When the Phillies agreed last week to pay $30.5 million for Odubel Herrera, it represented the largest guaranteed sum issued by the team in more than four years. Not since Cole Hamels signed for $144 million in July 2012 had the Phillies guaranteed a player more, and that feels like forever ago. The last position player to receive higher than a $30.5 million guarantee was Jimmy Rollins when he signed for $38 million in December 2011.
The post-2011 Phillies fell into an abyss, in part, because of outsized contracts to older players. The new regime, under Andy MacPhail and Matt Klentak, has attempted to trim all of the financial fat and rely more on younger players. So it should come as no surprise that the rebuilding Phillies ranked among baseball's lowest payrolls in 2016.
The final payroll numbers, obtained by the Associated Press, showed a significant one-year decline for the Phillies. They ranked 26th in Major League Baseball with a $103.1 million payroll, as calculated for luxury-tax purposes.
Only Oakland ($101.4 million), Cincinnati ($101.3 million), Tampa Bay ($81.3 million) and Milwaukee ($71.8 million) were lower than the Phillies.
The Phillies, in 2015, ranked ninth in baseball with a $159.9 million payroll using the luxury-tax formula. They had ranked in the top 10 of MLB payrolls, as calculated for the luxury tax, in each of the last nine seasons (2007-15). The high point was a $186 million payroll in 2014, when the team won 73 games.
The Phillies had not ranked lower than 20th in payroll since 2001, according to payroll archives compiled from the commissioner's office via the AP.
There are various — and complex — methods to calculating payroll. The above figures are from MLB's formula for purposes of the luxury tax. That, according to the AP, was defined in 2016 as:
Figures are for 40-man rosters and include the average annual values of contracts and $12,953,201 per club for benefits and extended benefits, which include items such as health and pension benefits; club medical costs; insurance; workman's compensation, payroll, unemployment and Social Security taxes; spring training allowances; meal and tip money; All-Star game expenses; travel and moving expenses; postseason pay; and college scholarships.
Salaries include earned incentive bonuses, non-cash compensation, buyouts of unexercised options and cash transactions. In some cases, parts of salaries that are deferred are discounted to reflect present-day values.
The 2017 payroll, using the luxury-tax calculations, is expected to be at the same level as it was in 2016. The Phillies have guaranteed a total of $50.3 million this winter in average annual value to Herrera, Jeremy Hellickson, Howie Kendrick, Joaquin Benoit, Pat Neshek and Andres Blanco. They have three players eligible for salary arbitration (Jeanmar Gomez, Freddy Galvis and Cesar Hernandez) and should fill the rest of the roster with players near the major-league minimum. Add in other costs, including buyouts and benefits, and the Phillies' current projection is around $100 million.
The franchise could start to spend more in free agency next winter, with a bigger splash possible before the 2019 season. In 2019, the Phillies have committed to just $6.1 million, the average annual value of Herrera's new deal.