Tax? What tax? Perhaps the Phillies should follow the Mets’ bold strategy
Exceeding the competitive-balance tax threshold doesn’t guarantee a championship, but it might be the Mets’ and Phillies’ best chance.
As word leaked Monday that the New York Mets — the New York Mets! — agreed on a record contract with Max Scherzer — Max Scherzer! — that boosted the sum of their post-Thanksgiving splurge to $254.5 million — $254.5 million! — the first impulse among many Phillies fans was to file a missing-persons report on owner John Middleton, who has thus far sat out free agency.
Breathe in, breathe out.
The Phillies’ most urgent needs are for a middle-of-the-order hitter and a closer. Scherzer is neither. And while dozens of free agents are rushing to sign before the collective bargaining agreement expires at 11:59 p.m. Wednesday and the owners likely lock out the players for as long as it takes to hammer out a new deal, most of the slugging outfielders (Nick Castellanos, Kyle Schwarber, Michael Conforto, and Kris Bryant) and experienced closers (Raisel Iglesias, Kenley Jansen, and Mark Melancon) are not among them.
So, again, inhale and exhale. Now repeat. Spring training is (at least) 11 weeks away, and plenty of good players are still available.
But the Mets’ actions since Friday revive a roster-building discussion that is relevant to the Phillies, chiefly whether there is an appropriate time in the life of an organization to blow past the competitive-balance tax threshold, whatever it may be in the next CBA, with no concern for the penalties, whatever they may be.
The Mets, like the Phillies, have a top-heavy, depth-challenged roster, with core players in their prime (Jacob deGrom, Francisco Lindor, and Pete Alonso). Like the Phillies, the Mets’ farm system lacks major-league-ready prospects. And the Mets, like the Phillies, haven’t made the playoffs in too long to satisfy a passionate fan base in a large Northeast market.
So, Mets owner Steve Cohen decided the time has come to flex his wallet, the team’s biggest competitive advantage. He is baseball’s wealthiest owner, by far, and in four days, he bought a leadoff man (Starling Marte), two veteran hitters (Eduardo Escobar and Mark Canha), and a future Hall of Fame ace (Scherzer) who happens to be 14-4 with a 2.50 ERA in his career against the Phillies.
The Mets’ estimated 2022 payroll, according to Fangraphs, is $268 million, $65 million more than their final 2021 payroll, $58 million more than the $210 million competitive-balance tax threshold this year. And they’re still looking to add.
Cohen’s message is clear: Tax? What tax?
Nobody knows what the tax structure will be under a new CBA. Maybe the owners will agree to raise the bar from $210 million, but in exchange for harsher penalties for teams that exceed it, making it seem even more like a salary cap and less desirable to the players. Presently, the tax is progressive, with first-time offenders taxed at a rate of 20% on all outlays over the threshold.
Despite approaching the tax this year and last, the Phillies have never paid it. That doesn’t make Middleton a penny-pincher. On the contrary, he has been, as he once famously said, “a little bit stupid” about spending gobs of money in free agency and has carried one of the largest payrolls in baseball since 2019.
The Phillies shouldn’t wade into tax territory now because the Mets are doing it. But the Mets had never paid the tax either, until Cohen realized that money represents their strongest asset. The Los Angeles Dodgers took a similar approach after Guggenheim Baseball Management bought the team in 2012. The New York Yankees went over the competitive-balance tax threshold every year from 2003 to 2016.
It’s a strategy that hardly guarantees a championship. It has netted the Yankees and Dodgers only one World Series title apiece. It isn’t particularly sustainable either, not with the tax penalties getting harsher by the year.
But it can help. Before this year, the last team to vault over the bar was the World Series-winning 2018 Boston Red Sox. The architect of that team: Dave Dombrowski, now the Phillies’ president of baseball operations.
Dombrowski recognized then that the Red Sox, coming off back-to-back division titles and first-round playoff ousters, needed a middle-of-the-order slugger to replace retired David Ortiz. The only way to get one was to go over the tax threshold, a move Dombrowski compelled owner John Henry to make to sign free agent J.D. Martinez.
Given the Phillies’ dearth of impact players in the upper minors, their hesitance to trade prospects in the low minors, and the presence of prime-age cornerstones Bryce Harper, Zack Wheeler, J.T. Realmuto, Aaron Nola, and Rhys Hoskins, could Dombrowski convince Middleton that it’s the right time to go over the tax threshold? Should he?
“I’ve always been an advocate to be below it because there’s a reason why they call it a tax. Because it’s punitive and you don’t want to get penalized,” Dombrowski said in October. “Ownership [in Philadelphia], even at the trading deadline, we weren’t in that position that they said, ‘OK you need to stay below.’ If we would have had a move that made sense for us, they were very open to discussing that type of topic.
“I think you have to be wise when you spend your dollars. You just don’t want to ask for things if you don’t think it’s going to make a difference for you.”
Cohen believes it’s the biggest difference-maker available to the Mets.
Ten years without a playoff appearance, staring at a roster in need of considerable reinforcement, Phillies officials — especially Middleton — should be seriously considering if it’s the best strategy for them, too.