Cliff Lee’s Impact On The Phillies

Now that we know the basic structure of Cliff Lee‘s contract with the Phillies – 5 years, $120 million, plus a vesting option for a sixth year that could take it to $135 million in overall value – we could break down the contract in terms of what the Phillies are expecting in terms of wins and future inflation. But, in this case, I’m not sure it is all that necessary, because the Phillies don’t need a certain level of performance needed to justify their high bid since they got Cliff Lee with a bid that was slightly lower than what New York and Texas offered.

In many cases, free agents become almost instantly untradeable due to the Winner’s Curse, as the signing team only gets to become the signing team by paying an amount that no other team in baseball is willing to match. But that’s not what happened here. Both Texas and New York were willing to commit similar dollars and years to Lee, but he simply chose to go to Philadelphia instead.

So, the Phillies have an ace pitcher who signed a contract that we know at least two clubs would take tomorrow if they could. I’d imagine there are probably other franchises who would also be willing to take Lee on this contract, but didn’t get involved in the bidding because they knew he wouldn’t consider signing with them. Unlike most premium free agents signed to long term megadeals, Lee actually has some trade value.

Of course, the Phillies won’t be trading him again anytime soon, but any contract where you could trade him if you needed to instantly carries less risk, as it essentially gives you an out clause. So, while guaranteeing five years to a 32-year-old pitcher certainly carries some risk, it is mitigated in some ways in this particular deal.

There is also another interesting aspect to this deal that is perhaps unique to the Phillies. In some ways, they’ve already mortgaged their future by building an older roster and locking in players like Ryan Howard to big money deals. Even if Lee is not overly productive in the last few years of this deal, it may not end up causing that much damage to the Phillies, as they may be unlikely to contend at that point anyway.

By likely upgrading from Joe Blanton to Cliff Lee, they bolster their chances of contention while Chase Utley and Ryan Howard are still productive players and Jimmy Rollins and Roy Oswalt are still under contract. They are borrowing from their future to improve their present, but given the age of the players on their roster and their future commitments to guys like Howard, borrowing from the future is not a bad idea, as it was unlikely that they were going to be able to sustain excellence into 2014 or 2015. Trading value from years where winning is not likely into years where it is possible is certainly a good swap, and that’s the move the Phillies just made.

Despite the size of the contract and Lee’s age, the upside outweighs the downside here. This is a good move for the Phillies organization, and kudos to Ruben Amaro for deciding to fix one of his larger mistakes.

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Dave is a co-founder of and contributes to the Wall Street Journal.

59 Responses to “Cliff Lee’s Impact On The Phillies”

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  1. Seattlee says:

    When Yankees fans spit on Cliff Lee’s wife in October, he started plotting how to screw them over…….string them along for 4 weeks while all the other useful free agents (Werth and Crawford) sign elsewhere, and then sign with the Phillies, leaving the Yankees, literally NO good players to sign. hahahaaaa. God bless you Cliff Lee.

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  2. Josh says:

    That’s why I hate seeing all these knee-jerk reactions from Braves fans wanting us to trade our prospects. In 2014-15 the Braves could have a very strong young team able to compete for years

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    • DH says:

      2014-2015? They almost went to NLCS, they added Dan Uggla, Heyward has a year under his belt. If they can keep Prado on the field and get something out of Chipper, they’re good NOW. And I’m a Giants fan.

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  3. Tom says:

    I gotta disagree with you on part of this Dave. I agree that today, he could be traded and that makes the contract less risky. That doesn’t mean in the future he could be traded. If there was a setback, injury or underpreformace that lead to The Phillies wanting to trade him, he would no longer be an easy contract to trade.

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    • lincolndude says:

      Yeah, exactly. It’s not really an “out clause,” because whatever it is that would cause the Phillies to want to get out would also likely make him untradeable.

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      • Nadingo says:

        Unless the reason they want to trade him is that they’re no longer in a position to contend. If Lee keep playing well but the rest of the team declines, then they’d want to move that contract to give themselves payroll flexibility. In that case, his trade value will certainly matter.

