After another early exit from the Major League Baseball postseason, the Philadelphia Phillies will go back to the drawing board.
In their quest to bring home the franchise’s third World Series title, the team will have to get creative. With star players such as Kyle Schwarber and J.T. Realmuto now free agents, the core of the Phillies might be shifting.
With young stars waiting in the minor leagues, how the Phillies plan to tackle free agency and the offseason trade market will be an interesting look. A team that has seemingly been very active in years’ past might not have that same opportunity.
Thanks to many factors, the Phillies organization has one of the highest payrolls in baseball. An ownership group that spends to win is a major reason for this level of spending. Complete buy-in from the fan base plays a large role as well. Fans pack Citizens Bank Park, buy merchandise of their favorite players, and often go above and beyond to support their ballclub. Being in a large market such as Philadelphia has its perks as well.
Consistent spending has not only helped the Phillies reach the postseason four straight seasons but has also led to two straight division titles. While these on-the-field results outweigh the costs, the team is facing a large penalty with MLB’s luxury tax.
The team has been over the tax threshold each season since 2022. Because of the increase in spending, they are now facing harsh penalties. Spotrac estimated that the Phillies paid over 49 million in tax penalties this season. This is the fourth most, behind the Los Angeles Dodgers, New York Mets, and New York Yankees.
Heading into 2026, the luxury tax threshold is going to be set at $244 million. For reference, the estimated payroll for the club in 2025 was $291 million before tax. However, the team does have some expiring contracts.
With these six players off the books, the club is expected to “gain” roughly $82 million in flexible spending. If the club did not spend another dime, they would be $34 million under the luxury tax. This would reset the tax penalty, meaning John Middleton would save an extra $50 million in his bank account.
Now, of course, this does not factor in any increases in player salary. The following players will be making more in 2026 than they did in 2025.
The potential increases from some of the players listed above will certainly vary. Arbitration numbers are hard to project, but these projections from FanGraphs give you an understanding of what certain players are likely to receive.
The Phillies can save $19 million dollars for next season’s payroll by declining the options on both Harrison Bader and Jose Alvarado. Although President of Baseball Operations Dave Dombrowski has already commented on Alvarado. Dombrowski stated, “I’d be surprised without making any announcements that Alvarado is not back with us…”
Bader is likely going to decline his half of the mutual option, which will allow him to reach free agency once again. Due to his performance in 2025, he is setting himself up for a multi-year contract. Whether or not the Phillies are the club to give him this deal remains to be determined.
Under the assumption that these deals work out similar to the projections, the Phillies will increase their payroll among these players by roughly $32 million. Taking that chunk out of the $82 million from expiring contracts puts the club at around $50 million in spending. This, of course, is if they wish to match last season’s payroll. If they did not spend another penny, they would be just under the luxury tax next season.
Understanding the current setup of the Phillies, I would expect that the club is not looking to cut back on their payroll. While the financial relief might be nice, the feeling is that John Middleton is not going to stop spending until he can bring back a World Series trophy to Philadelphia.
That brings us back to the club’s current free agents. Schwarber is expected to receive a large increase in his average annual value (AAV) in his next deal. Schwarber made $20 million this past season. A report from the Philadelphia Inquirer’s Scott Lauber mentioned that Schwarber’s camp is looking for a deal around five years / $150 million.
While the Phillies could afford that deal, it would not be in their best interest to pay an aging designated hitter that amount of money. Schwarber is clearly an elite hitter, but not being able to play the field limits the Phillies in how they can build their roster. That mark is unlikely to be met but could be an indication of where Schwarber lands. I would expect somewhere around four years / $120 million or five years / $130 million to be more realistic contracts.
Locking down the DH role for several more years would mean that an aging Bryce Harper would have to stick at first base the entirety of Schwarber’s deal. Harper has proven to be a strong defensive first baseman, but nagging injuries continue to cause the former MVP to miss games. If the Phillies could transition Harper back into the DH role moving forward, it just might keep him on the field.
If the Phillies do not bring back Schwarber, fans will demand that the club then reallocate his money towards another key free agent. In that case, would the Phillies then spend even more money on players like Pete Alonso, Alex Bregman, or Kyle Tucker?
Tucker would likely exceed $40 million in AAV for his next deal. Alonso will probably sit in the mid-30s, as he is looking for a long-term contract. Reports have indicated that Alonso wants a seven-year contract, if not longer. Bregman has an interesting market, as he opted out of a two year / $80 million contract with the Red Sox. He could potentially be looking at a lower AAV for more dedicated years on a deal.
There are two players on the Phillies that could potentially be moved this off-season. These moves would likely be more focused on financial relief than getting a star-studded trade package in return.
Rumors have already begun populating baseball circles that the Phillies are looking to move on from Nick Castellanos. The veteran outfielder has one year remaining on his deal with the team. After frustration with his decreased playing time boiled over in 2025, his exit from the team could be beneficial for all parties.
Castellanos slashed .250/.294/.400/.694 with 17 home runs and 72 runs batted in this past season. He, however, had a negative 1.0 WAR per baseball reference and accumulated 133 strikeouts to 32 walks in 2025. His defensive metrics grade out as one of the worst fielders in the sport, as he projects to be a designated hitter moving forward.
If the Phillies are able to move Castellanos to another team, they will almost certainly have to retain salary. This means the club would pay another team to have Castellanos play for them in 2025. If there is not a trade partner willing to take on Castellanos, The Athletic’s Matt Gelb reported the club could potentially release him altogether.
Moving Castellanos’ contract would be beneficial in many ways for the Phillies. Financial relief and roster flexibility would both fit the description.
Another player many may have pondered moving on from is Taijuan Walker. The veteran starter has had an up-and-down tenure in Philadelphia. After having his worst season as a professional in 2024, Walker bounced back heavily in 2025.
In 34 appearances, including 21 starts, Walker pitched 123.2 innings this past season. He pitched to a 4.08 earned run average, his best since 2022. He provided the Phillies with great depth in the rotation with injuries to Aaron Nola, Ranger Suarez, and Zack Wheeler at various points in the season.
Walker could help a lot of teams with poor starting rotations. He could plug into most rotations at the minimum as a fifth starter. While teams might not want to eat his entire contract, this is another situation where the Phillies can retain salary in an effort to get a deal completed.
After the conclusion of the World Series, free agency begins again in Major League Baseball.
At that point, players can sign new deals, and teams can make trades. Often times, however, baseball’s free agency period is slow-paced. Most deals do not start heating up until the December Winter Meetings, which is looked at as the unofficial start of the offseason.
The Phillies have plenty of tough decisions to make. How creative they will get remains to be seen, but overall a 96-win team from a season ago is just a couple of moves away from being back in contention for 2026.
