On Saturday, March 29, 2014 the Los Angeles Angels of Anaheim and Mike Trout officially announced they had reached a contract extension of six years worth $144.5 million. According to Baseball Prospectus the contract breaks down as follows: 2015: $5.25M, 2016: $15.25M, 2017: $19.25M, 2018: $33.25M, 2019: $33.25M, 2020: $33.25M.
This extension does not start until 2015 because the Angels already signed Trout to a $1M deal for the 2014 season earlier this offseason.
The contract values above may seem extraordinarily high to a general audience, but the Angles are clearly getting the better end of this deal by a landslide. The $1M contract for 2014 is a Major League Baseball (MLB) record for a one-year salary of a pre-arbitration player, and Mike Trout is definitely worth record money. Through any player’s age 21 season, Trout has the highest total WAR in MLB history. He has been compared to Hall of Famers such as Mel Ott, Jimmie Foxx, Mickey Mantle, Willie Mays, Ted Williams, and Ken Griffey Jr. He has finished second in the MVP voting in each of his two full seasons in the big leagues, losing to Miguel Cabrera both times. He is only 22 years old, still improving, has yet to hit his prime, and is already the best player in the MLB today.
To get a better understanding of what arbitration and WAR are, check out these descriptions given by FanGraphs.
To see just how good Mike Trout can be, I created the graph below. It shows the average WAR of the players listed above while at the same age. Using the slope of that trend-line, adjusted for Trout’s current performance levels, his ceiling is as high as any player in MLB history.
Furthermore, because his extension is signed through 2020 (Trout’s age 28 season) the Angels have control over the majority of his “prime” years. Historically players start to decline in performance after around age 30.
Now let’s get to the ins and outs of the contract. First off, the $5.25M first year is a steal for the Angles. Back in 2008 Ryan Howard set a record for a first year arbitration eligible player by winning his arbitration case and signing a $10M contract. Because that was six years ago, and because Mike Trout has been a better player than Howard, I would expect Trout could have gotten somewhere between $15M and $18M dollars for year one. For year 2 and 3, I think Trout could have commanded around a total of $45M because the value of each contract in arbitration should continue to increase, barring any season altering injuries. Instead, the Angles have secured Trout through all three of his arbitration years for a total of only $39.75M. That is around $20M cheaper than what Trout likely would have received.
In addition to the three years of arbitration that are covered under this extension, the Angels have also bought out three of Mike Trout’s free agent years. When a player hits free agency, he is most likely to get a contract most closely related to his true value. This value for Trout could easily be in excess of $40M per year and the Angels are paying him only $33.25M for each of those years. Based on a $6M per win rate (which is different for each team but a decent average) Trout is worth about $60M. This value, of course, is not going to be met by any team, but at a minimum, the Angels are underpaying Trout by nearly $7M/yr.
In all, this is an amazing deal for the Angels. They have secured the top player in baseball to a below market-value contract for the next 7 years. As more and more contracts come off the books in the upcoming years, the Angels can continue to build toward a championship caliber team using Mike Trout as the centerpiece.