Mike Trout: 20-year Contract Extension??

I'm not sure if you've heard but the Los Angels Angels made a couple big moves this off-season. They came out of nowhere to lock up future Hall-of-Fame first baseman Albert Pujols for the next decade. The Angels not only have Pujols under contract until 2021, but they also have a talented young outfielder, who has been stealing some of "El Hombre"'s headlines. The 20 year-old Mike Trout has been rated one of the game's top-3 prospects (in many cases #1 overall) by almost every prospect list known to man. Having a lineup that boasts Trout and Pujols at the same time has fans of Los Angeles' other baseball team, as giddy as they've been in the team's 51-year history. Two weeks ago in a tweet, Sam Miller of Baseball Prospectus and the Orange County Register raised an intriguing question about Trout.

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

The question Miller posed is as interesting as it is unrealistic. No baseball team (or professional sports team for that matter) would give 20 years of guaranteed money to an athlete (the longest contract in baseball history is Todd Helton's 11-year deal with the Colorado Rockies). There is just too much risk involved. Trout's career could end early for many reasons, including injury or a lost touch with his love for the game. The main reason why this idea would be risky is because Trout isn't a proven commodity; he has only appeared in 40 major league games. But I'd like to consider this fantasy scenario. Trout projects to be an above average defensive outfielder who could consistently post a line of .280/.360/.460 with 15-20 home runs and 25-30 stolen bases per season for a long time. Those type of stats are something any major league organization would die for. So let's say that Angels' GM Jerry Dipoto has a crystal ball that shows him that in fact Trout will live up to all the hype. If he has the chance to lock him up for not only the next decade in which in all likelihood Pujols will be the face of the franchise, but also the decade after Pujols hangs 'em up, just how much money would the Angels' ownership have to fork up (and they don't seem shy to do so) to make this happen?

My Answer: $274,000,000

My prediction for the overall value of a 20-year contract for Trout comes up just $1 million shy of the largest contract in terms of dollars in baseball history, just behind Alex Rodriguez' 10-year/$275 million contract with the New York Yankees. Every major league baseball player begins their career with three seasons in which they are under a rookie contract which allow their team to pay them the major league minimum salary, which is currently $480k. Thus, for the first three years of this fantasy extension I have Trout making just above $480k in each rookie-contract season. After a player as incurred three seasons of major league service they become eligible for arbitration raises. I based Trout's arbitration years (2015-17) on the contracts received by current major league outfielders' Andre Either and Hunter Pence, during their arbitration years. Which leaves the final fourteen years of this deal, the free agent portion and the time where the Angels would have to spend the most money to keep Trout in Southern California.

I settled upon essentially a 14 year/$252 million contract, with an AAV of $18 million per season. $18 million per year seems to be the going rate on today's market for All-star free agent outfielders. In recent off-seasons, Carl Crawford, Torrii Hunter, Jason Bay, Matt Holliday, and Jayson Werth all received free-agent contracts that had AAV's around $18 million per season. Their contracts were shorter than the one Trout would be receiving in this scenario; their deals were between 4 and 7 years. However, Trout would be significantly younger in his first season of free agency (26) than those players were when they signed their deals. The most difficult aspect of this analysis was attempting to figure out whether or not Trout would be worth $274 million to Anaheim over the course of his career.

Baseball Prospectus' PECOTA system offers a ten-year forecast for players and the WAR I used for Trout's 2012-21 campaign's come from their projections. These projections look fairly accurate, as it seems reasonable to assume Trout will be (on average) a 3+win player for the majority of his prime. The last ten years of projected WAR are my own. I projected the same WAR (3.4) for Trout's 2022 campaign as PECOTA projected for him in 2021, then I used a simplifying assumption of a 0.5 WAR decline each season after he turned 30. There is much debate in the baseball world as to when a player begins to decline; for position players most opinions range from 27-30 years old. There's no reason to predict that Trout won't decline in the same manner as other major leaguers, which is why I used the -0.5 WAR assumption; which is used frequently over at Fangraphs.

My simple model for Trout's decline begins to be pretty harsh at the end of the deal, but honestly to look at a 20 year-old kid and predict if he'll be above (or below) replacement level in his late 30's is impossible to do. Which is why I predict that at the end of this 20 year extension the Angels will begin losing money on their investment in Trout. However, that is how baseball contracts are supposed to work. In theory, a major league organization makes money off of a player during their team-friendly cost-controlled first six seasons, and then in return players are thanked for their service during their free-agent years. This "Thank you" usually ends up costing teams, and is reason why many believe signing a free agent from another team normally does not make the most financial sense.

To calculate Trout's dollar value as a player I used the current market established value for one win above replacement ($5 million with a 5% inflation assumed for each following season), and multiplied that by Trout's projected WAR. The Angels would make $62,440,000 in surplus value off of Trout during his first six team-friendly seasons. The last six seasons of this fantasy contract would hurt the Angels; their projected loss would be $102,680,000, a ridiculously high albatross. Even though the Angels would be incurring serious losses at the end of the contract, in total they would make $7.4 million on the deal. Based on the projections used in this analysis, Trout would be an almost 40-win career player.

To give a better perspective on what this projection would mean about Trout's career, I researched outfielders who accumulated around 40 WAR (using Baseball Prospectus' calculation) in their careers. The list is fairly interesting.

None of the players on the list are Hall-of-Famers, but all except two were All-stars. The two who weren't All-stars, Gibson and Salmon, are probably the two best baseball players of all-time who did not compete in the Midsummer Classic. Gibson is the only player to win an MVP and not play in an All-star game, and Salmon has the most career home runs of any player to not play in the game. Also its ironic that Salmon made this list, as his comparisons with Trout have been made for years it seems now (see: Angels' players with fishes for their last name). I think the Angels' front office, as well as, fans would be more than elated if Trout turned out anything like Salmon, or any of the players on this list for that matter.

In conclusion, if it were at all possible for Dipoto to know that Trout would be a 40 win player over the course of his career, I think that $274 million, as high a total as that is, may be a fair price and good move for LAA.

All-star data came from Baseball-Reference. All other statistics came from either Baseball Prospectus or Fangraphs.