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The State of the Rotation

Given the state of the majors and farm system the best course of asset management is trade from the bottom not from the top


We have once again come to the same point we've come to at multiple points these past two years: should the Phillies trade Cliff Lee, or should the Phillies trade starting pitching, or should the Phillies buy starting pitching, or...

Before exploring where they should go, it's best to look at what they have committed salary wise for the next 4 years (13-17).

2013 2014 2015 2016 2017
Cliff Lee 25 25 25 27.5*/12.5**
Cole Hamels 19.5 22.5 22.5 22.5 22.5
Roy Halladay 20 20#
Kyle Kendrick 4.5 Arb
John Lannan 2.5 Arb
Miguel Alfredo Gonzalez 8 8 8 8 8
Jonathan Pettibone min min min arb arb

* denotes team or mutual option; ** denotes buyout; # denotes vesting option

Based on their performances, you can expect that Lannan will receive $4-$5 million in arbitration and Kendrick will recieve at least $8 million.

Now lets looks at their WAR over the course of the past four seasons (Baseball Reference WAR)

2010 2011 2012 2013
Cliff Lee 4.5 8.6 4.5 4.0
Cole Hamels 5.4 6.6 4.6 1.4
Roy Halladay 8.3 8.9 0.9 -1.1
Kyle Kendrick 0.3 1.8 1.5 2.2
John Lannan 0.1 0.9 0.3 0.5
Jonathan Pettibone 1.0

Looking at that list above, you can see the large difference between an ace starting pitcher, an above average major league starter, and a back of the rotation pitcher. Most scouts see Gonzalez's ceiling as a #2/#3 starter which is somewhere in the 2-4 WAR a year range. Of the pitchers in the minor leagues, Biddle and Morgan have a little less upside than Gonzalez, so you can say they are more 2-3 WAR a year players.

So what are the trade/signing options and how do they affect the potential make-up of the rotation going forward?

Cliff Lee:

There are only two reasons to trade Cliff Lee. The first is that some team offers you one of the players in the minors with super star upside. That list on contenders is essentially the Red Sox' Xander Bogaerts (SS), the Rangers' Jurickson Profar (2B/SS), the Indians' Francisco Lindor (SS), and the Cardinals' Oscar Taveras (OF). In any other deal, you are getting less upside and more risk than you would if you just kept Lee. The only other scenario that makes sense is one in which the Phillies have seen something recently in Lee's physical makeup that suggests he is going to plummet off a cliff in the next year. For what it's worth, however, historically speaking, Lee's pitching profile and left handness is a good combination for keeping much of his value intact.

The conventional wisdom is that you can bank the prospects from a Lee deal and turn around and spend the money to improve the team. The problem as outlined in many places is that there aren't solutions on the free agent market to fill Lee's productivity, and no player on the current roster to offer a giant extension. If the Phillies are looking to compete in 2014 and 2015, they can easily afford Lee's salary for the production they are getting, and they do not have any other, cheaper or younger options, anyway.

Kyle Kendrick:

Kendrick's turn around is for real, and since he is pitching like a #3 starter, his salary this year is very reasonable. That being said, Kendrick is under control for another year, and that year's cost, after arbitration, is not going to be reasonable. Furthermore, due to his aforementioned turnaround, Kendrick has a lot value on the trade market right now. It would be tough for Amaro to sell him right now, as Gonzalez is not yet ready to go, but given the sellers' market for pitching, Kendrick could bring back a serious piece right now. And even if they decide to keep him through the trade deadline, Kendrick should have very good value to a competing team this offseason. If the Phillies do keep Kendrick through the 2013-14 season, it will likely mean that have closed the door on a Halladay return, and that they should look into trading from their minor league depth (more on that later).

John Lannan:

Lannan is the prototypical "good #5 starter" and is worth about $5 million on the open market. He won't return the impact player the Phillies need, but he certainly could return an interesting low minors player or bullpen arm. Given the minor league pitchers in the system, it makes no sense for the Phillies to keep him, but it would be a mistake to not get some value from him in trade before non tendering him (see Schierholtz, Nate).

Roy Halladay:

There is no way to make a determination on Halladay before he pitches again this season; we just do not know how his injury has affected his ability to pitch at a high level. That being said, he will likely receive a massive pay cut from his guaranteed salary, and should be at least worth a flier to the Phillies in 2013-14. The Phillies currently have the minor league depth to survive if he is injured on a one year deal, so they can mitigate a lot of the risk inherent in Halladay's recent fragility. They will get no value for letting him walk away, nor does he have any current trade value.

Minor Leagues (plus Pettibone):

Prospects are commodities -- they are either cashed in during trades or cashed in as major league players. It is up to the GM to make sure that the team cashes out in the right way and at the right time, so that the team maximizes their return on investment. That being said, the Phillies have over $50 million a year committed to three members of their rotation. The need on the big league club is for impact hitting, not pitching.

Given that prospect-for-prospect trades are rare, it can be assumed that, as trade commodities, the Phillies' minor league pitching chips would likely be cashed in for established, veteran hitters. The problem is that veterans cost a great deal more than prospects, and the Phillies cannot afford to continue to pile money on top of the current budget. As I have suggested earlier, the value of Adam Morgan or Jesse Biddle in the rotation (2-3 WAR each) is more than Jonathan Pettibone or Lannan can provide (.5-1.5 WAR each), and close to what Kendrick and Gonzalez could provide. They will also cost the league minimum for at least three years. It is the combination of affordability and upside that make Biddle and Morgan more valuable not as trade chips, but as the eventual numbers four and five starters of a rotation frontloaded by a Lee-Hamels-Gonzalez combination.

In conclusion, the best path for the Phillies is to enter 2014 with a Lee-Hamels-Gonzalez-Halladay-Pettibone rotation with young-but-wild RHP prospect Ethan Martin in the bullpen and Morgan and Biddle waiting in the wings. The Phillies can maximize the value of their surplus pieces by trading high on Kyle Kendrick -- who will go from being an undervalued asset to correctly valued by the market -- over the offseason, and by getting some return for John Lannan instead of simply non-tendering him. While the more histrionic trade rumors will insist on trading recognizable names, the wisest path for the Phillies is to stay the course in the top of their rotation, and build with an eye toward surplus value in the back end.

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