want to pay Pence $14 million dollars for maybe not quite $14 million dollar production, and because it seems they had little desire to bring Victorino even at a "hometown discount" price. Then, with two self-inflicted holes in their starting OF they underbid on every free agent outfielder on the market. Continuing the trend, this past summer Amaro bluntly stated he had no interest in taking on some salary in order to improve the trade offers for Papelbon and Lee.

When given the opportunity to enter Yankee territory the Phillies instinctively returned to their small-market mentality, and refused to take on what amounts to minor additional costs in the context of a $170+ million payroll in exchange for keeping the success rolling. They're trying to operate efficiently without the requisite analytical department allowing them to do so successfully, and they're trying to avoid being profligate spenders even though they already are. They fail to recognize that's their best shot at overcoming their other weaknesses; it's an area where they have a competitive advantage over 90% of teams in the sport and they are failing to exploit it. The Phillies still have small-market DNA in their system and it's sabotaging their chances at fielding a competitive team as core around which they built their success ages.

JOECATZ:

Lindros and I have disagreed famously over the years on a number of issues, but this just simply isn't one of them. For me, the biggest problem that the Phillies have right now today has nothing to do with analytics, and everything to do with a waning fan base.

Consider this. In 2013, the Phillies attendance dropped by NEARLY 500,000 HEADS from 2012, and has declined by nearly 700,000 from their 2010 high point. In 2011, when payroll was at its apex of $172,000,000 attendance was roughly 670,000 more than last year. So in less than 2 seasons, the organization has seen payroll drop by $12,000,000 and attendance drop by 670,000. If you assume roughly $35 spent per person (which is low), that means the 2013 team made $23,450,000 less just on attendance and concessions than in 2011. Subtract that 12,000,000 payroll and they made $13,450,000 less in revenue. And that doesn't even begin to account for losses from merchandise sales, etc...

Now add in the roughly $27,000,000 in additional revenue that each team will see in 2014. You get roughly $40,000,000.

If you believe (as I do) that winning brings fans back, the Phillies could spend $200,000,000 in 2014 and beyond and make the same money they did spending $172,000,000 in 2011 or more than they did last year.

A $200,000,000 payroll puts them over the luxury tax limits, but at the same time, they're only taxed on the overage. 17.5% for the first time, 30% for the second, 40% for the third, and 50% for consecutive years past that. So if the Phillies payroll sat at $200,000,000 for the next three seasons, they would pay a total of less than $10,000,000 over that entire three year period.

After the 2016 season, most of the salaries that are eating at this team are off the books.

The problem in a nutshell with trying to control a payroll between $160,000,000 and $180,000,000 is that when you are paying Ryan Howard and Jonathan Papelbon $38,000,000 every year and are committed to close to $120,000,000 in 2014 for nine players? Your ability to add talent is severely mitigated by your inability to spend to get THE BEST talent available. Simply put, The Phillies are forcing themselves to buy three Toyotas, or one Lexus, when if they wanted to, they could have three Ferraris.

Analytics or not, you have to press your luck a lot. You can go after a guy like Jacoby Ellsbury but you can't afford Ellsbury and Nelson Cruz. (as an example). Forcing yourself to stay around $170,000,000 also makes you make tougher decisions on players like Carlos Ruiz. So you find yourself having to get creative. And getting creative forces you to do things like take flyers on Delmon Young, and Michael Young, and make trades for guys like Ben Revere, instead of allowing yourself to play the market.

In essence, you gamble that a ten year old Cadillac with 100,000 miles and a bad transmission might be able to run like it used to for just long enough.

In essence, you have to make MORE GAMBLES. You have to make more CORRECT DECISIONS, because the players in the middle of the market, the players commanding a year or two less and a few million less per year are the ones with more high risk/high reward.

Don't get me wrong, I'm not advocating overpaying for guys. I'm advocating adding one or two more marquee players to the payroll, instead of three our four average guys who might end up being above average if all the stars align.

And without a proper analytics department those guys are much easier to miss on than not.

But more importantly there's a part of the market that is in flux right now and that's the ability to absorb payroll in trades. The Red Sox, for example, have 6 marquee starters. The Dodgers have four OF, teams like the Rockies and Rays have players that are getting too expensive.

At $160-$170,000,000 trading for David Price makes little sense because his expected salary handcuffs the teams ability to also add at other premium spots. But at $200,000,000? Trading for a guy like Price AND adding a marquee outfielder AND re-signing Carlos Ruiz becomes that much easier to do.

And the team gets that much better.

The worst thing the Phillies can do, with or without analytics, is construct a $160,000,000 86-win team.

So spend. Spend it all. Luxury tax be damned. Because we didn't even talk about that TV deal.

Which makes it that much easier.

We've both said this before and we're saying it again. The worst thing that can happen to this organization is for it to become a perennial $160,000,000 a year third place team, that wins 82-85 games every year.

Go big, or go home. Spend it all, or rebuild.

There's no in between.

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