SAN DIEGO — Let’s begin with a brief history of the Major League Baseball luxury tax. The current system used by Major League Baseball was implemented in 2003 and since that time only eight teams in history have been willing to cross the threshold and pay the taxes involved.
Predictably, the New York Yankees and Los Angeles Dodgers, the two most valuable teams in the sport according to Forbes, have been the teams most willing to spend beyond the restraints placed on them by the collective bargaining agreement.
Boston, Detroit, San Francisco, the Chicago Cubs, Washington and the Los Angeles Angels are the only other teams to also pay a luxury tax during the last 17 years.
You probably noticed that the Phillies are missing from that list and if you did some research you’d discover that four teams have won the World Series over the last 17 years during a season in which they exceeded the luxury tax. You’d also discover that the teams that were willing to pay the luxury tax also reached the postseason 25 out of the 32 times they did so.
I’m not an analytics expert, but I love a .781 batting average and I’ll even take a 23.5 percent chance of winning the World Series. Of course, each situation is different, but you get the idea.
This comes up now because the Phillies are at least debating the idea of exceeding the luxury tax of $208 million in 2020. If they exceed it, as first-time offenders, they would have to pay a 20% tax on every dollar they spend over $208 million.
“This is the first time since I’ve worked for the Phillies that it’s become a discussion point,” general manager Matt Klentak said from his hotel suite Monday during the first full day of the winter meetings. “Just by the nature of the competitive cycle and the players on the roster, it had never surfaced before. But when I worked for the Angels, it was an annual conversation.”
The Angels, for the record, never went over the luxury threshold during Klentak’s tenure in Anaheim. The only time they did surpass the luxury tax was in 2004 when they still had the nucleus from their 2002 World Series title team and they gave Vladimir Guerrero a six-year, $82 million contract. Guerrero won the American League MVP that year and the Angels went to the postseason in five of his six years. The deal was undeniably worth it.
Anyway, the decision for the Phillies to take the luxury-tax plunge really should be a no-brainer.
Klentak estimated that after officially announcing the signing of free-agent pitcher Zack Wheeler on Monday, the team is still roughly $20 million below the $208 million threshold.
It was fair and natural to ask the general manager if he thought $20 million was enough to finish constructing a roster that must be compete in the same division as the World Series champion Washington Nationals, a young and deeply talented Atlanta Braves team that has captured the last two division titles, and a resurgent New York Mets squad that played 20 games over .500 after the All-Star break.
“I think we’re coming off a season with a .500 record in a tough division where a lot of things went wrong,” Klentak said. “I think as a baseline, with the core of the team returning still in their prime, with projection and with improved health, I think it’s reasonable to project that next year’s team in the absence of any other moves could improve over last year.
“Then when you layer on a front-line starter and the additional resources that we have to still add more, I think it’s very reasonable to project that this team will be competing.”
The Phillies, without a doubt, are still going to add an infielder and the overwhelming favorite to fill that role right now is former Yankees shortstop Didi Gregorius. He would be a nice addition that would allow the Phillies to keep the payroll under $208 million.
The better option would be Washington third baseman Anthony Rendon, who would surely take the Phillies’ payroll over $208 million. He would also take the Phillies’ offense into another stratosphere. It seems unlikely that Rendon will be returning to the Nationals after they paid $245 million to re-sign pitcher Stephen Strasburg on Monday, but it could be more difficult to convince Rendon to come to Philadelphia than it was to get Bryce Harper here.
Two other infield options would be to make deals for Cleveland shortstop Francisco Lindor or Cubs third baseman Kris Bryant, but making trades for star players is never easy. Both of those players will take the Phillies over the tax threshold and they’d be worth it.
There are other ways to spend the money of John Middleton and his fellow owners Jim and Pete Buck that would take the Phillies over the payroll threshold and they’d also be good ideas for a team competing in a brutal division.
As much as the Phillies like Wheeler, they still appear to be short in the starting pitching department. It’s clear that they are not going to get into the Gerrit Cole bidding war that is likely to be won by the Yankees, Dodgers or Angels. They also do not appear to have serious interest in Madison Bumgarner at the nine-figure salary he is seeking. But the starting pitching market also includes Julio Teheran, Rick Porcello, Dallas Keuchel, Wade Miley, Tanner Roark, and Hyun-Jin Ryu.