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      • Matt Sc says:

        That is not really the case. What Dave is trying to say, is that right now the market values Cliff Lee for more than the Phillies have committed to him. If the Yankees had signed him for the highest price they would have an asset that is overvalued compared to the market.

        The Phillies may want to trade Cliff Lee for a number of reasons that don’t revolve around his value to other clubs changing. Say something catastrophic happens to Utley, or Howard, or Halladay. Or they just regress horribly over the next year or two to the point they are no longer viable pieces of a contender, while Cliff Lee remains an elite pitcher. They can move Lee (since without those other productive players the Phillies would not be in contention anyway) and secure prospects for their future when Utley et al. come off the books.

        Or think about if the Phillies have a drastic change in revenue. Again they can move Lee and get his deal off the books. The point is the Phillies have options with Lee (this is all slightly moot if he has a no trade clause and adores playing in the city of brotherly love) and can move him if need be.

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      • Eric says:

        It’s also not really an out clause because as a FA the Yankees were only going to give up a first round pick to sign Lee and the Rangers weren’t giving up anything.

        One year from now, would the Yankees be willing to give up anything of value for a 1 year older pitcher on a contract worth slightly less than what they would have paid now? Part of the reason for making a longterm contract offer is that significant benefit in the short term. If the Phils ever wanted to trade Lee, it’d be for less short term benefit and relatively higher financial risk. I don’t really see any team offering anything of value unless the Phils were to take a bad contract back in return.

        So yes, Cliff’s market value is slightly above what Philly paid for it. But that doesn’t necessarily mean they could extract anything of value (in terms of players) if they were to offer him up in a trade in the future.

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      • Hank says:

        I think the trade value thing is a bit of a reach… the only reason the Phils would want to trade him within the next 2-3 years is for performance reasons (which as pointed out would make him that much harder to trade at that salary)

        As for the “no longer in contention” scenario and drastic changes in revenue scenario… how realistic is this? Are the Phils going to flip him this year or next year at the deadline if they are beset with injuries and out of it? They would do this based on one year? Or would you need multiple career ending injuries?

        In 2, maybe 3, years, this is most likely an unmovable contract (without lots of cash); and the only realistic scenario that would make the Phils want to move this contract in the next 2-3 years is a change in Lee’s value.

        To suggest that if the Phils were out of contention they would flip him seems a bit silly (even for Amaro). They would need to be convinced they’d be consistently out of contention, not just out of contention for a year. Barring multiple career ending injuries that doesn’t happen until at least 2-3 years from now.

        Also while some in the market may value him as a 22-25mil/yr pitcher for multiple years, they probably don’t value him at that level + prospects. Additionally most of that AAV is done with the expectation that he will exceed that value in his early years and hopefully not fall too far below it in the late years

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    • Matt says:

      And does he really not have a no trade clause in his contract?

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  4. Mike Donlin says:

    Howard would have been club-controlled through 2013, no? If so, the Phillies didn’t need to extend him in order to make their run over the next two years. Don’t let a bad and unnecessary move rationalize a good one. The Phillies would have been in the position of Win Now regardless of what they did with Howard. The Howard contract simply makes it more likely that they will find themselves in trouble in the future.

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  5. I wonder if this is setting up a Hamels for Justin Upton trade. I imagine the Phillies would have to give up more than Hamels, but Upton is an affordable, right-handed, young outfielder, which is exactly what Philly could (and maybe should) have been looking to spend money on.

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  6. Gary Hailey says:

    Seattlee, SURELY you don’t believe that — I’m assuming you are joking.

    What’s hard to figure about Lee’s decision is not the money — although that is somewhat of a surprise given the pressure the agents and the MLBPA put on players to take the most $$$ — but the fact that the Phillies traded him a year ago in favor of signing Halladay, and badmouthed him too boot. listen to his quotes from the day he was traded — he was not happy. Suddenly he loves everything about the Phillies?

