The time has come for the Phillies to take a look in the mirror – a long, hard look using one of those 50X mirrors that shows every blackhead, wrinkle, ingrown hair, and imperfection you don’t want to see. The image staring back in the reflection may determine the success of the Phillies franchise in 2012, and could have implications that extend much further.

The Phillies might be every bit as bad as their record suggests and the returns of Howard, Utley, and Halladay still won’t be enough for them to escape the inevitability of a baseball-less October. They might also be destined to follow the similar championship paths of the Cardinals last year and the Phillies in 2008. One road suggests “Buy, buy, buy,” while the other screams, “Sell, sell, sell.” And what about the other trail in which the Phillies have a tremendous second half surge and still fall short?

The Phils might still have a run in them when all the big boys return. The 1980 Phillies were just three games over .500 and six games back on August 10 before they caught fire and won the World Series. The 2007 Phillies were seven games back on September 12 before coming back to win their first of five straight divisions.

But they might not be destined for championship glory, and Ruben Amaro cannot allow dreams of an unlikely playoff run to cloud his assessment of the true state of the team. The Phillies don’t have the financial ability or the prospects to become major buyers and too much excitement and revenue from ticket sales to hold a fire sale.

It is in the Phillies’ best overall interest to retool at the trading deadline.

Retooling might just be the latest catch phrase, but the approach is not new: make a few strategic moves with a small short term price and high long term yields. Think back to 2006 when Pat Gillick traded Bobby Abreu and Cory Lidle at the trading deadline. The Phillies went on a 38-23 run, and were two days away from making the playoffs. Retooling now allows the Phillies to hedge their bets by taking a small step backwards in 2012, to ensure greater success next year and in the years beyond.

But why retool?

The Phillies expensive, aging team has pushed them right up against the luxury tax, leaving them with very little payroll flexibility next season. They already have $111 million guaranteed for Ruiz, Howard, Utley, Rollins, Halladay, Lee, and Papelbon in 2013. Pence’s arbitration figure of roughly $15 million brings the Phillies to a team payroll of $126 million for next year. With likely departures of free agents Polanco and Victorino, the Phillies will have $52 million to fill third base, left field, center field, Blanton’s spot in the rotation, and pay for the other ten or so spots. It essentially fills their payroll before playing one game in 2013.

The Phillies face the prospect in 2013 of having razor thin financial flexibility, no real prospects available to fill existing roles, and an aging team with a history of injuries. If and when the injury bug attacks the Phils again, they will be right back where they are right now.

Before anything happens, the Phillies must take care of their primary order of business:

Cole Hamels must be included in the Phillies’ future plans. Hamels is not an elite pitcher of the likes of Roy Halladay, but he is still one of the best young arms in the game. Nearly all moves the Phillies make are predicated on re-signing Cole Hamels. Ruben Amaro needs to offer Hamels at least Cliff Lee money and get the deal done RIGHT NOW. I’ll examine the implications of not signing Hamels at a later time, but for now let’s assume the Phillies sign him.

With Cole Hamels locked up, the plan the Phillies should follow within the next few weeks before the trading deadline is to trade Cliff Lee, Shane Victorino, and Kyle Kendrick. Let’s examine each move.

John Kincade first brought this idea to my attention during an interview a few weeks ago. Cliff Lee is a tremendous pitcher and trading him has nothing to do with just one win to this point. He is an elite pitcher, works quickly, fields his position well, can hit, and has a perfect baseball mentality. It is also hard to forget that Lee chose Philadelphia. Unfortunately, he is a casualty of a last place team.

Moving Lee relieves $25 million of salary next year and $102.5 for the remainder of his contract. Secondly, and maybe more importantly, it will bring in much needed prospects to a farm system that has been stripped down in recent years. A quality farm system provides cheaper and often healthier options than buying free agents during the off season. We’ve also seen that good minor league prospects are crucial to making trades for players like Halladay, Lee, Oswalt, and Pence.

Lee might even garner a better return than Hamels. Free agents who sign with another team are no longer eligible for draft pick compensation under the new collective bargaining agreement. That means if, say, the Pirates trade for Cole Hamels and do not re-sign him, they are left with nothing at the end of the season. It makes potential rentals like Hamels less attractive for some teams than a player like Cliff Lee who is under contract for several years.

There’s no doubt trading Lee is a huge loss, but it doesn’t preclude them from winning this season since they still have Halladay, Lee, Worley, and Blanton. They may take a hit this season, but it improves the long-term success of the ball club.

If Ruben Amaro cannot find a suitable trade partner for Cliff Lee, the other option is to trade Roy Halladay. Nobody wants to do this considering Halladay is the ace of all aces and a first ballot Hall-of-Famer, plus he is a bargain at $20 million per season (easy for me to say). Since Halladay’s contract expires after next season, he poses less of a long term risk than Lee. Of course, it all comes down to the available deals. If Halladay brings in better prospects than Lee, it is an option worth considering. But I would try Lee first.

One major hitch to the giddy-up of moving Lee or Halladay is that, according to Ken Rosenthal, they both have limited no-trade clauses which enable them to list eight teams in which they would accept a trade and block 21 teams per season.

At this point it is almost a foregone conclusion that Victorino will not wear Phillies pinstripes in 2013. He’s a nice player, but he won’t be cheap and adds yet another player to a stockpile of 30 something’s. Victorino should have several willing partners who could use his offense, speed, defense, and valuable veteran experience for a pennant race.

In return, the Phillies should look for a younger center field prospect who isn’t quite major league ready, but can step in to fill Shane’s role and hopefully become a mainstay in the coming years. The perfect comparison is the Lidge/Bourn trade. Michael Bourn was a top talent who had not seen action with the Phillies, but he was able to start right away for the Astros. In this case, Victorino won’t bring in a player as talented as Bourn, but he could bring in a younger, cheaper version of himself.

This is a move I would make right now. The Phillies need bullpen help in a bad way and there are plenty of teams equally as desperate for a fifth starter. Kendrick has obvious flaws, but he is a versatile pitcher who can fill the fifth starter role or can serve as a long man out of the bullpen. A team with a solid ‘pen who is short in the rotation might consider Kendrick valuable enough to trade a middle reliever. The Phillies won’t get a top tier set up man, but they can acquire a Chad Durbin. One likely suitor would be the Rockies. To fill Kendrick’s spot, the Phillies would need to bring up a starter from the minors, like Tyler Cloyd (8-1, 2.15 ERA).

If all the moves pan out, here is how the roster shapes up for the remainder of the season:

Starting Rotation

Halladay

Hamels

Worley

Blanton

Minor League starter TBA

Bullpen:

Same, with one or more middle reliever coming through trades.

Infield:

Same

Outfield:

LF – Same

CF – Young prospect TBA (think young Michael Bourn)

RF – Same

Summary

Trade Cliff Lee in return for several prospects.

Trade Shane Victorino for center field prospect to take his place on the roster.

Trade Kyle Kendrick for middle reliever.

These three moves help replenish the farm system, add an arm to the bullpen, provide payroll flexibility, and replace age with a bit of youth.

What the Phillies see in their 2012 reflection are the results of those weird teenage years. Difficult moves made by the trading deadline might exacerbate the awkwardness this year, but could provide a championship image in the years to come.