A popular sentiment expressed around the MWAH comments and in other parts of the Angels blogosphere is that the Angels should abandon their pursuit of Japanese pitcher Masahiro Tanaka and instead turn their attention to signing Mike Trout to a contract extension that keeps him in Halo Red for a very long time. That line of logic dictates that the Angels are better off saving the money that they would very much like to give to Tanaka and instead set it aside for that fabled Trout extension.
If those were the only two options available to the Angels, I would very much agree with this way of thinking. When it comes to picking between keeping a generational talent locked in Anaheim for the next decade or rolling the dice on a Japanese import who probably isn't a legit #1 starter, I'll take the generational talent every single time without even thinking about it. But why is it the Angels can't have both?
I think part of this concern is the anonymous report from one agent/executive/figment of imagination that wildly speculated that he could foresee a scenario in which Mike Trout could get a $400 million extension. $400 MILLION! That's a lot! It is also patently absurd. Nobody has even gotten a $300 million contract yet, much less gotten that much in a contract that covers arbitration years. The market right now has pretty clearly maxed out around the 10-year, $240 million mark that we saw both Albert Pujols and Robinson Cano on the open market. Trout's youth gives him a great advantage over those two, but the fact that he'd be getting his extension prior to hitting the free market cancels most, if not all, of that advantage out. $400 million is a fear-mongering number and worrying about that windfall has become far too much of a factor in this debate.
If we want to use a more practical, but still incredibly expensive number, let's move forward with a 10-year, $300 million hypothetical extension. That's still an average annual value of $30 million moving forward for the Angels, a very big number for them to have to account for. With Hamilton, Pujols, Wilson and Weaver already on the books, adding that $300 million for Trout and then potentially a $100+ million deal for Tanaka, and the financial hand-wringing makes a lot of sense, at least at the macro-level.
However, the details of how all of those deals are handed out make things less concerning on the micro-level. Trout's extension might average $30 million, but it isn't as if he will make $30 million right off the bat. The way these early career contract extensions work is that the money slowly ramps up, especially over the pre-free agency years. As detailed in a previous post, a likely Trout extension could pay him what would be record salaries for each of his arbitration years and he still wouldn't be making over $20 million in a given year. The real expensive part of his hypothetical extension won't kick in until the 2018 season. You know what else happens in 2018? Josh Hamilton comes off the books. You know what happened the year before that? Weaver, Wilson and Aybar would have come off the books. The only other current Angel that has a guaranteed contract in 2018 is Albert Pujols. Pujols makes a lot money, but the rest of the payroll has been cleared out and can stay relatively cleared out if the Angels front office plans appropriately (hardly a given, I know).
What's more is that those pre-2018 salaries that Trout would be getting in his extension are what he would be getting anyway. The Angels have him under control for those years whether they extend him or not, so that money is coming to him either way. It is only 2018 and beyond that should be of any real concern. That's where a potential Tanaka signing comes into play.
In all likelihood, the winner of the Tanaka sweepstakes will be doling out a six-year, $108 million contract, give or take a few million. That's another $18 million in AAV, but like Trout, it most likely isn't going to be distributed evenly. Using Yu Darvish as a precedent, we see that his six-year, $56 million pact ramps up over time, starting at $5.5 million in the first year before maxing out at $11 million in the final year. Look at any of the big contracts the Halos have handed out the last few years and you can see that they are no stranger to backloading deals. There is little reason to believe they wouldn't try to do the same with Tanaka. Keeping that in mind, Dipoto could structure the contract so that the salaries in the first three years are pretty reasonable. As you hopefully recall, because I just said it, Weaver, Wilson, Aybar and Kendrick will all be off the payroll by then with Hamilton clearing off a year later. So, while both Trout and Tanaka would be getting big overall paydays, the first three years of each of their respective contracts are surprisingly affordable, in relative terms.
