Bryce Harper’s 13-year, $330 million Phillies contract—the richest in the history of American team sports—reflects a unique opportunity to add a 26-year-old former MVP, one of the most talented hitters in baseball, via free agency. It also reflects how badly Philadelphia needed Harper.
After flirting with contention early in 2018, the Phillies dropped off badly down the stretch, and headed into the offseason with principal owner John Middleton, a billionaire tobacco magnate, uttering his now-infamous call to arms: “We’re going into this expecting to spend money. And maybe even be a little bit stupid about it.”
Since the ravages of time and injury took the Phillies’ last competitive core down around 2012 or so, the club has asked its fans to hope for the future. After a few false starts, Harper’s arrival confirms the Phillies’ return as a major financial player for free agents and a serious contender for the NL East crown.
The Phillies, a big-market team that ran a top-three payroll as recently as 2014, had assembled a talented core that included young homegrown players like Rhys Hoskins, Odubel Herrera, and Cy Young finalist Aaron Nola. That core couldn’t get over .500 last year, but even after lavishing multiyear deals on Jake Arrieta and Carlos Santana in the 2017-18 offseason, the Phillies’ payroll was just $104 million in 2018. That’s $93 million under the competitive balance tax threshold and $71 million less than their peak expenditure in 2014. They had the ability to spend stupid money, and with Harper and Manny Machado on the market, a great opportunity to spend it wisely.
For the first three months of the offseason, the Phillies signed solid complementary players in reliever David Robertson and outfielder Andrew McCutchen, and traded for shortstop Jean Segura and coveted catcher J.T. Realmuto. They signed Nola to an extension. But they didn’t get their franchise cornerstone, and their overall payroll only rose to $125.5 million, leaving the club in more or less the same spot it ended 2018 in, only with increased expectations. And after Machado signed with the Padres last week, Harper was the only cornerstone left.
The other two finalists for Harper—the Dodgers and Giants—are positioned differently. The Dodgers will probably make the playoffs without Harper, while the Giants are in the process of tearing down the remnants of the 2010-16 club so they can rebuild. The Phillies, because of the size of their market and their share of exploding leaguewide revenue, ought to be running a payroll in the $200 million–a-year range at the very least. After three years of spending barely more than half that, being outbid on both Machado and Harper would have amounted to a broken promise from ownership, a discontinuity between championship rhetoric and third-place financial commitment that’s become all too familiar across baseball.
The Phillies had to have Harper, and now they do. The record-setting contract confirms that the Phillies are willing to spend what it takes to hold their own in a very competitive division. More than that, adding Harper to the middle of the Phillies’ lineup transforms an offense that could look anemic in 2018 into a group that can score in bunches. Realmuto, Segura, and McCutchen weren’t transformative additions on their own, but in concert with Harper, they’re a group that can turn an offensive inning into a half-hour-long conga line around the bases.
Harper’s agent, Scott Boras, was able to leverage that need into a $330 million contract. For all the discussion about Harper’s streakiness and last year’s weird defensive numbers, his impact as a player is fairly obvious in the short term. Harper will be the Phillies’ best hitter, and their best position player overall, from the moment he pulls that red pinstriped jersey over his dress shirt at his introductory press conference. With incumbent right fielder Nick Williams in the lineup, the Phillies were a sleeper pick for a playoff spot. With Harper in the lineup, they’ll expect to win the division.
The contract is a little more complicated than Harper’s on-field production. Thirteen years is a long time—smartphones and Twitter have been around about that long—and $330 million is a gigantic number. It’s perfectly reasonable to look at 13 years, $330 million and get sticker shock. That’s more money than 99.9 percent of human beings will ever make in their entire lives, and if your eyes don’t bug out a little at that figure, you should have your pulse checked.
So let’s unpack that number, and what it means in the context of the Phillies and baseball at large.
The most interesting thing about Harper’s contract is its structure. Harper’s deal is the richest ever in terms of overall value, but it won’t make him one of the 10 highest-paid players in the game in terms of average annual value, bringing him in at around $25.4 million per year on average. And the contract is reportedly front-loaded, meaning Harper will make more money earlier in the contract than later. This is in contrast to the Nationals’ reported 10-year, $300 million offer, which carried a higher average salary but included $100 million in deferred money, paying Harper until he was 62 years old. Harper would have earned interest on those payments, but the money loses value over time thanks to inflation. That bothers some athletes but not others; for instance, Max Scherzer, another Boras client, is on a seven-year deal, in which half of the $210 million he’s owed is deferred.
