It turns out that the Philadelphia Phillies were not done making big moves after signing Kyle Schwarber. The team reportedly agreed to a five year, $100M contract with free agent slugger Nick Castellanos late Friday night. The signing firmly put the Phillies over the new $230M competitive balance tax. It is the first time in franchise history they have crossed the first tax threshold.

ESPN’s Jeff Passan was first with the agreement.

MLB Network’s John Heyman was first with the terms.

Breakdown

The addition of Castellanos gives the Phillies one of the most lethal lineups in baseball on paper. The now 30-year-old Castellanos posted a .939 OPS with 34 home runs last year with the Cincinnati Reds en route to his first All Star selection. Castellanos was drafted by Phillies President of Baseball Operations Dave Dombrowski in 2010 when the latter was president of the Detroit Tigers. In nine seasons with the Tigers, Chicago Cubs, and Reds, Castellanos owns a .278/.329/.486 batting line with 168 home runs. He is one of 17 players since 2017 to have at least 100 home runs, 350 RBIs, and an OPS of at least .850. Four of those other players (Bryce Harper, Christian Yelich, Mookie Betts, and Freddie Freeman) have won MVP over that same span

However, much like the Phillies other big acquisition this week in Schwarber, Castellanos is a poor defender. He has -15 defensive runs saved above average per 1,200 innings in his career. After having -20 DRS in 2017 as a third baseman, Castellanos was moved to the outfield where he has -13 DRS above average in his career. He had -7 DRS in 2021 while primarily serving as the Reds right fielder. 

Fit with the Phillies

Castellanos gives the Phillies one of the best 1-6 hitter combinations in baseball. Despite an MVP season from Bryce Harper, the Phillies offense as a whole was very middle of the road in 2021. Philadelphia’s offense ranked 13th in runs scored, 15th in WAR, 16th in home runs, and 14th in OPS. Castellanos will provide a major jolt to the middle of the order and serve as excellent protection for Harper as well as taking some pressure off of Rhys Hoskins and J.T. Realmuto to produce runs. Castellanos presents a major upgrade over Andrew McCutchen in left field who struggled after running from injury. 

But Castellanos will be at best a lateral defensive move from the 35-year-old McCutchen. Castellanos now bumps the recently acquired Schwarber into the designated hitter spot, even though both are better suited as DHs. The Phillies will still almost certainly want to rotate DHs, so at times there could be occasions where Schwarber and Castellanos are both in the field while Harper or Hoskins DHs. The Phillies will once again have a below average defense in almost any iteration of their alignment you can think of. However, they should be able to vastly out hit their defensive inefficiency, which wasn’t true in the past.

What this signing means

Perhaps the biggest development from signing Castellanos isn’t even acquiring the player but the fact that the Phillies have entered the luxury tax for the first time. They have done everything in their power to avoid doing so in recent years, going so close as just $700k under last year. This signals that principal owner John Middleton has finally stopped treating the tax as a salary cap and identified the difference maker he has alluded to in the past that would be the catalyst for going over. 

The Phillies being over the tax opens up an abundance of opportunities to improve further with free agents and trades before the season as well as at the trade deadline. Once over the first $230M tax threshold, teams are only penalized monetarily until exceeding $270M. Crossing that threshold brings penalties to draft position. The second monetary penalty does not kick in until crossing $250M. This means the Phillies can spend freely now that they are already over the first threshold. They can go right up to the second threshold without the surcharge penalty changing. 

What changed?

There isn’t one definitive thing to point to that made Middleton change his mind. Perhaps it was Mets owner Steve Cohen’s blatant disregard for the tax in fielding a possible juggernaut. Maybe it was Dombrowski who was a driving force in the Red Sox spending when he oversaw the construction of a World Series champion roster in 2017. Bryce Harper might’ve found the magic words in his meeting Monday night with Dombrowski and Middleton. Or perhaps Middleton was tired of facing the brunt of the criticism for the Phillies on-going postseason drought.

Whatever the reasoning, Middleton has seemingly committed to removing the self-imposed cap on the team’s spending. Doing so certainly does absolve him from some of the criticism directed his way over the last few seasons. But he still isn’t completely innocent. Middleton still oversees a team that has struggled to develop talent at the minor league level. Changes have been made under Dombrowski that could alleviate this problem. Only time will tell. But Middleton is still culpable for the success or failure of the player development department as he hires the people who are in charge of it. He chose wrong with Matt Klentak and Andy MacPhail and is now facing the repercussions. However, he has now shown that he is willing to try and outweigh those mistakes with money at the major league level while waiting on the new development strategy at the minor league level to bear fruit.