Phillies have short and long-term financial flexibility even with Bryce Harper
Even with Bryce Harper’s salary on the books, the Phillies still have the financial flexibility to keep their window open for a long time.
Any time a team hands out a humongous contract, there are worries about their ability to make other moves to surround that player. That was long the worry for the Phillies in their pursuit of Bryce Harper, who got the record-setting contract he was projected to.
However, with an average annual salary of $25.4 million, Harper’s salary won’t hamstring the team’s future financial flexibility. The raw money of the deal is slightly front-loaded, but the AAV is all we care about for luxury tax purposes.
According to Spotrac, Philadelphia is projected to have a $172 million payroll this year. When factoring in benefits and minor-league contracts, the team has about $16.6 million available before they enter the luxury tax. It may not be enough to land another big free agent, but they will still have room to pick up someone at the trade deadline.
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Looking towards the future, the team still has plenty of room. For 2020, the team has about $70.6 million of room to work under the luxury tax. Even when you add arbitration salaries, there is still enough room to make other significant additions without having to worry about the luxury tax.
The same is true in 2021, with only six players guaranteed money and just two with club options.
There is about $82.6 million of room to work with under the tax that year before arbitration. Beyond that, the financial system could completely change in the new collective bargaining agreement, so it’s hard to make predictions about the team’s options.
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That room under the tax may prove to be important not for free agency additions, but for extending current players. Rhys Hoskins will hit arbitration after the 2020 season; he will likely warrant an extension if he has another productive season.
J.T. Realmuto is only under team control for one more year; he will be a free agent after 2020. The team lost their long-term option behind the plate, Jorge Alfaro, in the Realmuto trade, so extending Realmuto is in their best interest. His and Hoskins’ extensions both will incur significant costs, so every dollar under the tax will matter.
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Harper taking the longer deal without a record AAV helps the front office build a team around him in the short and long-term. Harper gets the long-term deal he is looking for and the club gets the star they needed to propel them to the next level.