The Philadelphia Phillies and left-handed starter Cole Hamels have agreed on a six year contract extension worth $144 million, pending a physical. The deal makes Hamels the second-highest paid pitcher in baseball history, behind C.C. Sabathia, who signed a seven-year deal with the New York Yankees worth $161 million in 2008, while just passing the six year, $137.5 million that the New York Mets gave to Johan Santana.
According to MLB Trade Rumors, the extension also includes an option for a seventh year, that will either be a club option at $20 million or a vesting option at $24 million. The option vests if three conditions are met:
- Hamels is not on the disabled list with a left shoulder or elbow injury at the end of the 2018 season;
- Hamels pitches 200 innings in 2018; and
- Hamels pitches 400 innings in 2017-2018 combined.
In a vacuum, the deal anticipates approximately 24 wins above replacement from the 28-year old. Assuming the standard $5 million per win above replacement, five per cent inflation, and a 0.5 WAR decline after his age 30 season this is the calculation we get:
2013 – $24 million salary - $5.00 $/WAR – Paying for 4.8 WAR – Anticipating 4.9 WAR
2014 – $24 million salary - $5.51 $/WAR – Paying for 4.4 WAR – Anticipating 4.9 WAR
2015 – $24 million salary - $5.79 $/WAR – Paying for 4.1 WAR – Anticipating 4.4 WAR
2016 – $24 million salary - $6.08 $/WAR – Paying for 4.0 WAR – Anticipating 3.9 WAR
2017 – $24 million salary - $6.31 $/WAR – Paying for 3.8 WAR – Anticipating 3.4 WAR
2018 – $24 million salary - $6.63 $/WAR – Paying for 3.6 WAR – Anticipating 2.9 WAR
The extension appears to take Hamels’ best season (2011) and imagines it to be his true talent level. That type of thinking usually results in an overpay, and in all likelihood, that’s what this is. However, that isn’t meant to suggest that the Phillies don’t know what they’re doing with this deal. It’s very likely that an even better deal was awaiting Hamels in free agency this coming off season, and that the Los Angeles Dodgers intend on blowing the lid off of our neat little $5.0 million per win above replacement calculation that we do.
What’s far more disagreeable than the slight overpay that this appears to be is that Philadelphia appears to be in feast or famine mode as far as its roster has been constructed. If the team doesn’t move any of its assets in the near future, and still hopes to maintain a similar payroll next year, it will have a staggering 74% of that payroll locked up in seven players, including three starting pitchers. Approximately $128 million will go to Cliff Lee, Hamels, Roy Halladay, Ryan Howard, Jonathan Papelbon, Chase Utley and Jimmy Rollins next season.
Even that might be excusable if it was currently leading to success on the field, but it isn’t. The Phillies, with all those players already on their team (granted, with significant injuries to Howard and Utley), are ten games under .500 and 14 behind the NL East leading Washington Nationals. By signing Hamels to this extension, Philadelphia has essentially reinvested in its current roster, which is looking further and further removed from the ones that have won five straight division titles.
While flags fly forever, bodies do not. By the time the rest of the high paying contracts come off the books, Hamels is most likely to be in his decline phase.
So, while the deal itself appears to be close to fair given the current free agent climate, I’m not sure how it helps the Phillies to become a better team. Given the age of its roster and the current structure of its payroll, Philadelphia would’ve been better off attempting to rebuild rather than reinvesting in the team that it has now. Signing Hamels, the youngest of its major assets, doesn’t preclude them from doing that in the coming week and after the season has been completed, but we come back to the same problem facing the Phillies if they merely wait out the current batch of contracts. By that time, Hamels too will be in decline.