Finances Have Become Major Issue for Philadelphia Phillies This Offseason

After spending aggressively in previous offseasons, the Philadelphia Phillies are battling some financial constraints this winter.

Jun 5, 2023; Philadelphia, Pennsylvania, USA; Philadelphia Phillies owner John Middleton before game against the Detroit Tigers at Citizens Bank Park / Eric Hartline-Imagn Images

The Philadelphia Phillies have not been shy about spending in the past.

They handed Bryce Harper the then-richest contract in Major League Baseball history by locking him into a13-year, $330 million contract before the 2019 season.

This was followed up with multiple lucrative contracts during the next few winters, handing J.T. Realmuto $115 million in 2021, signing Nick Castellanos and Kyle Schwarber to $100 million and $79 million deals after that, giving Trea Turner $300 million in 2023, and then last offseason, re-signing Aaron Nola for $172 million and extending Zack Wheeler on a three-year, $126 million deal.

A lot of money has been spent, and that's not even taking into account the contracts for Taijuan Walker, Cristopher Sanchez, and others who have been brought in during this time.

Phillies fans have certainly enjoyed this from owner John Middleton.

It's been a clear signal that he's willing to do what it takes to bring a championship back to the city, reigniting Philadelphia's passion for baseball during the past few years with the postseason runs they've gone on after a long stretch of irrelevance.

But, the Phillies have hit a wall.

Since reaching the World Series in 2022, they have regressed each season by being eliminated in an earlier stage of the playoffs.

To fix that, fans were hoping Philadelphia would, once again, open up their checkbook and land a high-profile player who would fill the hole that is present on this roster.

That hasn't happened.

Jordan Romano, Max Kepler and Jesus Luzardo have been the three Major League moves made thus far, and while there are whispers that more could be coming, one thing has been made abundantly clear by the front office this winter; they're hurting financially.

"Everybody we sign is a major penalty at this point. You're cognizant of that," Dave Dombrowski said per Corey Seidman of NBC Sports Philadelphia.

That stems from their luxury tax penalties.

The Phillies are repeat offenders, so they were taxed at a base rate of 50% because they have been over the tax in three or more consecutive years.

With their payroll above the third apron of $281 million, their signing of Max Kepler for $10 million actually cost $19.25 million because they have to pay a 92.5% penalty on every dollar the spend.

That increases to 110% if they go over $301 million, something they are roughly $2 million away from reaching after adding Kepler.

Because of that, Philadelphia has not been at the top of the free agency market like they have in the past, clearly mindful about how much money they are currently spending, and will have to pay in the future if they were to bring in a star player.

"I would be surprised if we got into impactful free-agent type of signings from an offensive perspective," Dombrowski added.

The Phillies could be keeping things close to the vest, though.

Middleton has not been shy about spending, and if he thinks this team needs another aggressive move, there's a chance something can get done.

"Well, I don't want to say it's a tight payroll in the sense that from an ownership perspective, I don't think I've ever gone to John (Middleton) on anything and him say no, don't do something," Dombrowski shared.