Ryan Madson, Closing, and Contracts

Over at Brotherly Glove, Eric Seidman refutes the suggestion that the Phillies named Jose Contreras closer partially to deflate Ryan Madson‘s leverage in contract negotiations.

While the idea that the team is trying to cost-control Madson by not allowing him to close is interesting from a storyline standpoint, I highly doubt the Phillies are implementing such a devious tactic.

How would it even make sense? The front office would spend this year deflating Madson’s confidence, convincing him that he lacks the mental fortitude to be a closer, hoping that he and Boras buy in and re-sign at a lesser price, only to eventually use Madson in the role they said he could not fill? It’s just too wacky a theory when every angle is examined.

I haven’t seen anyone else suggest this besides myself, so it’s just a theory of mine and is in no way a fact. However, over the years, the Phillies have shown themselves to be very acutely aware of any and all contract situations. Before Cliff Lee, they absolutely refused to devote more than three years to any pitcher, Roy Halladay included. For all of the contracts former GM Pat Gillick and current GM Ruben Amaro have handed out, the only two that have come back to haunt them were the ones awarded to Adam Eaton and Geoff Jenkins (though some, including myself, will argue that Ryan Howard‘s contract will end up being a mistake).

Let’s not forget that Amaro’s secretive handling of the Lee signing was incredibly strategic. The New York Yankees and Texas Rangers were considered the heavy favorites to sign Lee; the Phillies were never even considered.

Additionally, the Phillies have traditionally set their payroll as a specific percentage of revenue.

Year Revenue ($M) Payroll ($M) Ratio
2005 $167 $95 1.76
2006 $176 $88 2.00
2007 $183 $89 2.06
2008 $192 $98 1.96
2009 $216 $113 1.91
2010 $233 $138 1.69
2011 $239 $169 1.41

From 2005-08, the Phillies had a ratio between 1.76 and 2.06. As soon as they won the World Series, ownership felt the best way to continue to turn a profit was to devote more money to payroll. So as the Phillies made more and more money by selling more tickets, merchandise, advertisements, etc. they sank more of it into the players and coaches on the field.

In 2009, the Phillies signed Howard to $54 million contract extension, signed Ryan Madson to a $12 million contract extension, traded for Cliff Lee, and avoided arbitration with Joe Blanton and Shane Victorino, among others.

Last year, the Phillies traded for Halladay and signed him to a $60 million contract extension, signed Howard to a $125 million contract extension, traded for Roy Oswalt, signed Blanton to a $24 million contract extension, signed Victorino to a $22 million contract extension, signed free agent Placido Polanco to an $18 million deal, and signed Carlos Ruiz to an $8.85 million extension.

Going into 2011, the Phillies signed Lee, exercised Jimmy Rollins‘ $8.5 option, and re-signed Jose Contreras for $5.5 million.

Clearly, the Phillies have become very dedicated to putting out the best possible team that money can buy. However, there is a limit to how much the Phillies can spend. As their current streak of 126 sellouts will attest, you can only sell so many tickets to every game; you can only sell so many jerseys before everyone has one (or seven); you can only sell so much advertising. As profitable as the Phillies are, they cannot yet print their own money like the New York Yankees, which Forbes valued at nearly three times the Phillies ($1.7 billion to $609 million).

The Phillies cannot continue to spend with reckless abandon, especially given how heavily some of the contracts they’ve awarded have been back-loaded. Between now and some time during the next off-season, the Phillies’ front office will be carefully analyzing what they can do with upcoming free agents and position vacancies. Potential free agents include Raul Ibanez (LF), Rollins (SS), Madson (RP), Danys Baez (RP), Brian Schneider (C), Ross Gload (1B/OF), and J.C. Romero (RP). Four arbitration cases await for Cole Hamels (SP), Kyle Kendrick (SP), Ben Francisco, and Wilson Valdez. Roy Oswalt can also be kept around for $16 million or bought out for $2 million. Brad Lidge will likely be bought out for $2 million. As of right now, the Phillies have $113 million committed to nine players.

The case of Madson may seem like an insignificant blip on the radar, but it will actually play quite a large role in how the Phillies’ manage their roster going forward. In baseball, because of the perceived importance of the ninth inning, closers make significantly more money than other relievers. Consider some closers around baseball that have hit free agency:

The only set-up reliever who has come anywhere close was Rafael Soriano, who signed a three-year, $35 million contract with the New York Yankees. But again, they print their own money.

Therefore, it is true that as Madson’s save opportunities increase, so too will his price tag. This is not a fact unknown to the Phillies. If Madson gets scant save opportunities, he and his agent Scott Boras have less leverage in negotiations. They can cite his K/9, BB/9, and xFIP as I have been for the past couple years, but when Amaro cites his relatively low saves total and save conversion rate, there’s not much of a counter-argument, as irrational as it may be.

Assuming a 2012 Opening Day payroll of $175 million, the Phillies have around $65 million to spend on at least 16 players. Chopping Madson’s asking price from (example) three years, $30 million to (example) three years, $18 million is a big deal. Saving $4 million in annual average value nets them a player worth about one extra win above replacement.

I agree that suggesting that the Phillies are intentionally fixing Madson’s price is a wacky suggestion, but I wouldn’t put it past the Phillies. Their front office has been among the trickiest (and best) in all of baseball.

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11 comments

  1. Brian

    April 05, 2011 09:39 AM

    With all the money they have invested in winning, I think it’s a pretty far reach that they would try to fix Madson’s price for next season. Still, it’s an interesting thought exercise.

    Looks like there could be a lot of openings for the younger guys (Stutes, Mathieson, De Fratus) next year with Baez/JC/Lidge/KK all likely to be free agents. I gues that’s all the more reason to bring some of the young guys up this year as injury fill-ins, so they can evaluate what they have.

