The financial aspect behind professional sports teams is always complicated. Over the years, the Phillies have built a reputation of being unwilling to exceed that luxury tax threshold. But a lot of people talk about the luxury tax, and the money coming “off the books,” and don’t always know what that means. So, what does it all mean, and how does it affect the team?

The luxury tax is calculated at the end of the season, and it’s based on every player’s AAV (annual average value). Last seasons, the Competitive Balance Tax (luxury tax) was $210 million. The Phillies ended their season around $202.5 million, a few million dollars under that tax. Where did that $202.2 million go throughout the organization? To start, here’s a great chart of the Phillies payroll (After Knebel, before Camargo).

Around $40 million of their money is officially off the books. Archie Bradley, Chase Anderson, Vince Velasquez, Brad Miller, Odubel Herrera, Hector Neris, and Andrew McCutchen were all let go, and a majority of them have signed with new teams already. The Phillies signed Corey Knebel and Johan Camargo to MLB contracts before the lockout, adding up to $11.4 million. 

Rhys Hoskins, Zach Eflin, and Jose Alvarado all obtained arbitration and will be sticking with those deals for the 2022 season unless an extension takes place. Those three players add up to around $13 million, and after combining everything we’ve talked about so far, hit around $161-$162 million. Players received incentives throughout the year, which sums up to around $15 million, leaving us at close to $177 million taken up. 

The current payroll would leave us with around $28 million in money to spend. The biggest question mark right now with the Phillies is their outfield situation. They have been rumored and linked to Kyle Schwarber, Nick Castellanos, Kris Bryant, and more. They have also been linked to Kevin Keirmaier in centerfield, who would be acquired via trade. Is there any possible way that we could dump the Didi contract in a trade for Keirmaier? Absolutely not, but it would be a dream. Getting off of Gregorious’ contract at this point in time is probably the most important thing financially. 

We’ll never know why John Middleton doesn’t exceed that luxury tax, even after he’s talked about winning, and competing for a championship multiple times. If the Phillies were to go out and get a left fielder, centerfielder, bench bat, a closer, and maybe another reliever, they would without a doubt exceed that tax, depending on the value of the players acquired. 

With the MLB lockout in place, the luxury tax number is one of the key issues being negotiated, and not decided on. No true numbers have been released yet, but there are reports going around that owners proposed $215M, while the MLBPA proposed $245 million. The Phillies would have $28 million of free space with the current agreement, $32 million under the owners asking, and $64 million under the players’ proposal.

A lot of numbers were thrown around today. The bottom line is when the lockout ends and a new CBA is in place, the Phillies should have around $30-$32 million. With a few million taken off for in-season trades as well, their final number lands at about $28.5 million. Nobody truly knows when this lockout will end, but when it is, Dave Dombrowski and John Middleton have some money to spend. 

Ring it. Go Phils. Go over the damn tax John.

Mandatory Credit: The Philadelphia Inquirer