The Billion Dollar Rebuild

In December we looked back at what teams have spent in free agency since the 2017-18 off-season, and what they’ve gotten for it: Teams’ Free Agent Spending and Production since 2018. Here we update that with signings since the lockout was lifted. There will still be some smaller signings to come, but only one of the top 50 free agents (per MLBTR) remains unsigned and so the high-level view won’t change very much.

___

Think back to the 2017-18 off-season:

• The Phillies had spent the past six years either trying to compete and failing, or trying to rebuild and failing and not even hoping to compete.
• Aaron Nola was showing flashes of stardom.
• Rhys Hoskins had just come up and gone on a tear, setting records for home runs at the start of a career.
• The Phillies’ farm system was ranked among the best in the sport.
• J.P. Crawford, Scott Kingery, and Sixto Sanchez were all top 50 or better MLB prospects, and the Phillies had anywhere from four to seven on the most-referenced Top 100 lists:

There were still many unknowns about the future, but whether it was because they wanted to return to relevance in the city’s sports scene, or simply because winning baseball is more fun and exciting, Phillies ownership made the decision that there was enough talent coming up from the farm system to begin competing once more.

That off-season they took the plunge and began spending significantly in free agency again. They signed Carlos Santana, a proven veteran hitter with the approach at the plate that they wanted to instill in the lineup. (Rhys Hoskins’ brief foray in left field at the end of the ‘17 season was apparently enough for them to try moving him there full time and so free up first base for an impact hitter.) The other big signings were Jake Arrieta, whose velocity was declining, but who could still be effective, relievers Pat Neshek (coming back after being their lone All-Star representative and then getting traded to Colorado the year before), and Tommy Hunter. The $169 million they committed that off-season was the second highest total in MLB (behind only the Cubs).

The 2018 season didn’t end with a playoff berth, but it still showed tantalizing potential: the Phillies were in the race for the division title well into September, and for a wild card even longer. Another promising indicator: at one point in August they had won 89 of their last 162 games dating back to ‘17.

It was enough of a validation of their return to contention that over the 2018-19 off-season they were one of the main players in the Bryce Harper/Manny Machado sweepstakes — a rare chance to grab a top talent in free agency who wasn’t already well into (or past) their prime, and they came away with Harper. A year later, the 2019-20 off-season was dominated by landing Zack Wheeler, and a year ago they locked up J.T. Realmuto.

This off-season they shored up the bullpen with Cory Knebel before the stoppage, and then Jeurys Familia and Brad Hand after the CBA was agreed. Most Phillies were not too satisfied though until the Phils inked Kyle Schwarber and then Nick Castellanos to fortify the lineup.

Over these five off-seasons, a time when they would have liked to fill in needed pieces around a home-grown core, they have had to essentially “rebuild” through free agency, spending over one billion dollars to build out a team that looks like it will be a legitimate contender.

Below is how the Phillies’ spending over this period compares to the rest of the league.* This is total contract value committed for the 641 major league contracts signed over this time. So for example the 2018-19 column includes all of the $330 million in Harper’s deal. The ranking for each team is for the total committed over the five off-seasons:

These are selective endpoints, for sure. For many, or even most, teams, spending is cyclical, and the Phillies have been one of the teams in the spending phase over this period. Still, having said that, they have spent the most in MLB in this window, $320 million more than the number two team (Texas).

Below is a graphical view of the same data:

Apparently the Rangers are turning the corner from rebuilding to trying to contend, and the AL West overall has led the way this off-season. Even so, and with the Dodgers and the NL West spending again, the NL East has still spent the most of any division over this five-year period, $710 million above the second-ranked NLW.

In the meantime, teams like the Marlins, Orioles, Royals, and (especially) Pirates, have barely participated. And then there are the A’s and Rays, spending little and winning anyway.

This kind of graph is misleading in some ways, but the main point — that the Phillies have spent a ton without much to show for it — is unmistakable.

We know why that is, of course — the farm hasn’t produced enough. Of the Top 100 prospects above, three were moved in win-now moves:

- Crawford was traded for a less risky (but much more expensive) version, in Jean Segura.
- Sanchez, along with Alfaro, was redeemed for two seasons of the best catcher in baseball, and possibly an improved chance at signing him for longer.

But Kingery, Medina, Moniak, and Haseley haven’t lived up to expectations so far. In addition, Spencer Howard and Alec Bohm later rose to top-50 status but have failed to consistently produce in the majors to date (and Howard has already been traded).

As a result, rather than only needing to add key pieces to round out a core, the Phillies have had to build most of their core through free agency.

Return on the Investment

The Phils have committed the most total contract dollars in MLB since 2018, but what if we look at the salaries paid to those free agents so far — where do the Phillies rank then? We can compare what every team has paid free agents in salaries over the last four seasons (2018-21). We can also compare the production they’ve gotten from those FA’s, using the WAR they’ve produced (valued at a standard dollar value per WAR).

In the graph below, salaries paid on these contracts, i.e. the total Average Annual Value (AAV)**, are along the x-axis. The value of the players’ production under those contracts is along the y-axis. Fangraphs has used the $8 million per WAR figure to value performance for each of the past four seasons.

