SAN DIEGO — Back when he worked for the Los Angeles Angels, Matt Klentak came to these offseason gatherings of baseball executives and talked about the luxury-tax threshold. Some years, the Angels went over it; others, they stayed below. Almost always, the decision involved a debate.
“It’s not something I’m unfamiliar with,” Klentak said Monday, as the winter meetings began at the Manchester Grand Hyatt.
That’s convenient, because the subject has arisen for the first time in Klentak’s tenure as Phillies general manager.
The club has slightly less than $20 million to spend on the 2020 payroll before reaching $208 million, a mark at which ownership would begin paying a 20% tax on every dollar up to $228 million. And so, every conversation — real and rumored — about a potential acquisition comes amid this backdrop: Will the Phillies clear the tax threshold, or won’t they?
The question isn’t binary, the answer much more complicated than a ‘yes’ or a ‘no.’ It’s dependent on multiple factors, which can be viewed through the prism of what Klentak described as the team’s “main focus” this week: finding a shortstop or third baseman.
Here’s a look at a few of the options that the Phillies are considering:
The Didi scenario
In their ideal world, the Phillies sign free-agent Didi Gregorius, move Jean Segura to second base, and shift versatile Scott Kingery to third until top prospect Alec Bohm is ready to graduate to the majors, at which point Kingery could either slide to second base or go to center field.
Gregorius, a favorite of manager Joe Girardi’s when the shortstop played for him with the New York Yankees, figures to cost about $14 million to $16 million per year, which would leave the Phillies wiggle room beneath $208 million for a few low-cost pitching additions and a long-term contract extension for star catcher J.T. Realmuto.
But the Phillies also aren’t alone in the pursuit of Gregorius. The Cincinnati Reds and Milwaukee Brewers have interest, too, according to sources, which could drive up the price, especially if Gregorius is willing to take a one-year contract for a higher annual salary and reestablish his multiyear value after returning last season from reconstructive elbow surgery.
The stopgap scenario
If the Phillies don't land Gregorius, they could spread around their money and, as Klentak described it, "piece it together with multiple players potentially, which not only would help the starting infield but would improve the bench."
Take Brock Holt, Starlin Castro, and Travis Shaw, for instance. Each of them could start the season as the primary third baseman, then move into a utility role once Bohm is ready. Segura and Kingery could play shortstop and second base, or vice versa, with Kingery getting occasional starts in center field.
It wouldn't be as sexy as some other options, but it could prove to be effective nonetheless.
The Rendon scenario
After going to record lengths to reach agreement with Stephen Strasburg on a seven-year, $245 million contract on Monday, Washington Nationals general manager Mike Rizzo suggested the structure of the deal, with deferred money, won’t hinder the team from bringing back superstar third baseman Anthony Rendon, too.
Surely, though, it won't make it any easier.
If the Nationals bow out, Rendon won’t lack for suitors, with the Texas Rangers and Los Angeles Dodgers reportedly in pursuit. Every expectation is that he will receive a mega contract.
But the Phillies will continue to monitor the market, which might not fully develop for several more weeks. In the unlikely event that interest in Rendon begins to recede, managing partner John Middleton’s history suggests that he might be compelled to jump in, even if it means blowing past the luxury-tax threshold.
“John and the [Buck family] have always encouraged us to stay engaged on everything,” Klentak said. “The most notable example, I think, was signing [Jake] Arrieta two years ago. That was not necessarily on our radar. It came together late, and the owners jumped on it.”
The Lindor/Bryant scenario
A trade is always an enticing alternative to free agency, and two stars might be on the move: Kris Bryant and Francisco Lindor.
With the Chicago Cubs reportedly looking to trim payroll, Bryant might be the likelier of the two to switch teams. He’s also close friends with Bryce Harper, having played for rival high schools in Las Vegas. But trading for Bryant would be tricky, because he’s still awaiting a ruling on a grievance that will determine whether he’s eligible for free agency after next season or after 2021.
"In general, if you're going to make a significant trade, you want to make sure you have complete information," Klentak said. "And so does the other team."
The Phillies have drawn the line at trading Bohm or top pitching prospect Spencer Howard. One or both would almost certainly have to go in a trade for Bryant or Lindor. Moreover, their projected 2020 salaries through arbitration ($18.5 million for Bryant, $16.7 million for Lindor, according to MLB Trade Rumors) would put the Phillies over $208 million.
For players of that caliber, though, Middleton would have to consider it.
“We’re just trying to explore all different avenues,” Klentak said. “Single-year and multiyear fits. Trade and free-agent fits.”
Whatever Klentak comes up with will influence how the Phillies approach the luxury-tax question.