The Papelbon tradeoff

Setting the stage

Once upon a time, the Philadelphia Phillies signed Jonathan Papelbon to four-year, $50 million contract with a $13 million vesting option for 2016. Since Papelbon was a Type-A free agent, the Phillies also surrendered their first-round pick—31st overall—to the Boston Red Sox as part of the signing.

A short while later, the owners and players agreed to a new five-year Collective Bargaining Agreement which called for several substantial changes, which included releasing all relievers from traditional Type A status. Clubs would not have to give up a draft pick in return for signing a Type A reliever.

Formerly, Type A status was best viewed as a tax. Teams might view a particular reliever as worth $6 million for one year, but if Type A status was attached, the reliever would be paid considerably less. The value of the lost draft pick offset a chunk of the reliever’s value. In that sense, the new CBA was a boon for all relievers who would have unfairly lost income due to arbitrary rules.

However, the rule change was not retroactive. The Phillies must still surrender their first-round pick.

One man’s theory

At first sniff, this smells unreasonable. It appears that the Phillies were penalized for acting decisively in the free agent market. To apply different rules at different points of the offseason is bizarre.

But maybe the Phillies weren’t penalized. What if the Phillies knew about the impending changes and still decided to sign Papelbon before the agreement? Why would they do that?

With the new CBA in place, Papelbon’s bargaining position would have improved. While most view his contract as a gross overpayment, it’s not unreasonable to think that he could have gotten an additional $4-8 million added to the deal without the draft pick “tax.” The Phillies, already treading dangerously close to the luxury tax threshold, may have decided that saving a few dollars in the contract was more valuable than the draft pick.

There are a couple of reasons why the Phillies might feel this way. Free agents Jimmy Rollins (if he signs elsewhere), Ryan Madson and Raul Ibanez will net the Phillies several early draft picks. Trading the 31st pick for several million dollars in contract savings seems fairly reasonable for a team that should gain several picks somewhere around No. 31.

The Phillies’ draft profile also should be considered. They are widely known to focus on players with the best tools. These players are usually raw, athletic types who lack polished baseball skills.

As an example, in 2008, the Phillies selected Anthony Hewitt with the 24th pick. Hewitt was regarded as the most athletic player in the draft, but his baseball skills left much to be desired. Hewitt’s tools never developed into skills. The Phillies went on to take several other similarly toolsy players early in that draf,t including Zach Collier, Anthony Gose (part of the trade for Roy Oswalt) and Jason Knapp (part of the trade for Cliff Lee).

This tools-oriented approach to drafting doesn’t require a preponderance of early picks. High-ceiling, raw athletes abound in the first several rounds of the draft. The Phillies acquired their top pitching prospect—Trevor May—with the 136th pick of the 2008 draft. At the time of the pick, he was a high-ceiling, projectable pitcher with a sloppy delivery.

The last reason might be the most important. It was speculated on Twitter that Papelbon might have retained Type A status anyway, assuming Boston made a sufficiently large qualifying offer. In this case, signing Papelbon early carries additional value: It takes him off the market before Boston could make an offer worthy of Papelbon’s attention.

Bottom line

Might the Phillies have known about the impending changes to Type A status but chosen to sign Papelbon anyway? It’s certainly possible.

The Phillies probably saved several million dollars in major league payroll by signing Papelbon early. This will either help them avoid paying the luxury tax or reduce their burden.

They might have viewed the pick as entirely fungible. Since they will receive several similar picks before the end of the offseason, they can still aim at the same players. They won’t be particularly concerned that nearly major league-ready talent is scarce at that part of the draft since they typically pick players who take four or more seasons to develop.

And Papelbon might have ended up with Type A status anyway.

So… Maybe the Phillies were retroactively screwed, or maybe they knew what they were doing all along.

*Author’s note: I would have liked to write this article sooner, but I was busy “winning” NaNoWriMo (National Novel Writing Month, in which the goal is to write a novel during November). I highly recommend the experience.