What would a Mike Trout contract extension take?by Glenn DuPaul
September 05, 2012
In March, Sam Miller of Baseball Prospectus posed this question on twitter:
I attempted to answer that question, in an article for Beyond the Box Score. I projected that deal would cost $274 million with a projection of Trout being worth 40.2 wins above replacement (Baseball Prospectus) over his career. It sounded crazy at the time, mainly because giving any player $274 million in guaranteed money is insane, especially when the player only has 135 career plate appearances. But obviously the entire analysis/projection was a fantasy scenario, because a 20-year contract is nuts, even for baseball's number one prospect.
If Mike Trout was willing to sign a 20-year contract with the Angels right now, what would be a fair price?
— Sam Miller (@SamMillerOCR) March 7, 2012
At the time of that article, Trout was in spring training and already aware he would begin the 2012 season in Triple-A. We all know by now that Trout did not stay in Triple-A, and is well on his way to winning both the MVP and Rookie of the Year awards, this season. He has already been worth 7.6 WARP and looks poised to pass the 40.2 career WARP that was used in my original analysis.
A 20-year contract proposal was quite clearly a fantasy world idea, but at that time a realistic contract extension for Trout was not out of the question, despite his lack of major league experience. Miller wrote his own take on Trout and long-term extensions for Baseball Prospectus. In that article, he cites deals signed by Matt Moore, Salvador Perez and Evan Longoria as recent long-term contracts that were signed by players with very little major league experience. A deal similar to theirs for Trout was a possibility before this season, but is way out of the question at this point.
The problem for the Angels is that Trout's 2012 campaign has been unprecedented; his value, which was already extremely high before this season, has risen exponentially. A Longoria-esque six-year $17.5 million deal with three club options, is no longer within the realm of possibility. Trout has been too good and it would take so much more than that to lock him up.
About a month ago, Kevin Goldstein wrote a phenomenal article about contractual options for Trout and the Angels, which appeared at both Baseball Prospectus and ESPN. Goldstein polled industry executives and scouts on how they would approach a Trout extension and came out with three distinct "theories" of what the best decision would be for the Angels:
- Theory 1: The cautious route. Which would mean no extension
- Theory 2: Fair market value. Which would be a contract similar to the ones recently signed by Andrew McCutchen, Starlin Castro and Carlos Gonzalez
- Theory 3: The all-in. Which would be an extension unlike anything we've ever seen before
Right now, the Angels have Trout under team control for the next five seasons. Players typically don't make a ton of money over their pre-arbitration and arbitration years, but Trout could a different case. Trout's arbitration projections, according to Goldstein's sources, were between $52 and $55 million. That sounds about right to me. So let's assume, for the sake of this analysis, that Trout is essentially under a five-year $54-57 million deal with the Angels right now. "The cautious route" would be for the Angels to stick with that deal and attempt to negotiate another contract when Trout is 26 years old and entering free agent eligibility.
It's hard to argue against that move. Trout is in all likelihood going to bring the Angels ridiculous production over the next five years, and it's hard to imagine him not being worth well over $57 million. With where the two sides stand at the moment, Trout would have to be worth only around 9 fWAR over the next five years for the Angels to break even, and Trout has been worth 8.3 fWAR just this season.
There is the risk that the Angels won't be able to retain Trout if he hits the open market, or that they would have to sign him to a record deal to keep him. But I wouldn't be surprised if some people in the Angels' front office think that the surplus value that the Angels will get from him in the next five years outweighs the free agency risk.
As for Theory 2, I personally don't see much benefit for Trout. In Goldstein's article, an NL exec gives a contract proposal that reflects "fair market value":
“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.”An eight-to-10 year deal worth between $95 and $115 million makes market sense based on similar extensions. The Angels would most likely win this deal and they'd be getting a steal to have Trout for three to five years of his free agent-eligible years, at a cost of just $40 to $60 million more than they are already going to spend on him.
With this move, Trout would receive as much financial security as a pre-arbitration player could hope to get, and still would enter free agency at a fairly young age (between 28 and 30). It is also perfectly conceivable that Trout could still receive a Pujols-ian contract when he hits free agency at a later age. But I think that deal would seriously pale in comparison to the one he'd receive if he became a free agent at age 26.
Joey Votto is 28 years old and his current contract with the Reds is for 12 years and worth $251.25 million. Coming into this year, Votto had been worth 22.8 fWAR in his career. Let's assume that Trout regresses a good deal from his historic 2012 season, and is worth 4 fWAR on average over the next five seasons. That would bring his career fWAR total up to almost 30. Thus, when Trout hit free agency he'd be two years younger than Votto and have been worth seven wins more over his career. Oh, and did I mention that Votto's contract with the Reds was an extension, and not a free agent contract?
A lot can happen in five years, but I could see Trout receiving a 15-year, $350 million contract if he became a free agent after the 2017 season. That proposal would be the largest contract in baseball history, but the crazy thing about it is that it could be an underpay. Superstar free agents now typically make around $25 million on the open market, and this projected deal would be paying Trout less than that. When inflation is considered, he could be making even more.
Does it make sense for Trout to risk not receiving that record-breaking contract for just three more years of financial security?