    Using Seattlee’s reasoning, perhaps Lee is planning to screw over the Phillies by deliberately underperforming and forcing them to trade him cheap after a year or two.

    As for Crawford, the Red Sox wanted Werth — who is a much better fit for them. They got desperate when he signed with the Nats and ended up paying more for an inferior player. Crawford is really nothing special. (Better than the bums they were playing in the OF last year for sure.)

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    • Josh Shepardson says:

      Carl Crawford, nothing special, you can’t be serious can you? He’s coming off a 6.9 WAR season and a 5.7 WAR season the year before. He’s a great fielder, and is like the equivalent of plugging a CF in LF. Toss in that he posted the highest ISO mark of his career, and what is there not to like? Also, why in the world is Werth a better fit for them?

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  7. Wow! What an unbelievable pitching staff. This is only going to make Hamels a better pitcher…unless they dump him.

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    • don says:

      Why would they dump Hamels? He’s coming off a terrific season in which he picked up a new pitch, upped his GB%, and reversed his declining fastball velocity and K rate. Unlike the other 3 he’s just shy of his 27th birthday. If Philly’s jump from mid-spending to big-spending team is permanent, he may be with the team for quite a while. Even if it’s not, getting rid of him before he hits free agency would be crazy.

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  8. DH says:

    They’ll dump Blanton for sure, Oswalt maybe (maybe next year.) Hamels/Lee/Halladay is rotation for next two years minimum, I bet.

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  9. GoJetzoff says:

    Speaking for Phillies fans, we’re definitely getting spoiled by our roster. But, I think it’s a mistake to think that in 3 yrs any fan will think back and say, “we shouldn’t have gotten Lee.” He could probably go 10-10 as a 35 yr old and people would give standing O’s. Look how much we love Jaime Moyer.

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  10. maqman says:

    I’m glad Cliff got to pick the place where he wanted to be for a change and thank him for helping to improve the Mariner’s farm system while not helping the Yanks or Rangers in the future. He’s a class act.

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  11. LGM says:

    As a Mets fan, i think we’ll be ok in the long term, although a 4 game series against these guys is a scary thought

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    • LetsGoMutz says:

      Really what evidence do you have that the Mets will be better in the long term? What Great players do you see coming up on the horizon? What have you seen so far from the owners to give you confidence that they’ll invest in the draft, international free agents, or MLB free agents? I don’t get where this Mets Fandon condfidence in the long term came from.

      This is a bad team with bad starting pitchers and an average farm system.

      Jeez Mets fans are dumb.

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      • B says:

        Blind optimism is a beautiful thing.

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      • Mr. Met says:

        The farm system showed promise last year with Ike Davis, Jon Neise, the Mets are probably middle of the pack as far as the system goes, but Alderson has stated he will go over slot on the draft, and as far as investing on big MLB free agents goes, that hasn’t exactly worked for the Mets, and isn’t exactly the way to build long term success

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      • Bubba says:

        I would say it’s a pretty average team with pretty average starters and a pretty average farm system. Alderson said they’ll go overslot. For years the team had more money than sense, now they have some sense. It doesn’t require blind optimism to expect improvement long term.

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      • Locke says:

        So Omar was the reason they never went over slot on draft picks? I find that somewhat hard to believe.

        I’m not sure I’d call next years Mets average if Santana is going to miss a bunch of games — is he still expected to be out until mid season?

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  12. Bless Your Hart says:

    The Phillies would *never* trade Cliff Lee. Oh wait…

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  13. Boomer says:

    Cliff Lee has modest surplus value *today*. Going forward, I don’t think we can say anything of the sort. That two clubs may have been willing to pay more (though it seems Phillies’ AAV is higher than Yanks’ offer) really means very little once Lee throws his first pitch for the Phils.

    Valuations need to remain very fluid.

    The market was only willing to bear $4 million per WAR for deals last offseason. By the looks of this offseason, many of those deals all have surplus value given the inflation in $/WAR we’ve seen so far.

    By extension, they should ALL be very tradeable.

