Deal of the Century: Angels delay Mike Trout's free agency with six-year extension
Mike Trout is 22-years old and the best player in baseball, but he won't be the highest-paid player in baseball until he's almost 30, if ever, thanks to the team-friendly extension he agreed to with the Angels Friday night. According to MLB.com's Alden Gonzalez, Trout and the Angels have come to terms on a six-year, $144.5 million extension with a full no-trade clause that will take effect in 2015. The deal will cover Trout's three arbitration years and delay his free agency by three years, expiring just after Trout's 29th birthday at the end of the 2020 season. Though imperfect in the sense that the deal allows Trout to hit the market while still in his prime, it is a major coup for the Angels given that Trout's likely value over the course of the deal could be twice what the Angels will pay him.
Last month my Strike Zone batterymate Jay Jaffe, utilizing research into player aging patterns, the market value of a win and factoring in inflation, calculated Trout could be worth in excess of $320 million over the next six seasons. Adjusting for the salary depression resulting from the reserve system and the measured increases players receive via salary arbitration, Jaffe adjusted that figure down to $265 million. And rounding down Trout's eye-popping production projections, he got that figure down to around $230 million.
Trout's actual contract is $86 million less than the most conservative of Jaffe's evaluations. What's more, Jaffe's estimations were for 2014 to '19. Trout's actual contract is for 2015 through '20, swapping out a pre-arbitration year for a free agency year, something which could have added tens of millions of dollars to Jaffe's estimate.
Writing on the subject of a potential Trout extension back in December, I didn't see how Trout would even listen to an offer of less than $200 million given his potential to land a contract in excess of $300 million upon reaching free agency at the age of 26. Trout seemed poised to easily exceed a contract like that of Buster Posey's nine-year, $167 million extension, which also kicked in with the first of the player's arbitration-eligible seasons. The announcement on Thursday of Miguel Cabrera's eight-year, $248 million extension, with its $31 million average annual value (breaking the record of $30.7 million set by Dodgers ace Clayton Kershaw's seven-year extension in January) only made me more convinced that Trout's earning potential as a free agent would have required a record-breaking offer from the Angels to get Trout to sign an extension.
As it turns out, Trout's extension is record-breaking in its own way. Its average annual value of $24.1 million is significantly greater than Posey's $18.56 million, the former record for an extension signed by a player with fewer than three years of service time. Also, Gonzalez reports that Trout will set a record for salary relative to service time in each year of the deal (the exact payout is unknown as of this writing), something he has already done for 2014 having agreed to a $1 million contract for the coming season last month despite not yet being arbitration eligible.
So how is it that Trout's contract is both record-setting and a bargain? Mostly because of how good Trout is -- outside of a trio of 19th-century pitchers, no player in the history of baseball has been as valuable in his age-20 and -21 seasons as Trout was the last two years -- but also because of the length. Six years is a short-term deal for a superstar hitter these days, and while a shorter deal might typically seem more team-friendly, in this case, it is to the benefit of the player.
Had Trout signed for seven years, he would have pushed his eventual free agency past his 30th birthday. Had he signed for 10, he would have pushed it past his 33rd birthday and very well might have started to show signs of decline before hitting the market. Instead, he'll become a free agent at 29, coming off his age-28 season, right in the heart of his expected prime. That sets him up for the sort of career-capping 10-year contract the Mariners gave 31-year-old Robinson Cano this winter, or the Tigers effectively gave Cabrera, who will turn 31 in April, by adding eight years to the two remaining on his existing contract. Teams may not bid as confidently on a 29-year-old Trout as the 26-year-old model that was due to become a free agent prior to this extension, but it seems there might have been something to those tampering charges levied against Yankees president Randy Levine, after all.
From Trout's perspective, then, he could get the best of both worlds: security now (along with the respect of context-dependent record-breaking salaries) while retaining the potential for a monster payday later, all while avoiding the ugliness of high-stakes arbitration negotiations and the distraction of extension speculation. Had Trout hit the free-agent market at 26, he might have landed a contract that would have lapped the field the way Alex Rodriguez's deal with the Rangers did when Rodriguez was 25. That won't happen now, but in signing a six-year deal and hitting the market at 29, Trout could earn more in his career than if he had signed a 10-year deal now and hit the market at 33. Still, it's hard not to see this contract as a major victory for the Angels. They just added three years of Mike Trout's prime to their future without breaking the bank. Assuming Trout's salaries over the course of this deal escalate in accordance with his service time, Jered Weaver, C.J. Wilson and Josh Hamilton's contracts will all have expired before Trout is making top dollar. The real bottom line, however, is that the Angels have locked up the best player in baseball through the end of the decade at a fraction of his projected value. From a team's perspective, you can't do better than that.