Of course, the underlying assumption here is that the Angels are actually worried about payroll limitations. Starting this season, the Angels are going to be taking home $150 million in regional and national TV contract money. Once you factor in ticket revenue, concessions, parking and the city of Anaheim readying themselves to bend over, grab their ankles and give Arte Moreno a bunch of land for nothing and the Halos are still going to make millions in profits even if they allow their payroll to climb over $170 million annually. All that TV money gives the Halos enough cash to swallow the early parts of the proposed Trout and Tanaka contracts while still paying out the bloated back ends of the Hamilton, Wilson and Weaver contracts and more than enough cash to pay the back ends of the Trout and Tanaka contracts while reloading the roster with what will undoubtedly be another glut of expensive free agent pacts.
So, yes, Virginia, the Angels can afford both Trout and Tanaka. They can have their cake and eat it, too. Sure, it is absurdly expensive, luxuriant cake, but they can choke it down if they want. Whether Tanaka and Trout want to oblige them and serve up said cake remains to be seen. But that's another story for another time.
|Like MWAH on Facebook||Follow MWAH on Twitter|
The part about the estimations of Trout's future salary is that each estimate seems to ignore the fact that he's still under team control for 2014, and under arbitration for 2015-17. Free agency doesn't arrive for him until the 2018 season. A 10-year deal, then, would include 4 years under team control and his first 6 years of free agency. Those first 4 years would be much, much less than $30M a season, which means the AAV of the 10 year deal would be much less than $30M per year. I would assume a salary for 2014 of $1M, values for his arb years of $15M, 17.5M and $20M, and THEN the $20M to $30M for the remaining 6 years. The upside to Trout is that this is all guaranteed money, the upside to the team is that he could still outperform such a deal. Assuming he gets $30M a season for those final 6 years, that is still a contract total of $233.5M and an AAV then of $23.4M. That is both a hell of a lot of money for Trout, and a long, long way from $300M/10yrs.
All these guys coming off the books will have to be replaced with someone, Tanaka will be in 120 to 140 mill to be signed.After this year Trout will have financial security with one year of arbitration. Show Trout this is his team and sign him long term now 300 mill 10 years.
You forget that the thing that counts toward the tax threshold is the AAV of a contract, not what the player earns per year. I agree I think the Angels should do both and could very well do both with the big tv deal. Sign Tanaka this off-season to add to the rotation and go a couple million over the tax threshold. Extensions after opening day don't count towards the tax threshold so maybe the Angels are waiting on something like that to happen before locking him up. We have Wells, Blanton, and possibly Burnett coming off the books next year. The year after that you have Iannetta, Kendrick, and Freese off the books. Year after that is the time where we get so much payroll flexibility it Tanaka and a Trout extension won't matter, we have Weaver, Wilson, Aybar, Smith, Jepsen, Frieri, and Salas all leaving. It comes down to Arte being willing to pay the tax penalty for a few years until the 2017 season
@GeorgeKaplan8I agree, the $300 million figure seems like a stretch, but I used that figure as a sort of pie-in-the-sky number just to put in perspective how things might be if he really does get a crazy extension. I really can't envision the extension being much bigger than that. I think the rhetoric about how great Trout is and how much he should be paid has inflated the numbers to unrealistic levels.
@angels1961Yes, they will need to be replaced, but they have plenty of time to figure that out and hopefully Tanaka would be able to join Trout as a franchise cornerstone to build around.
@ChaseKimuraA good point, one I touched on in a previous article, so I didn't want to dwell on it here. I strongly believe they should just pay the tax this year. They should have a relatively easy time getting back under the tax line next season, so they won't get hammered with the increased tax rate.
@monkeywithahalo@GeorgeKaplan8 I didn't intend to point fingers at anyone; in fact, this $300M/10Yrs is so widely bandied about that it is almost an internet meme at this point. My only thought here was that such a calculation didn't take into account the fact that Trout would be getting significantly less money than $30M in those next 4 seasons, which means the idea of an AAV of $30M is lunacy. Use Ryan Howard's arbitration buyout extension as an example, or Even Longoria's. Inflation isn't really such a factor, because the player is being guaranteed money many years in advance; this means he is trading potentially higher future salaries in exchange for financial security and a guaranteed wage.