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  14. NBarnes says:

    It does make the Ryan Howard extension look really, really terrible. Amaro may not ever really notice, but the day will come, and soon, when he’ll wish he had that money to get actually useful players instead of paying $20 or $25 for Ryan Howard’s continued march to being a 240/330/450 first baseman.

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    • LetsGoMutz says:

      You mean like next year?

      When they have about $40mm coming off the books

      Face reality guys, the Phils are big market team that is going to spend like the Yanks, Red Sox, Cubs and Mets. They’ll probably be in the top 3 total salaries for the next 10 years until the Mets decide to start spending again. They’ve added 20% more payroll this year, when just about everyone said they had no flexibility. Therefore, we don’t know there finances, but chances are, they have plenty of cash to at least keep the payroll where it is for the forseeable future.

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      • neuter_your_dogma says:

        Regardless of the cash coming off the books, the Howard extension was premature (whether it is ultimately worth the performance in return is unknown, but probably not). Also, that cash is likely spoken for by raises/extensions for other current players.

        However, I don’t see the Phillies being wholly uncompetitive in 2014-2015. They have an impressive A and lower farm system and a willingness to spend.

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    • Jimmy the Greek says:

      You can talk a lot of crap on Ryan Howard, for sure. But it takes a pretty large leap to see him as a 240/330/450 first baseman.

      He’s a 275/355/540 first baseman. Which may clearly be overpaid at $20-$25 million, but is still a pretty damn nice weapon to have in your lineup.

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    • NEPP says:

      Yeah, I mean, their payroll is around $170 million right now so with that $25 million in “dead” money, they’ll only have $145 million left to build a roster.

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  15. Patrick says:

    Hey at least the Ryan Howard contract isn’t as bad as the Mo Vaughn deal. That’s right Mutts fans, I went there.

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  16. neuter_your_dogma says:

    Stange thing about Howard in 2010: .943 OPS night games, .690 OPS day games. Dude, stop partying or get daytime glasses.

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    • JK says:

      Or stop staying out late with cheerleader girlfriends on the nightes before day games…

      on second thought, invite me to hang out — will fall on any grenades that come your way.

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  17. manny says:

    Common Dude,

    Ruben Amaro did nothing special to get Lee. He just made an offer like any other GM would have made. Lee don’t want to pitch for Texas and Yankees even though they are offering 7 years just to pitch for Philadelphia. It it was any good GM, they would have offered Lee 5 year 22 million per year…..some thing like that. Lee asked Yankees and Texas for 7 years but he is good with 5 years. If he don’t want to pitch for them why to ask the teams for 7 years. its totally ridiculous.

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  18. Oakland Dan says:

    Wait, why is Blanton the odd man out? He is a better pitcher than Kyle Kendrick. Am I missing someone?

    I understand that Blanton is more expensive, but he isn’t particularly expensive in general. There’s no reason to think he won’t bounce back up a bit, to league average or so, and he’s paid like a league average pitcher.

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    • Hank says:

      It’s about the absolute level of the payroll… you are looking at a $/WAR perspective but the level matters too… otherwise they would be adding Crawford (or any other player) so long as it’s a fair $/WAR deal.

      I think most people are assuming that the Phillies are over their ‘budget’ with the Lee signing and need to cut payroll.

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      • Oakland Dan says:

        I see what you mean, Hank, but what is the point of spending all of those millions if you’re just going to throw a couple of games back to the competition in order to save one small handful of millions? Within certain tolerances, the budget is just a number that someone is throwing out there. It’s not like they’re basing it on how many hotdogs they’re likely to sell. Given that that’s the case, we might as well look at it in terms of $/WAR. Blanton will probably bounce back to leave agerave or so, with a ceiling a little higher than that, and Kendrick looks for all the world like he just isn’t very good.

        The point is, they’re spending all that money, and I can see cutting loose something useless and/or replaceable to get a little bit back. In this case, they’d be cutting loose something useful at a fairly reasonable price in favor of something cheap and crappy. It’s like buying a Mercedes and then trying to save $50 by getting lesser tires.

