Six-year Trout extension in the works

Here we go…

Our prayers have been answered. After two years of often ridiculous speculation about what kind years and money the Angels would need to offer in order to extend Mike Trout, some legit numbers have finally emerged.

The Angels are working on a six-year deal with Trout that’s in the neighborhood of $150 million, per Jeff Passan of Yahoo Sports. The gap in negotiations between the two sides is reportedly in the low eight figures (i.e. $10-$15 million), with the Halos sitting a little north of $140 million and Trout’s camp presumably somewhere over the $150 million mark. (Ken Rosenthal also tweets that the Angels are hoping to tack on a seventh year, but keep it in the $150-$160 million range.)

Passan’s article is written under the presumption that Trout will come to an agreement before Opening Day — meaning the extension will start in 2014 — but we know (and OC Register’s Jeff Fletcher confirms) that this is highly unlikely. Unless Arte Moreno has suddenly decided he doesn’t care about the luxury tax, the Angels simply don’t have room on the 2014 payroll to give Trout an extension. Because of this, they’re unlikely to formally agree to anything until April, at which point any contract (signing bonus included) would apply only to the 2015 season and beyond.

Because Passan assumes that the contract will start this year — Trout’s final pre-arbitration season — and end following his second year of would-be free agency, the salary numbers he comes up with look rather crazy:

2014: $2 million ($10 million signing bonus)
2015: $13 million (ARB-1)
2016: $22 million (ARB-2)
2017: $30 million (ARB-3)
2018: $35 million
2019: $38 million

The highest yearly salary any MLB player’s ever received is $33 million¹. I wholly appreciate Trout’s greatness, but the idea that he’d handily eclipse that mark in his first two years of free agency, while it’s still four years away, just doesn’t seem feasible.

If we look at the more likely scenario, in which the six-year deal starts in 2015 and buys out three years of Trout’s free agency,  the numbers seem much more reasonable:

2015:  $12 million (ARB-1)
2016:  $18 million (ARB-2)
2017:  $20 million (ARB-3)
2018:  $30 million
2019:  $30 million
2020: $30 million
+       $10 million signing bonus²
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=       $150 million

A deal of that size would have an average annual value (AAV) of $25 million, which would put him on equal footing with Albert Pujols ($24MM/year) and Josh Hamilton ($25MM/year). Surprising to no one, that number coincides quite nicely with the amount of salary ($26.1MM) coming off the books when Vernon Wells and Joe Blanton are officially vanquished at the end of 2014.

Luxury tax calculations for multi-year contracts are based solely on AAV, so if/when the Angels do lock up Trout, they’ll have an insane $74 million in taxable payroll tied up in just three players through 2017 (when Hamilton’s contract expires). That is more money than the A’s, Astros, Marlins, Pirates, Padres, Rays, and Rockies spent on their entire teams in 2013.

A payroll baseline that high would be absolutely crushing to most clubs. But for a team like the Halos, who flirt with the luxury tax threshold every season, it should leave some wiggle room in 2015 and beyond, even after accounting for the many other guaranteed contracts on the books (Weaver, Wilson, Kendrick, etc.). As noted above, Trout’s money will essentially take the place of the soul-crushing Wells/Blanton tandem, so the roughly $130 million the Angels had tied up in multi-year contracts when this offseason began should hold steady³ at that number when next fall rolls around. As we saw this winter, that doesn’t leave a whole lot of room to sign players off the open market, but it does leave some. And I think we can all agree that locking Trout up through the end of the decade is more than worth being marginally constricted in making moves elsewhere.

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¹A-Rod was the first to reach that number, back in 2009. Clayton Kershaw will equal it in 2017, 2018, and (if he doesn’t opt out) 2020.
²For tax purposes, the signing bonus is spread out evenly over the length of the contract. More practically, the Angels will include it to artificially boost Trout’s 2014 salary from the paltry $1+ million he’s likely to get as a pre-arb player.
³This is assuming the Angels don’t trade anyone between now and October, and also pick up Sean Burnett’s $4.5 million option for 2015.