The Ryan Howard Situation

The Phillies’ front office has stated that they are done making major deals until spring training starts, though that doesn’t exclude a signing of someone like Kyle Lohse or Kris Benson. The only thing left to complete then is signing Ryan Howard to some kind of a deal, as Howard is arbitration-eligible for the first time in his brief career.

The Phillies and their Ruthian first baseman exchanged figures recently and were $3 million away from each other: the Phils offered him $7 million; Howard wanted $10 million. Should this be settled by an arbitrator, there’s little doubt the Phillies would win, as $10 million for a first-time arbitration-eligible player is unprecedented (as a comparison, Miguel Cabrera got $7.4 million in his first year of arbitration eligibility).

Before last season, however, Howard and the Phillies were at odds. The author of the Phillies’ franchise single-season home run record wanted a long-term deal. Instead, the Phillies gave him a one-year deal worth $900,000. Howard was disappointed, though it tied the record, held along with Albert Pujols, for the highest base salary for a non-arbitration-eligible player. When the deal was completed, Howard said:

It’s a little frustrating and a little disappointing that we didn’t get it done, but that’s the business aspect. Now you use it as a starting point. It’s over. Now you go out and play.

Should the Phillies give him a long-term deal now? They have control of him until after the 2011 season and can go year-to-year with him in arbitration until then. Let’s look at some possibilities.

The Phillies sign Howard to a large long-term deal worth $90 million over the next six seasons.

The Phillies now have control of Howard until after his age 33 season in 2013, when he would undoubtedly be in decline. For those six years, the Phillies wouldn’t have to worry about drafting a first baseman and would have an almost-definite above-average offense, since they also have Chase Utley locked up until after the ’13 season.

Adrian Cardenas, one of the Phillies’ top prospects, then becomes valuable to the Phillies in two ways: they can try him out as a potential third baseman (or perhaps an outfielder), or they can continue grooming him as a second baseman and use him as trade bait, since he’s road-blocked by Utley at his natural position.

By the time Howard’s contract is nearing its end, his annual salary will likely look like a bargain, given inflation. This benefits the Phillies two-fold: the relative cheapness gives them probable cap space to add players and it increases Howard’s trade value.

As for ’08, the Phillies will have little cap room to make another signing (i.e. Lohse) or an in-season move unless it involved shedding salary (perhaps that of Pat Burrell?).

The Phillies sign Howard to a back-loaded four-year, $65 million deal.

With this contract, Howard averages over $16 million per season, so he’s definitely being fairly compensated when you compare it to what he’d make in arbitration. Backloading the contract allows the Phillies flexibility in the immediate future, so they can still sign a player like Kyle Lohse to round out the starting rotation while still ensuring themselves that the mainstay in their offense is happy about his tenure in Philadelphia and doesn’t demand to be traded.

When Howard is reaching the end of this four-year deal and is destined for free agency, the Phillies may want to consider trading Howard and moving Chase Utley over to first base. This is feasible only if Adrian Cardenas makes significant progress in the Minor Leagues, another impact second baseman is drafted and climbs the ranks quickly, or the Phillies sign another good second baseman.

Howard’s deal will run out two years before Utley’s, so that means that unlike the hypothetical six-year deal, the Phillies won’t be left with having to deal with the simultaneous contracts of their two best players. The Phillies can deal Howard without fearing that their offense will collapse and won’t have enough talent to contend.

The Phillies go year-to-year with Ryan Howard until after the 2011 season.

This is a dangerous way to go, as it will all but guarantee that Howard will not be wearing a Phillies uniform in 2012. However, the Phillies would end up getting a bargain and paying market value for a top-tier first baseman, allowing them the financial flexibility to round out the roster and give them the best chance to make a run at the World Series. The Phillies are, if nothing else, a team built for the immediate future.

Towards 2011, the Phillies could shop Howard around similar to how the Twins are shopping Johan Santana. Teams would likely overpay for a top-five offensive juggernaut (assuming Howard averages a 130 or so OPS+) both in terms of players given up and the amount of Howard’s remaining contract taken. Then the Phillies could move Utley to first or shop for another first baseman in the off-season.

So, what should the Phillies do? The Good Phight analyzed how players most similar to Howard performed in their same-age seasons and concluded:

On balance, I think this data suggests that Howard is a solid bet to deliver very good to excellent production over at least the next 4-5 seasons.

“Very good” and “excellent” are ambiguous, perhaps intentionally so. Either way, I’ll take “very good to excellent production” with a backloaded four-year, $65-ish million deal for Howard. After ’11, either deal him or if he’s still productive as his career wanes in his mid-30’s, maybe he’ll want to sign another lighter contract for the Phillies.