I really don't think so, which is why I think if the Angels are serious about keeping Trout in Anaheim for his prime, they're going to have to go "all-in".
Goldstein's brief paragraphs about what it would mean and what it would take for the Angels to give Trout a monster contract do a great job of capturing why this type of deal could be the only way for Trout to sign an extension:
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?”I think the Angels and Trout could agree on something along the lines of a 12-year $175 million deal with all of the money guaranteed. That offer would almost have to be too good for Trout to pass up and would be enough to keep him from dreaming of the $300+ million deal that he could possibly have made on the open market.
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.”
I understand that $175 million guaranteed sounds completely insane for a player who only one season of plate appearances under his belt. But Trout could be a legend. The Angels would be receiving all his prime and if Arte Moreno has the money, that's honestly too good to pass up.
Trout is going to regress next year. Trout may never have a season like this one again in his career, but maybe he doesn't have to. His .383 batting average on balls in play (BABIP) will regress, but he has a plus-plus speed, so I could easily see him having a .330 to .340 BABIP over his career. Also, I don't think that Trout's 21.7 percent home-run-to-fly-ball rate is sustainable, but it doesn't have to be. He isn't going to hit 25+ home runs every year, but scouts peg him as a 15-20 home run-guy, which still is very good. Also, I think that his plate discipline will improve.
Trout has had a 0.41 walk-to-strikeout rate (BB/K), which isn't horrible, but based on his youth and his mature plate discipline that scouts have raved about, I'm almost certain that number will improve.
So Trout may never have a season like this one again. He's 21 years old and still could improve, but the numbers he's put up have been out of this world. If Trout comes down to earth significantly (his batting average and home runs regress while his plate discipline improves) he could still average four WAR per season over this 12-year proposal. If he can do that, this deal would be an obvious win for the Angels:
For this model, I began with $5.25 million as the price of one win next season. I've heard very strong arguments that the market price of WAR is higher or lower than that number, but I think this estimate fits nicely in the middle. I then assumed a consistent five percent inflation rate for the next 12 seasons. Based on this model, if Trout is worth 48 WAR over the course of this contract, then it'd be a huge, $160 million, win for the Angels.
I find it strange that a 4 WAR season is well above-average and would go a long way in helping the Angels, but it actually feels like an under-projection for what Trout may do over the next dozen seasons. The break-even WAR for this deal is 25.1 WAR or an average of ~2.1 WAR per season, but the Angels would be hoping for much more than that, or else they wouldn't venture into this contract.
This deal might sound great right now, because Trout is in the midst of a super-human rookie campaign. And it definitely feels like he'll easily outstrip 48 WAR over the next 12 years. But at the same time, he's literally only accrued about 220 days of major league service time. Given the ridiculously small sample size of Trout's major league experience and the fact that so much can happen over the next decade that is not under Trout's or the Angels' control, this deal may still feel very risky.
So to give us a better idea of what we can maybe expect from Trout in the future, I looked at players who put up Trout-esque numbers in their careers before they turned 22.
Just 22 position players (other than Trout) in major league history have been worth 9+ WAR before they turned 22.
Trout has been worth 9 WAR, but he doesn't turn 22 until next August, so he has a full season to accrue more WAR before his 22nd birthday. WAR does have a playing time component, so I factored plate appearances (playing time) out of the equation in an attempt to account for the fact that Trout still has a full season left to play.
Below are the 23 9+-win batters sorted by their WAR/PA:
|Player||Age-21 WAR||WAR/PA||Age 22-33 Total WAR|
|Ken Griffey Jr.||15.5||0.86%||67.1|
Shoeless Joe Jackson is the only hitter on this list who had a higher WAR/PA before his 22nd birthday than Trout. Trout's WAR/PA ranks ahead of some of the greatest to ever play the game. Rogers Hornsby, Ty Cobb, Ted Williams, Jimmie Foxx, Mel Ott and many more rank behind Trout.
Of these players. 14, are in baseball's Hall-of-Fame. If Jackson hadn't been banned from baseball he would've been a lock for Cooperstown and Alex Rodriguez and Ken Griffey Jr. will be admitted someday.
If we don't count Bill Mazeroski (who shouldn't be in the hall) but assume that Jackson, Rodriguez and Griffey are HoFers, then the total rises to 16 of the 22 (73 percent), in Cooperstown; which is pretty absurd.
These players averaged 66 WAR over their age 22-33 seasons (the years of my Trout contract proposal); which is well above my 48 WAR semi-projection for Trout. Only six players failed to reach 48 WAR and those were the six players with the worst WAR/PA on the list.
In no way am I'm attempting to say that Trout is a shoo-in for the hall with only one season's worth of PAs to his name, but he is a once-in-a-generation talent, who was ranked as the top prospect in baseball and is going to win an MVP award.
At this point, it seems that nothing short of a record-breaking deal for a pre-arbitration player is going get Trout to sign an extension. It is up to Moreno and Jerry Dipoto to decide whether that is really the road they want to travel.
But if you care about my opinion, I'd be sprinting down that road.
References and Resources
All WAR data comes courtesy of FanGraphs