Phillies Phenomenon: How Investing in Athletes has Rejuvenated the Franchise

      The Philadelphia Phillies franchise was established over 139 years ago in 1883. In 1905, the first official World Series was played; to date, there have been 117 World Series. The Phillies have made 7 appearances in the World Series, most recently in 2009, and won twice, most recently in 2008. John Middleton the principal owner of the Philadelphia Phillies with a nearly 50% stake in the franchise sold his family’s tobacco business in 2007 for $2.9 billion in cash. Middleton authorized “stupid money,” to revamp the team with $527 million in free-agent contracts for the three main stars of the Phillies on this year’s road to the World Series.

First investment: Right-fielder Bryce Harper for 13 years and $330 million in March 2019

·               Base Salary: $26,000,000

·               Signing Bonus: $1,538,462

·               Payroll Salary: $27,538,462

·               Luxury Tax Salary: $25,384,615

Second Investment: The 2021 winner of the National League’s Most Valuable Players Award, pitcher Zack Wheeler for 5 years and $118 million in December 2019

·               Base Salary: $24,500,000

·               Payroll Salary: $24,500,00

·               Luxury Tax Salary: $23,600,000

Third Investment: Left-fielder Kyle Schwarber for 4 years and $79 million

·               Base Salary: $20,000,000

·               Payroll Salary: $20,000,000

·               Luxury Tax Salary: $19,750,000

Fourth Investment: Right-fielder Nick Castellanos for 5 years and $100 million

·               Base Salary: $20,000,000

·               Payroll Salary: $20,000,000

·               Luxury Tax Salary: $20,000,000

All four investments consequently put the Phillies over the luxury-tax threshold for the first time in franchise history. According to Spotrac, their total payroll is over $255 million, the 4th highest in the MLB behind the Mets, Dodgers, and Yankees.

Following all these investments, the Phillies have made the postseason after a decade-long absence. The franchise value has increased by $200 million since last season. Revenue has increased 230% from 140 million to 323 million. Operating income has increased by $50 million but players' expenses have skyrocketed by 226% from $93 million to $210 million. They are slowly recovering from the debt of investing in these four key players, currently sitting at 6% debt.

The choice to acquire the four players was not made from a capitalist mindset but rather by a passionate fan (their owner) who wanted the franchise to reach the World Series after such a long absence. Despite the financial burden, the Phillies are currently 3-1 against the San Diego Padres for the title of National League Champion. Is this acquisition of players similar or different from FC Barcelona’s acquisition of Lewandowski and other big names in recent years? 

Comments

  1. Eleni, Rachel, and CharlotteNovember 3, 2022 at 12:51 AM

    I think this strategy is very similar to FC Barcelona's. When Joan Laporta became president of the club his whole plan was to sign big names like Beckham (even though Beckham rejected the offer). Since then, Barca has spent huge amounts of money on Neymar and Lewandowski, similar to the Phillies. Both teams came to this decision in an attempt to win rather than as a wise business decision and are also still in debt.

    Rachel Wun

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    Replies
    1. Kalee, Marissa, GeriNovember 8, 2022 at 3:09 AM

      Rachel- I agree this is similar to FC Barcelona. The club went through a spending period putting themselves into a big hole of debt that they are still trying to get out of. How do you think these teams will get out of it? How do you think they will avoid this in the future?

      -Kalee Krippner

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    2. Team 1November 9, 2022 at 2:24 AM

      This comment has been removed by the author.

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    3. Team 1November 9, 2022 at 2:25 AM

      I think to get out of this debt they obviously have to win. That's the whole reason of acquiring these big players. For example, the Phillies made it to the World Series this year which was huge for the city and the franchise so I think it was well worth it. There was also a video release on the owner saying that he believed he underpaid Bryce Harper for how he was playing and joking said I didn't think it was possible to underpay someone that makes over 25 million a year.

      - Maxwell Clark

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    4. TobyNovember 9, 2022 at 3:47 AM

      I 'm going to have to agree with Maxwell on this for sure as in order for a team to make it out of debt they need to win. A team cannot just tank and sell off all of its players just to get out of debt as they would lose even more money as none of the fans want to support a tanking franchise. Although there are ways to counteract a team with debt or low money such as the Oakland Athletics and Tampa Bay Rays playing a form of moneyball selling off high costing assets in order to utilize stats and analytics to win the game, however as it may work to make the playoffs, it has yet to result in the two most important objectives which are to win the World Series and make the team as most profitable as possible. Therefore in order to maximize returns teams need to buy those high value guys to rake in the money and fans such as signing Bryce Harper on the Phillies and Machado on the Padres.

      Delete
  2. Team 1November 9, 2022 at 2:34 AM

    I think that the acquisition of these players is very similar to the approach of FC Barcelona. It has obviously paid off for the club as they reached the World Series. They did lose in game 6 of the series, but it shows that it was a very good decision to put themselves into debt much like Barcelona did to acquire the talent they needed to reach the top. Although the put themselves into a lot of debt, it was good debt because it led to future success and as mention in the post, the debt has been cut down to 6% and they have young stars on the roster that can continue to lead the team to success year after year. Debt is not always bad for sports teams because sometimes you have to take a couple steps backwards before you see long term success.

    -Jared Anderson

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    Replies
    1. Pay DayNovember 9, 2022 at 10:24 AM

      I agree that while debt generally has a negative connotation, it's becoming increasingly common and understandable in sports with drastic salary growth to go into debt by investing in key players. I appreciated your comment that "sometimes you have to take a couple steps backwards before you see long term success." Athletes are like long-term investments that franchises hope to prove profitable by bringing in more money to their franchise and earning them more titles. While they may not have won the World Series this year, Bryce Harper has already proved to be a valuable asset to the Phillies franchise.

      Marissa Weiss

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  3. Pete DeAngeloNovember 11, 2022 at 1:49 AM

    I think that making the connection between Fc Barcelona and what the Phillies have been up to is very fair. In both instances we see organizations butting the business aside and risking it all for the win. In Barcelona's case after not making champions league after 2 seasons, and spending all this money on these top class expensive players, now they are in a real pickle. It seems like quite the opposite has happened in the case of the Phillies. Making the post season for the first time in years and bringing in a large influx of viewers and revenue. Hopefully they are able to continue this level of success and eventually win the world series.

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  4. Team 1November 11, 2022 at 6:10 AM

    Although it was disappointing that the Phillies lost in the World Series this year, the money they spent ended up being worth it as this team is very competitive and strong. I would say their money spending is similar to Barcelona's in a sense. However, besides the recent signings of Kounde and Lewandowski, I think the Phillies spent their money on players who deserve it more so than Barcelona did. An example of this is Ousmane Dembele, who at the time was a world class player, but Barca overpaid for him and he has not been worth the money.
    -Hunter

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