The team announced the expected move on Friday, two days after losing the World Series to the New York Yankees. Lee's contract expires after next season, though general manager Ruben Amaro Jr. said the team is open to signing the star left-hander to a long-term deal.
Lee, 31, was acquired from the Cleveland Indians on July 29 for four minor leaguers, and quickly became Philadelphia's ace. Lee posted a 3.39 ERA in 12 starts for the Phillies, then went 4-0 with a 1.56 mark in five postseason outings, including 2-0 in the World Series.
Lee might command a deal similar to the seven-year, $161 million contract the Yankees gave C.C. Sabathia.
Lee told MLB.com on Thursday that he's interested in staying with the Phillies but had not given much thought to his contract.
The Phillies have until Monday to decide whether to pick up a $5 million option on third baseman Pedro Feliz, who batted .266 with 12 homers in 2009, hitting mostly seventh in the lineup.
"He had a solid year for us," Amaro said. "I like the man personally. He's a great person, a great teammate, but I also believe in trying to improve and change can be for the better. It doesn't necessarily mean we're going to, but it's something that we'll look into."
Not picking up Feliz's option doesn't prevent the Phillies from re-signing him.
With Lee in the fold next season, the Phillies have $104.5 million committed to 12 players, and are expected to give raises to four salary-arbitration eligible players: Shane Victorino, Joe Blanton, Carlos Ruiz and Chad Durbin. Amaro suggested that the team's 2010 payroll will be similar to last season's, somewhere between $130 million and $140 million.
If the Phillies decline the option on Feliz, they will have eight potential free agents, including Pedro Martinez, Brett Myers, Scott Eyre, Chan Ho Park and Matt Stairs.
Amaro wouldn't rule out bringing any of them back. Martinez will be an interesting decision for the Phillies, who have five starters under contract — Lee, Cole Hamels, Blanton, J.A. Happ and Jamie Moyer — plus young pitchers such as Kyle Drabek and Kyle Kendrick waiting for their shot.
Martinez helped his prospects by going 5-1 with a 3.63 ERA in nine regular-season starts.
"We're still assessing what to do on our free agents," Amaro said.
Notes
The Phillies announced that Eyre, 37, had surgery to remove "floating bodies" in his left elbow. The left-hander pitched through it in the final month of the regular season and the postseason. Eyre has said he will either pitch for the Phillies or retire. … Closer Brad Lidge had his right elbow examined by team doctors, who also examined Raul Ibanez's troublesome groin and abdomen. Ibanez spent nearly a month on the disabled list earlier this season, and batted .232 in the second half of the season. He may need surgery.