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How Mike Trout's Contract Alters Bryce Harper & Manny Machado

How Mike Trout's Contract Alters Bryce Harper & Manny Machado

With 1,000 games under his belt, Mike Trout is beginning to make a serious case for baseball’s GOAT conversation. Lost on an Angels’ team that hasn’t been able to push through to the postseason with any regularity of late, the numbers for Trout are eye-popping across the board.

The 26-year-old is averaging 182 hits, 35 doubles, 36 home runs, 100 RBIs, 30 stolen bases, and a .989 OPS in 7+ seasons. He’s had 4 seasons with a batting average north of .300, and is currently carrying a .332 average, league leading .471 on base percentage, and league leading 1.155 OPS - a ridiculous split for nearly July.

While much has been made of the pending free agency for Nationals OF Bryce Harper and Orioles SS Manny Machado, it would behoove both of these players to look in Trout’s direction when contemplating their next financial move. Many eyebrows rose when Mike Trout agreed to a 6 year, $144.5M contract back in March of 2014, a deal that bought out his entire arbitration process plus his first three years of free agency. In an era where $200M+ contracts were almost certain for the game’s elite players, a $144M contract seemed questionable for Trout given his high ceiling. But a closer look at the deal might change your impression a bit:

The Arbitration Years

Let’s begin with a look at the first three seasons, his arbitration years. His 2015 season comes with a $5.25M salary + a $5M signing bonus, or $10.25M. For reference, Cubs 3B Kris Bryant is playing out his first year of arbitration in 2018 on a $10.85M salary. Rockies 3B Nolan Arenado’s first year of arbitration came with a $5M price tag, as did Manny Machado’s, and Bryce Harper’s, who accepted a 2 year $7.5M extension in 2015 to keep that cost in check.

In year two of arbitration (2016), Trout reeled in $15.25M, compared to $11.5M for Machado, $11.75M for Arenado, and $13.625M for Harper.

Moving on to 2017, Trout’s year three of arbitration comes with a $4M pay raise, up to $19.25M. Elsewhere, Machado is reeling in $16M this year, Arenado $17.75M, and Harper a whopping $21.625M.

So doing some quick math on these years, we get to:
Trout: $44.75M
Harper: $40.25M
Arenado: $34.5M
Machado: $32.5M

 

The Veteran Years

But it’s the final three years of Mike Trout’s contract that become the most notable. For 2 decades now, baseball has been a league that has paid its stars exponentially higher year in and out regardless of logic or tact. Albert Pujols’ 7 year $100M extension with the Cardinals back in 2004 was nearly identical to the structure & reasoning behind the Mike Trout contract we assess here. But then the Angels poured on 10 years, and a guaranteed $240M more to a 32-year old shell of Albert Pujols in 2012. The Tigers have done the same with Miguel Cabrera, adding 8 years, & $248M guaranteed at age 33, while the Brewers tacked on 5 years, $105M guaranteed to a 32 year old Ryan Braun.

Long story short here, those days appear to be dwindling. We like to say Jason Heyward’s 8 year, $184M contract with the Cubs is the straw that broke the camel’s back, and in many cases that might be true. But it’s not an accident that the 2017-18 free agency season went the way it did. Teams refused to overbid, rush to pay, or add in additional “fluff” years for even the most coveted players. The result? Players were signed at or slightly below their calculated market values across the board this offseason, led by J.D. Martinez’s $22M AAV contract with the Red Sox.

Per his current contract, Mike Trout will earn $99.75M over the next three seasons, more than any player is set to make across 2018-2020 (Kershaw, $98M if he opts-in). In other words, not only did Mike Trout’s deal pay him top dollar across his arbitration range, it appears to also be paying him top dollar across his first three years of veteran status as well - a nearly perfect contract for the game’s best player. Furthermore - and maybe the most important point here, is that Trout’s contract will expire after the 2020 season, when he’ll be just 29 years old. Getting yourself to a second major contract before the age of 30 is becoming vital across all of the major American sports, as career durations shorten, and rookie wages tighten.

 

Harper & Machado Going Forward

Much has been made about the exciting free agency that players like Bryce Harper and Manny Machado will bring us this winter. And numbers like $400M have been thrown around joyously across various mediums. But in an age of baseball where owners appear poised not to overpay, and elite players are enforcing player options (opt-outs) across all of their veteran contracts, $400M may be nothing more than a marketing buzzword.

The last eye-popping contract to hit the board was Giancarlo Stanton’s 13 year, $325 million deal with the Marlins back in 2015. But a quick glance shows that Stanton can opt-out of the deal after 6 years (2020) and “just” $107M (for reference this contract also bought out Stanton’s arbitration years at just $30M). In other words, contract numbers are beginning to not be what they seem in today’s baseball - and it’s a positive step for both teams and players.

As noted above, the age factor should be just as important to Harper & Machado as the dollar figures. Manny Machado will turn 26 in a few weeks. Harper won’t be 26 until the middle of October, but both should be very conscious of how their new contracts - wherever signed - are structured in 4 years.

Generally speaking, having analyzed contracts for a decade now, I’ve nearly always pushed for short and sweet with structure - allowing for cash upfront, and control at the end. But in Bryce Harper and Manny Machado’s case, a more plausible (and likely) contract structure should be a more strict version of Giancarlo Stanton’s. It makes sense for both to sign a hypothetical 10 year contract, but more importantly, both should be seeking multiple player options built in, the first to come in 4 years, at their 30 year age mark. In saying this, it will be extremely difficult for these players to receive top dollar in a 4 year span.

Knowing what we know about Mike Trout’s next 3 years ($99.75M), and the fact that Trout’s on-field production has been markedly better and more consistent, will teams really shell out $135M+ over a 4-year span to lock in Bryce Harper or Manny Machado? Recent free agencies plus a push to reduce luxury tax bills across the league say no. In fact, it seems reasonable to assume that neither of these players will even garner $30M per year over that first 4 year span, putting them well behind Trout in this regard.

So while the buzz continues to build (even though Harper’s numbers continue to drop), for a wild MLB offseason with huge paydays, we’re here to slow things down a bit and suggest that the details may be a little underwhelming when push comes to shove. Anyone still craving jaw-dropping, ridiculously overpaid players though, simply need to click on the NBA portion of this website.