The diagonal line represents the standard estimate of $8M/WAR of production — teams above that line have gotten more value than that (i.e. paid less than $8M per WAR), and teams below the line have gotten less value.

In fact what teams have actually paid, overall, on the FA market these past 4 years is that standard $8M/WAR. i.e. if we divide the total spent in salary ($3,881 million) by the WAR produced by those FAs (487 per Fangraphs.com), the average is almost exactly $8M/WAR ($7.97 to be exact).

The Phillies are hard to see here, because...

We have to drastically expand the axes to fit them in. Both in terms of payroll spent on free agents over the past four seasons, and in the production they’ve gotten from them, they are far ahead of any other team.

That’s a good thing of course, because the prospects haven’t produced as planned, and the Phillies have needed free agents to fill in much more than they probably expected.

Below is the data behind the graph:

About two thirds of the teams have gotten production at or above the standard of $8M per WAR. There are several with big negative balances, including the Mets, Cubs, Padres, and Nationals, and two in particular that have had no luck at all recently in free agency:

The Angels have spent $205 million in FA salaries over these past four years, and have gotten only 1.9 WAR of production for it (valued at ~$15 million). Even worse, at least on a relative basis, the Rockies have spent $114 million, with 0.3 WAR to show for it (~$2 M). Key signings for both teams are shown at the end below.

And one more view by team:

The Phillies’ signings at the start of this period didn’t turn out so well: Arrieta, Hunter, and Neshek (in his return after being traded in ‘17) were all under water. Santana was positive over the length of his deal (the graph is based on Santana’s entire three-year contract, since that’s what the Phillies were signing up for at the time), but for just 2018, it was $15M value vs. $20M AAV. That deal had other consequences that aren’t reflected here — for example if they still had J.P. Crawford would they have signed Didi Gregorius the first time, let alone the second?

More recent signings have been much more successful. Harper was producing well even before his 2021 MVP season, and Wheeler’s very good 2020 and Cy Young-level ‘21 have also improved this picture considerably.

And graphically:

Arguably the Phillies should have been spending even more than this, which would have pushed them over the luxury tax threshold. They have spent right up to that line, putting together rosters which were generally expected to win in the 80-85 range and stay in the race for a wildcard. And if most of the many variables broke their way, they had a chance for more, and possibly a division title.

Unfortunately more things have gone wrong than right, as noted earlier. Kingery failed to show more than flashes of his promise. Bohm started well in the shortened 2020, but had the mother of all sophomore slumps in his first full season this past year. Howard likewise struggled and was traded in July.

The main things that have gone well are their two big signings of Wheeler and Harper. The first year of the Realmuto contract really also belongs here — while disappointing to some, it was a season consistent with Realmuto’s career hitting stats (and with 2019), and produced 4.4 WAR (per fangraphs), among the highest of all MLB catchers.

However with the lack of production from the farm, they needed to be near-perfect in free agency, and they haven’t been that — Didi’s and David Robertson’s deals, among others, and Andrew McCutchen’s to a lesser extent, have fallen short.

Around the NL East

The other teams in the division have had modest success in free agency:

The Braves got a good season from Josh Donaldson in 2019, and Marcel Ozuna in 2020, though his return in 2021 was marred by injury and underperformance.

The Mets ended up overpaying for Jay Bruce, Anthony Swarzak, and Jeurys Familia, among others. The Nats have had some hits (Kendrick, Harrison, Schwarber), and have gotten good value from Patrick Corbin, but don’t have much to show from their first two years of the big Stephen Strasburg deal. Miami hasn’t done a lot in free agency over this period, but got a good partial year from Adam Duvall last year.

Key signings for all NL East teams are at the end below.

Summary

Since the 2017-18 off-season, the Phillies have spent over a billion dollars in free agency, more than any other team by far. That’s partly by design, like any team trying to contend and improve through the FA market. But it’s also by necessity, since the Phillies’ farm system hasn’t provided the number of cheap home-grown players most teams have coming out of a rebuild, and which they rely on to keep payroll more manageable.

They have gotten decent return overall on that free agent spending so far — they have not only paid by far the most in free agent salaries these past four years, but have also gotten by far the most production from them. That’s thanks in large part to the signings of Bryce Harper, Zack Wheeler, and J.T. Realmuto.

However, given their spotty contributions from the farm system, their unwillingness to spend even more and exceed the luxury tax threshold has left them short of reaching the postseason, let alone making a serious playoff run. Spending this much in free agency should have been a way to get back into contention quickly while waiting for the farm to deliver at least average contributors. That has yet to happen to a meaningful degree, but hopefully the changes they’ve implemented to their development processes will bear fruit quickly.

In the meantime though, they will likely continue to rely on their spending power, to the extent they’re willing to wield it. The new CBA increased the luxury tax threshold, and now with the Castellanos signing they have finally exceeded even that higher number in an effort to improve their chances of reaching the postseason.

With two weeks to go to Opening Day, it will be interesting to see whether the front office tries to improve the team further with additional, smaller signings, or by using some of the prospect capital they have in trades.

---

Appendix

Key free agent signings for selected teams.

NL East:

Among the best:

Among the worst: