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March 31, 2014

Transaction Analysis

Angels Sign Baseball's Best Player to One of Baseball's Best Deals

by Ben Lindbergh

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ANAHEIM ANGELS
Team Audit | Player Cards | Depth Chart

Signed CF-R Mike Trout to a six-year, $144.5 million extension. [3/28]

Because Mike Trout is the best player in baseball, one would think that any transaction in which he’s involved would lead to a long article. But this is going to be a fairly short one, both because Sam Miller already wrote about Trout’s extension when the approximate parameters were first reported and because there are really only a few things about this contract that you need to know.

If you read the italicized text and did some quick mental math, you’ve already realized that this is a steal for the Angels (which isn’t to say that it’s a mistake for Trout). Here are the basics: The extension buys out Trout’s three arbitration-eligible years (2015–17) and what would have been his first three free agent years (2018–20), ensuring that the Angels can hug him and pet him and squeeze him and pat him through age 28. The contract also includes a full no-trade clause—not that trading Trout was going to be high on the Angels’ to-do list, considering the team-friendly terms of the deal.

As Jeff Todd points out, this isn’t the largest extension ever signed by someone with between two and three years of service time. That distinction goes to the eight-year, $159 million deal Buster Posey signed last spring. Of course, Trout’s contract runs for fewer years and will pay him a higher average annual salary. But we’re talking about Trout, whose performance has blown by the previous best by a player of his age and experience level. It seemed only natural to expect his salary to do the same.

If we accept $60 million as a reasonable estimate of what Trout could have expected to make in his three arbitration years—which, given his unprecedented early success, almost certainly would’ve been record-breaking—we’re talking about a total of $84.5 million, with a $28.2 million AAV, for the three free agent years (2018–20) that this extension buys out. PECOTA projects Trout to be worth 20 Wins Above Replacement Player in those three seasons. We don’t know what wins will be going for five years from now, but barring a Mad Max-style economic collapse, it won’t be $4 million.

Granted, the Angels are accepting some risk by committing to Trout four seasons before he would have hit free agency. As I noted in my take on the Miguel Cabrera contract, it’s only fair for a team to receive some reduction in cost in exchange for securing a player’s financial future long before it’s forced to. That said, as a young, well-conditioned position player with no serious injury history, Trout is about as safe a bet as a baseball player can be. Any player can suffer a freak accident; Mickey Mantle, whom Trout is often compared to, hurt his knee when he tripped over an exposed outfield drain pipe and supposedly was never the same. But even a diminished Mantle went on to have a Hall of Fame career, and outfields today don’t have exposed drain pipes. There’s always the chance that tragedy could befall Trout off the field (as the Angels, sadly, know well). Add all of those threats together, though, and from the team’s perspective the reward still outstrips the risk.

The obvious follow-up question is why Trout was willing to pass up all of that imaginary money. Presumably, he’ll say it’s because he wants to play for the Angels and provide for his family, and that’s perfectly fine. Other players might have preferred that Trout set a more lucrative precedent, but the earnings of others are a secondary concern. Trout’s draft bonus and 2012–14 salaries add up to less than $3 million, considerably less than the signing bonus from this extension alone. He’s just guaranteed himself a payout nearly 50 times larger than his lifetime earnings to date. Some players (and people) are more risk-averse than others; for Trout, $144.5 million was where it stopped being worth it to worry about worst-case scenarios. And it’s not as if this is the end of his earnings: Assuming he continues to produce and doesn’t sign another extension, he’ll have the option to sign a much more massive contract when he hits the open market heading into his age-29 season.

Even if Trout and agent Craig Landis weren’t the types to hold out for the last dollar, whoever secured his signature deserves some praise. If we’re going to give Jerry Dipoto and/or Arte Moreno grief for adding Albert Pujols and Josh Hamilton, then we also have to give Dipoto and/or Moreno credit for convincing Trout to accept this extension. We’ve heard repeatedly that Trout “just wants to win.” Yet he hasn’t won with the Angels, who’ve finished third in the AL West in each of Trout’s two seasons as the best player on the planet, and who have the consensus worst farm system in baseball. If winning is really Trout’s main motivation, and he believes that staying in Anaheim gives him the best chance to do that, then we have to assume that someone in Anaheim is a persuasive salesman.

Before the extension, the Angels were a team with a thin system and six declining players owed $112 million in 2016. Now, they're also a team with a superstar locked up long term at a below-market price. Sounds a bit better, doesn't it? What a difference a Mike Trout makes.

So, sorry, rival teams who were hoping to make a run at a 26-year-old stud: Trout is taken. The Players Union might not be pleased, but those industry officials who were appalled, shocked, and disgusted by the Cabrera contract on Thursday can take solace today. And if you root for the Angels, your Trout contract dreams just came true. Feel free to fist pump in the privacy of your home.


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

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