  2. bill

    April 05, 2011 09:59 AM

    On the assumption they will definitely give Hamels his money, since 28 year old pitchers with his success and relatively clean injury history are tough to find, I’d like to see some spots made for younger guys on the roster. Dom Brown definitely needs to be playing full time next year in RF, and Francisco shouldn’t be getting a long-term deal if Singleton is close to being ready in 2012.

    That being said, Madson is worth retaining, but Baez and Romero are average (or worse) relievers that you can find anywhere for low cost.

  3. Evan

    April 05, 2011 10:57 AM

    Do the Phillies really need to resign Madson at all? I’m not sure what the free agent market is like for relievers next year, but really a reliever is just as likely to blow a lead in the 9th as he is in the 8th. If saves cost money couldn’t any decent non-closing reliever be paid a relatively low salary and take over as the closer?

    $10 million a year for any reliever no matter what role is probably a waste of money. Especially if the guy gets a multi-year deal which adds risk for an injury to further defalte their value.

  4. Bill Baer

    April 05, 2011 11:08 AM

    I would say Madson is one of the rare pitchers you spend a bit of money to keep around. Relievers with a 10.9 K/9, 2.2 BB/9, and 50% GB rate don’t grow on trees, after all.

    I wouldn’t commit $10 million a year over three-plus years, but I’d give him a pay raise to keep him around.

  5. Jeff T

    April 05, 2011 11:29 AM

    Of our list of impending FA’s we should really only sign Hamels, Madson, and probably Rollins (at a contract that takes into account age and injury history). While I love our success, I am not a fan of having such little payroll flexibility. Hopefully as most of our highly paid veterans end, we can replace them with some of our cheap homegrown guys (i.e The Clearwater Five).

  6. Terry

    April 05, 2011 05:29 PM

    I feel that if you don’t have a pither to get thru the 8th inning it does not matter who is pitching the 9th or closing. Maddison has had several opportunities to close games. He is at best fifty percent as a closer. I for one do nott think he has a closer mentality. He is better off in the setup role that he has now. That is why the Phils did not name him the closer. On the other hand I think Contreras does have that closer vibe about him. he even has that closer look about him. I also think y=that you can use him on consecutive days more than Maddson can go. He is just the better choice for closer right now.

  7. Todd D

    April 05, 2011 05:32 PM

    Much like in a fantasy baseball auction draft, I’d never advocate spending money on a closer. Way too much turnover at the position. While it may be a little far-fetched that the Phillies are playing games with Mad-dog, I wouldn’t put it past them to try and save a buck or two, given the recent spending spree.

  8. hk

    April 06, 2011 06:10 AM

    Bill,

    I like a conspiracy theory as much as the next guy, but I think Eric Seidman’s right on this one. If the front office believes that having one closer is important (as opposed to closer by committee) and that Madson’s their best option while Lidge is out, I can’t imagine that they would potentially sacrifice wins in 2011 to save dollars in 2012 and beyond. I think what’s more likely is that the front office thinks that Madson’s not cut out to be a closer, despite all of the statistical evidence that shows otherwise.

    To me, what the decision to name Contreras as the closer means is that we should not expect Madson to re-sign with the Phillies after this year. Boras will find a team that’s willing to look deeper into the stats and pay Madson closer money, especially considering that there could be a lot of “potentially” big budget teams in the market for a closer. I could see Boston signing him if Daniel Bard is not ready to replace Papelbon, the Dodgers if they are ready to move on from Broxton, Texas if they make Feliz a starter or even the Mets if they are smart enough to avoid having KRod’s contract vest for next year.

  9. Bill Baer

    April 06, 2011 06:41 AM

    Are they really sacrificing wins by using Contreras instead of Madson, though? The difference seems negligible to me.

  10. Dave

    April 06, 2011 11:51 AM

    I disagree on the Madson devaluation….here me out. Let’s assume that the Phillies feel both contreras and madson can close. contreras is signed next year, while madson is not. its less about what the phils want to pay for him as it is what other teams would be willing to pay for him. if they make madson the closer and he succeeds, his price goes through the roof. if they make contreras the close and keep madson in the 8th, and madson succeeds, then you have other teams wondering “is he worth closer money when he hasn’t proved he can do it? will we be paying $10-12M per year for a guy who is better suited for the 8th? why didn’t the phillies trust him in the 9th when lidge went down…do they know something we don’t?

    Now, for all those saying the phils wouldn’t employ this strategy because it could cost them wins in 2011 by keeping the better pitcher out of the closer role, i have a question….how exactly does it cost them anything?

    If madson is better than contreras and madson pitches in the 8th….that ensures contreras, and the Phillies, have more save opportunities to begin with. If you had madson in the 9th and contreras in the 8th, and contreras is worse than madson, then there would be less save opps for madson. My point is that if you are pitching both in the 8th or 9th regardless of order, over a season their impact on overall team wins will be the same.

    the only legitimate claim that could be made is that you should pitch the better pitcher in their higher levergage situation, whether thats the 8th or 9th….which of course, equates to closer by committee. Until Charlie has the balls to do that, it makes all the sense in the world to keep madson in the 8th for 2012 cost concerns.

  11. hk

    April 06, 2011 12:58 PM

    Bill,

    I don’t think they are necessarily sacrificing wins by using Contreras instead of Madson. However, my point was that if the front office thinks that (a) the closer is more important than the set-up man and (b)that Madson is better equipped for the role than Contreras, in their minds they would be hurting the 2011 team (by putting the lesser player in what they think is the more important role) to save money in 2012 and beyond.

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