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  19. Paul says:

    Maybe they trade Halladay :) – not like they didn’t move a No. 1 last year…

    On a serious note, the Lee for sainthood thing for taking less money is bunk. He took the offer that allows him the maximum money making potential

    Guy gets 24 per year for 5 – the most AAV; then has a makeable performance related clause to hit an option giving him at least 12.5 (i think) as a minimum buyout (or 27.5 if the club picks him up).

    gives him 120 over 5; or 132.5 over 5; or 147.5 over 6. These are higher than what else he had on the table

    + if he is still godlike, then he can still play for the 6th and 7th year

    Though kudos to him that he has backed himself by taking some risk at the back end (he might not make the clause, or be out of baseball for the 6/7 year)

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    • B N says:

      Exactly. I was thinking that the numbers don’t add up to a “less money” contract myself. I am also unclear why this piece states that the contract can be “worth” 132.5m, when in fact it can be worth up to 147.5m if he’s worth 15m in value for the 6th season (doubtable, but possible).

      The Yankees offered 132m over 6, plus a vesting player option for 16m.

      Looking at the three possibilities about Lee’s effectiveness + health:

      1. Lee pitches well, healthy, for all 6 years:
      Phillies: 147.5 over 6 years + Yr 7 FA contract
      Yankees: 132 over 6 years + min(16, Yr 7 FA contract)

      Better Payout: Phillies ( +15m)

      2. Lee completely busts, blows out his arm before throwing a pitch:
      Phillies: 120m
      Yankees: 132m

      Better Payout: Yankees (+12m)

      3. Lee hits his vesting options, but is ineffective enough to be unwanted:
      Phillies: 132.5 over 5 years + Yr 6&7 FA contracts
      Yankees: 148 over 7 years

      Better Payout: Probably Yankees (15.5m – Yr 6&7 FA contracts)

      4. Lee doesn’t hit his vesting options
      Phillies: 120 over 5 years + Yr 6&7 FA contracts
      Yankees: 132 over 6 years + Yr 7 FA contract

      Better Payout: Yankees if Yr 6 FA contract < 12m

      This hardly seems like a special sweetheart deal for the Phillies. If Lee is worth 12m in his 6th year or 16 in his 6th and 7th combined based on market value, he will make more by signing in the Phillies deal. This holds true regardless of if he vests or not. Even with some decline, that's pretty attainable if he ages well (between 2 and 3 WAR annually).

      The only case where the Yankees are giving Lee a bigger payout is if he completely blows out his arm to the point where he can't earn 16m between his 6th and 7th seasons combined. Otherwise, the Phillies are paying out more money and Lee actually gets a bigger payday.

      So why exactly do people keep saying he "turned down more money?" I know math literacy is on the decline, but this is getting ridiculous.

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  20. Paul says:

    Nice analysis B N,

    I think the reason Lee got the buzz for sainthood was that the initial reports were 100 for 5 yrs, which would be a shocker, and the reports gradually got closer to reality (I’m assuming Cots if correct), it is clear that actually Lee took a deal which gives him the max earning potential over the next 7, but takes on some risk for the final 2 years.

    It also gives him flexibility to sign somewhere else in yrs 6/7 if the Phils really have mortgaged their future to win in 2011-13

    But in his shoes, fair play to him.. there is an old family saying (i wish), the first 120 million is the most important, whether you make another 20-40mil after that won’t really affect your quality of life too much (notwithstanding that after earning c. 20mil already you are set for life)

    I really hope Lee does well, and it looks like whoever will win the NL CY 2011 will deserve it (they will have to to be better than so many elite NL SP)

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  21. Paul says:

    sorry, i got this wrong…

    the contract is 120/5 including the 12.5 mil buyout; or 135/6 if lee hits his performance targets – so he did in fact leave a fair chunk of change on the table

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  22. James says:

    Anytime you give a big contract to a pitcher, it is a big gamble, so I wouldn’t say it is little risk. If he gets injuried or has bad years, you can’t move the contract.

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