Pondering a Mike Trout extension …

troutMike Trout spoke to reporters in Arizona for the first time on Wednesday, but before taking questions for 15 minutes, the Angels’ 22-year-old center fielder wanted to say one thing.

I know what you guys are gonna ask. I’m here to get ready for the season. I don’t want to comment on the contract negotiations and stuff. I’m here to just get ready, prepare myself for the upcoming season.

Trout may not talk about it publicly, but his agent and the Angels will surely continue to have dialogue.

The Angels, owner Arte Moreno confirmed, are in “active discussions” with Trout and his agent, Craig Landis, over a long-term deal even though he’s still four years away from free agency. The reason is three-fold: (1) The last thing the Angels want to do is go into a complex, record-breaking, all-over-the-Internet arbitration hearing with Trout next season; (2) signing him to a deal will give the organization some much-needed cost certainty; (3) duh, they’d like to buy out some of his free-agent years before it’s too late.

An important note about a potential Trout extension, which is worth repeating: Even if both sides agree to terms tomorrow, Trout can’t sign the deal (and thus the Angels can’t announce it) until after Opening Day because the organization doesn’t want it to count towards its Collective Balance Tax payroll until 2015, when Vernon Wells and Joe Blanton are off the books and the Angels have more wiggle room.

I explained it in more detail here, but here’s the gist: The CBT payroll, used by Major League Baseball to determine which teams will be taxed for going over the luxury-tax threshold, takes into account the average annual value of contracts, not the yearly breakdown. So, if Trout signs a 10-year, $300 million deal, that would be $30 million counting towards the CBT payroll, even if Trout is only making $15 million in Year 1.

Now, having said all that … I don’t think Trout becomes baseball’s first $300-million player.

That’s the shiny round number everybody keeps been throwing out, but it’d be hard for me to see Trout get that given his service time and his camp’s desire to set him up for two mega contracts.

Let’s say Trout doesn’t sign an extension, so he goes to arbitration and shatters every record based on service time. And let’s say that has him making $15 million as a first-year arbitration-eligible player, $20 million as a second-year arbitration-eligible player and $25 million as a third-year arbitration-eligible player. (That, by the way, is quite generous.) If he gets that, and you factor that into the breakdown of a 10-year, $300 million deal, then in his seven free-agent years, that contract is carrying an AAV north of $34 million.

Dodgers ace Clayton Kershaw just recently set the record for AAV with a seven-year contract that pays him more than $30.7 million annually — but he signed it with one year left before free agency.

The Angels, in my opinion, are still at a point where they can offer less AAV than that and still give Trout’s camp incentive to take it. Why? Because there are no certainties in this game. Trout is the best all-around player in the game, but he’s a whole four years away from free agency. A lot can happen — injuries, under-performance — and it’d be hard to walk away from so much guaranteed money this early. That’s why clubs do this.

The question, of course, is: What’s the price that makes both sides comfortable?

I had this conversation with Jim Bowden while on MLB Network Radio recently. Bowden, whose opinion I respect, said if he’s Trout’s agent, he’s demanding that the Angels pay him more than any other player in baseball if they want to buy out some of his free-agent years. And so I said: What if the Angels offered a long-term contract with, say, an AAV of $22 million (just throwing out a lower number, that may end up being too low)? Would you really turn that down with so much time left before free agency?

“I’d take that risk with that player,” Bowden said.

Fair point. If ever there was a guy to take a risk like that one, it’s probably Trout.

And that’s what makes this all so fascinating.

My guess (and that’s all this is)? I’d say a $35 million AAV for his four free-agent years (Kershaw maxes out at $33 million by 2017). Given that, the (perhaps generous) arbitration projections and the potential desire to make Trout a free agent again at or just before age 30 — seven years, $200 million ($28.6 million AAV) for a Trout extension.

Again, just a guess.

Alden

10 Comments

It is a fair assessment. I really want to see the Angels give him 10 years. Granite this is because I am an Angels fan. But I would love to see Mike Trout be the face of the Angels. The worst thing about free agency is the fact that very few players stay with one team. The Angels really have no one in the HOF, even though they have had Carew (Twins), Jackson (As, Yankees), and Ryan (Rangers)(though he should have been an Angel). I want Trout to be that player, that Angel fans never forget.
One of the biggest reason I was against Pujols coming to the Angels, was because he did all those great things as a Cardinal and should always be remembered as a Cardinal.

Trout would be a fool to sign now. Moreno would be a fool to let him go!

What happens to Trout’s salary for 2014 then? Just renewed at ~$500k? Does Trout have to wait until 2015 or would a signing bonus be received immediately?

There are a number of ways it could be done. If announced after Opening Day, contract takes effect in 2015 and doesn’t count towards the Luxury Tax this season (Angels are currently approx $11 million under the threshold currently). Trout would have his 2014 contract renewed at whatever value the Angels choose, though it can be an agreed upon amount too.

Or, they could have the contract begin immediately with a salary for 2014 factored in at a similar value to the rest of the deal. The AAV of the full contract would count against the Luxury Tax in this scenario.

Or perhaps more ideally, the extension starts in 2014 but the 2014 salary is for much lower than the AAV of the rest of contract, say $6 million for 2014 as opposed to $26 million for the rest of the years of the contract. This would lower the AAV of the whole contract and save the Halos Luxury Tax room while also giving Trout a record payday right now.

Going to be interesting that is for sure.

Why extend him for only 7 years when you already have 3 controllable years after this year? Are those 4 extra years worth it? If you are going to extend him, extend him for at least 10 years so you have 7 years after his arbitration years. That would be worth it. 10 years $300 million is a steal for Trout, especially considering only a $25M AAV towards the luxury tax, avoiding 3 years of arbitration and getting 7 extra years of his service. Is Trout’s agents really going to turn down $300M of guaranateed money in hopes of a bigger contract 4 years from now? Huge risk.

In a word, yes. Yes, it is worth buying out even just 4 free agent years right now.

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2 million for 2014, then after opening day a 7 year extension…10 million signing bonus and 5 million more for 2015 ( 15 mil total ), 18 million for 2016, 22 million for 2017 ( 55 million total for arbitration years ) 30 million for 2018, 35 million for 2019, 35 million for 2020…team option 40 million for 2021….free agent at 31 with another chance at a huge payday….fair for both sides….lifetime security for Trout and maybe a slight discount for the Angels…..

I honestly wouldn’t be surprised if Jeter calls Trout and suggests that he stay an Angel his entire career. There’s something to be said about a player who stays with his team for his entire career (Jeter himself, Ripken, Salmon, etc). It’s like a legacy thing, and it’s great for their image as both a person and a player.

If I was Mike Trout there is no way I would sign a contract. After what the Angels did to him last year, I would play my games and wait to go to the highest bidder. Isn’t that the same game the owners play with the players. They seem to have no problem getting rid of a player, just ask Trumbo.

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