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August 8, 2012

Future Shock

Considering a Trout Extension

by Kevin Goldstein

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Mike Trout is having a season for the ages. That shouldn't be news to you. But let's forget about the present for a second and think about what could be an even more promising future, as terrifying as that sounds. By common thought in the analytical community, Trout is still six to eight years away from his peak, and if you’re the Los Angeles Angels of Anaheim, you want that peak. That means an extension for the most valuable young asset in the game. If you are the Angels, how do you even approach this? To find out, I talked to a number of scouts and executives to get their take.

Theory No. 1: The Cautious Route
For many I polled, now is simply not the time to discuss a Trout extension. “I'll go low because I can just pay him $1-1.5 million for the next two years and then try to do an eight-year deal going into his age 23 season,” said a National League executive. “You're going to be paying him either way,” said another NL official. “So I would probably wait another year or two since you still get him relatively cheap.”

An American League assistant GM noted that Trout's remarkable performance over his three-plus months in the big leagues means you are paying at his absolute peak. “I think they've missed the window to lock him up,” he said. “I know he's not going to suck at any point, but he may at least cool off sometime in the next two years and give you a chance to actually compare him to someone else.” All deals out there are baselines for future deals, and Trout's lack of comparable performances has the potential to create a real problem for the Angels. “Right now, there are no comps and you open the door to any contract number the agent wants to throw out there,” the exec continued. “$100 million isn't crazy right now, but that's kind of the problem.”

Theory No. 2: Fair Market Value
For many officials, this is really just a math question and it falls into three parts. The easy part is the known quantity of Trout's 2013 and 2014 seasons, or, to stick to the industry jargon, the pre-arb years. Those are simple enough to calculate, and even with the Angels giving Trout considerable raises simply as a nice gesture, both seasons should come in at well under $2 million.

Things get complicated from 2015-17, and Trout's three years of arbitration. For one NL executive, the best comparable for these years might be Phillies slugger Ryan Howard. “Howard went Rookie of the Year, MVP, and then back-to-back top five MVP years and his arbitration numbers were $10 and then $15 million,” he explained. “I know Trout could go higher, but a reasonable guess can't be much more than this.”

But others think it could creep a bit higher, according to one AL official. “He has a chance to set arbitration records since he dominated in the statistical categories arbitrators look at, and he has a chance at some hardware.”

Ranges for Trout's three years of arbitration were from $52-$55 million, But there was a remarkable universality in the value of Trout's free agency at this time. “My approximate math has him at $25 million for free agency,” said an NL executive, while another responded, “let's say he gets $25 million per as a free agent.” One AL official wrote “so we'll assume $25 million on the free agent years.”

Add up the $1.5 million for 2013-2014, and average estimate of $53.5 million for the arbitration years and $75 million for the three free agent years, and you have a total of $130 million for the next eight seasons, covering 2013-2020.  Eight years seemed to be a magic number for those that responded as it buys out three years of free agency, while still allowing Trout to hit the open market at 28.

So the question becomes, what's the discount for providing Trout with immense security, and how does one structure the deal?

For many, options could provide additional opportunities for both sides of the table. “I'd be aiming at eight years at $85 million with two option years at $20 million and each with a $5 million buyout,” explained an NL exec. “That guarantees $95 million for eight years with the potential for $115 million over ten.”

That was the general range of logic, but that's also considerably more than previous similar deals done with young stars like Carlos Gonzalez (7 years, $80 million), Evan Longoria (6 years, $17.5 million with the potential for 9 years, $33.5 million), and ranks with Ryan Braun's two contracts that add up to 13 years and $150 million, though five of those years represent free agent time.

“I'm not even sure a $100 million dollar offer would start the conversation at this time,” said an AL official. “That first Pujols deal with the Cardinals (7 years, $100 million) might be the barometer, and in retrospect, that ended up looking like a very club-friendly deal.”

Theory No. 3: The All-In
And that's the problem. In the midst of a historic season, and clearly a remarkable talent, and obviously so incredibly young, would Trout even entertain anything but an equally historic offer at this point? “You might need a 12-15 year contract for it to make sense from Trout's side,” explained an AL executive. “Otherwise, why not dominate your arbitration years and test free agency at 26?”

Even with those parameters, many team officials were interested. When one NL scout was asked how much he'd offer Trout, he simply responded “whatever he wants.”

“I don't think anything is too much for Trout,” said another NL official. “It's just such a different situation given the leverage. If I'm the Angels, I'm looking to do something historic, and we're talking those 12-15 years, to make sure he is the man for our franchise for as long as possible.”

One thing was certainly clear with competing executives: they'd all love to have Trout on their roster, but they did not want to be in their shoes when it came to trying to keep Trout around long term. “I do not envy the Angels. They are in a very precarious situation with this kid,” said an AL front office official. “That being said, I'd certainly try to sign him.”

A version of this story originally appeared on ESPN Insider Insider.

Kevin Goldstein is an author of Baseball Prospectus. 
Click here to see Kevin's other articles. You can contact Kevin by clicking here

Related Content:  MLB,  Contracts

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