That means Harper will get paid more up front, but it also has two important implications for the Phillies. The first has to do with the competitive balance tax, which appraises each player based not on what he makes in a given season, but on what his average annual salary is over the life of the contract. The Phillies front-loaded Arrieta’s deal but have several players—McCutchen, Nola, Scott Kingery—whose salaries increase substantially in years to come. Compare Harper’s deal to the one Rockies third baseman Nolan Arenado signed—eight years, $260 million: The Phillies are paying Harper $70 million more over five years at the back end of the contract, while reducing his competitive balance tax hit in 2019 by $7.1 million. That means Harper’s tax hit is about 22 percent less than Arenado’s. NHL teams used to deploy extra-long front-loaded contracts to circumvent the salary cap before the league outlawed the practice in its current CBA, so while the tax logic of this deal is novel for baseball, it’s not completely untried in sports.
That the NHL changed the rules governing contracts should serve as a reminder that Harper’s contract is so long it’s impossible to know how it will look when it ends. Anyone who tells you what $25.4 million will buy in the MLB of 2031 is either a liar or a time traveler. In the next 13 years, the National League could adopt the DH or change the composition of the ball or bats. There will probably be at least one work stoppage and at least two CBAs negotiated in the life of this contract, which means the competitive balance tax could be turned into a salary cap or abolished altogether. The Phillies might regret this contract in 13 years, or they might win multiple World Series that make it easy to forgive a few years of decline. For that matter, the economics of baseball or even society in general might change in the next 13 years. They’ll deal with 2031 when they get there.
From the standpoint of financial allocation, paying Harper more up front while stretching out the contract over 13 years allows his salary to more accurately reflect his production. The Phillies threw all this money at Harper because of what he can do from age 26 to, say, 33 or 34, depending on how he ages. The value of a prime Harper year far exceeds $25.4 million—Boras said Harper received a $45 million–a-year offer for a short-term deal. (For what it’s worth, FanGraphs placed the value of a win last year at a little over $8 million. Over seven MLB seasons, Harper has been worth 4.4 fWAR per year.) So his contract will be structured to pay him most while he’s performing at his best, and while the Phillies’ commitment to spend is greatest. If Harper ages like Nelson Cruz and hits 40 homers a year into his late 30s, so much the better. If he ages like Albert Pujols and forgets how to run when he turns 36, the Phillies will have had him for five to seven prime years and lessened their financial exposure when he starts to decline.
The biggest risk for long-term, nine-figure contracts is that the player will decline before his salary does. Harper’s current age already insulates the Phillies from some of that risk. But to compare Harper’s deal to an extreme nightmare scenario like Miguel Cabrera or Pujols is unfair. For starters, Harper’s annual salary is less than Cabrera’s ($31 million) and comparable to Pujols’s ($24 million), and his contract ends after his age-38 season, while Pujols and Cabrera are both signed into their 40s. But Cabrera and Pujols are both on back-loaded deals, in which the last year of the contract calls for the highest salary: $32 million for a 40-year-old Cabrera in 2023, $30 million for a 41-year-old Pujols in 2021. Not only will Harper’s contract end before he turns 40, he won’t be making $32 million in the last year of his deal.
It’s also important to remember the broader economic circumstances in which the contract exists. Inflation will reduce the value of Harper’s future salary somewhat, but if his deal is comparable to the Pujols or Cabrera contracts in terms of raw dollar value, it’s much smaller relative to the total amount of money that teams are taking in. MLB revenues are increasing not only faster than inflation, and faster than the buying power of the American worker, but much faster than what MLB’s players are making.
While this deal makes sense for the Phillies, a 13-year, $330 million contract also allows Boras to claim, once again, that he negotiated the richest deal in baseball history. He has now negotiated four of the past six record-breaking contracts—Kevin Brown’s in 1998-99, Alex Rodriguez’s in 2000-01 and 2007-08, and now Harper’s. In 2014, the Wasserman Group negotiated a $325 million extension for Giancarlo Stanton, knocking a Boras client off the top of the list for the first time since Ken Griffey Jr. held the record for a year in 1999-2000.
Harper’s $25.4 million AAV looks about the same as the $25.2 million a year Rodriguez signed for in the winter of 2000. But $25.2 million in December 2000 is equivalent in value to about $36.5 million now, and MLB’s annual revenues have tripled since Rodriguez signed his first deal.
Harper’s $330 million contract isn’t a bargain—there’s not really such a thing as a $330 million bargain, unless you’re buying a space program. But unless you ignore the structure of the deal or the broader economic trends of the past 20 years in baseball, it’s absolutely affordable for Phillies ownership. Spending $330 million on one player won’t hinder the Phillies’ ability to compete, because the player they spent it on is, it bears repeating, Bryce Harper.