While the Phillies have several contracts coming off the books, they might not have as much financial flexibility this offseason as you think.
With the Phillies long since eliminated from playoff contention, much of the fanbase has already shifted their attention to the offseason.
In theory, the Phillies should have lots of money to spend. As Jake Arrieta, J.T. Realmuto, Didi Gregorius, David Robertson, and more become free agents, the Phillies will have at least $68.125 million coming off the books for luxury tax purposes
However, the luxury tax payroll doesn’t tell the full story. For luxury tax purposes, contracts are assessed at their average annual value (AAV) rather than the actual amount of money the team has to pay the player each year.
For example, the AAV of Bryce Harper’s mega-deal is $25.38 million, and so that’s the number that affects the Phillies’ luxury tax payroll. However, Harper isn’t actually being paid $25.38 million annually. He’ll be paid $26 million a year through 2028, and then $22 million a year until 2031.
This distinction is critical, because if the Phillies are forced to reduce their budget in 2021, the team will need to lower the amount they’re actually spending, not just the amount that counts towards the luxury tax.
Here’s a brief calculation of how much money the Phillies actually have coming off the payroll going into 2021.
- Jake Arrieta – 2020 Salary: $20 million
- Didi Gregorius – 2020 Salary: $14 million
- David Robertson – 2020 Salary: $11 million. Robertson also has a $2 million buyout for 2021 that the Phillies are certain to exercise.
- J.T. Realmuto – 2020 Salary: $10 million
- Jose Alvarez – 2020 Salary: $2.95 million
- Jay Bruce – 2020 Salary (as paid by the Phillies): $1.375 million
- Tommy Hunter – 2020 Salary: $850,000
- Brandon Workman – The Red Sox paid almost his entire 2020 salary. The exact numbers don’t seem to be publicly available.
- David Phelps – Phelps has a $250,000 buyout for 2021 that the Phillies are likely to exercise. This is pretty much equal to what the Phillies paid Phelps in 2020 (40% of his salary), so this one is basically a wash.
That means the actual total coming off the books is around $58.625 million. That’s already $9.5 million less than the luxury tax number I calculated. But we’re not finished yet.
Note: 2020 salary numbers are based upon original contract values and not prorated salaries, with the exception of the players acquired midseason.