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Mike Trout: worth "Opening" the Checkbook for?
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Post by beasleyrockah on Feb 24, 2014 18:20:19 GMT -5
What if I'm Mike Trout, and I don't particularly like being on the west coast or playing for the Angels? Seeing as I'm the best player alive, I probably have the leverage to get the Angels to buy out my arb years at a relative discount without giving up any FA years. That way I get tens of millions in guaranteed money, and I'm two years closer to signing a record-breaking contract with the team of my choice. I was more speaking to about risk vs reward instead of personal choice. I was pointing out the fact that he could get hurt or under perform and make next to nothing in this sport. I don't know that Trout has any leverage to sell out just his arb years without add team control, at least not more leverage than any other arbitration player. Why would the Angels do that? They would be better off just taking him to arbitration or settling year after year, to protect themselves from any risk. I guess if he was willing to devalue his later years, but that is what the Angels are asking for in a 6 year extension. As for the record breaking contract, if all goes according to plan he would still sign one at age 27 instead of 25, and depending on the length of the contract or opt out clauses, and the inflation of salary YTY, it could be more beneficial for Trout to hit the market a little later in his career. As for his arbitration years and contract, I can only speculate, but here are my assumptions. If he was not extended and faced arbitration/settlement in each of his 3 years, I would assume he makes less than 20M in his first year, and never making more than 30M in an arbitration year. I think that is a very aggressive assumption also. So if we say he makes 15M Y1, 25M Y2, and 30M Y3 he would have made 70M to this point. He would then need 40M a year the first two years of his megacontract to make up to the 150M he would have gotten with a 6 year extension. Now the megacontract I am speculating would be at least 10 years, which offers security (the 150M 6 year extension now is true security), but at the age of 27, I don't see any reason why he would not be able to get another 10+ year offer. I know the board is not interested in what it's posters would do in various athletes positions. I was only trying to look at a transaction I don't have a stake in (I don't like the Angels, and Trout probably won't be a Red Sox) objectively. I thought it was a very fair and strategically sound deal for both sides. This is backwards. Where is the upside for the Angels exactly? The only way Mike Trout isn't getting paid record amounts through arbitration is if he gets a serious injury. If Mike Trout gets hurt to the point where he has no value the franchise is already screwed. Buying out arbitration years (at the right cost) for the best player in the sport is an obvious move, and it becomes more obvious if Trout simply values "some" financial security and doesn't try to aggressively pursue every last dollar. The only way the Angels would "win" by going year to year is if Mike Trout turns into a pumpkin. Given the Angels current situation it makes little sense to not offer him a reasonable deal to buy out the arb years. If they can't compete with cheap, best in the game version of Mike Trout it becomes very difficult to imagine how they could without him. If Trout believes he could land a 10+ year contract AFTER the age of 27 (like you do) it would make zero sense to give away younger free agent years. Why would you be afraid to stay healthy/productive in the next 4 years, yet believe in your ability to do it over 6+ years? If he's just looking for "some" immediate money/security he could easily approach them about a team friendly deal to buy out his remaining years...at some point the Angels will settle for just those years if he's adamant. Mike Trout has much more leverage than the Angels do, playing hardball or year to year offers little to zero upside for the team.
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Post by jrffam05 on Feb 25, 2014 11:09:20 GMT -5
To me with a player of Trout's caliber, the discount of his arbitration years are negligible. They may submit numbers 5-6M off per year, and if they are settling it would be somewhere in the middle. Knock off a little discount for giving the later arbitration years up front and you come to maybe 9-10 million if he went to arbitration each year. A lot of money, but for a 10 war players over 3 years I think the Angels think this is immaterial, they don't care about the discount they care about extending team control. This is why I say Trout doesn't have any extra leverage to work out a deal buying just his arbitration years as someone like Stanton or Heyward.
I don't want to speak for the board, but I doubt I am the only one here who thinks Trout would get 10 years at 27. Cano and A-Rod got 10 years in their 30's, and neither of them have ever had a 10 War season. Trout put up more than half of Cano's career war in just two seasons. If you look forward in this thread you would also find estimations of Trout getting 12-15 years, which would equal or eclipse 10 years at age 27. If the offer is 150M for 6 years, it is adding at a very conservative assumption 80M for 2 extra years of team control (if he makes 70M in arbitration years, 15,25,30. Pretty aggressive). He is getting security, a good wage, and the opportunity to still sign a mega deal or two while the Angels get team control. Like I said before, fair deal for both sides.
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Post by Oregon Norm on Feb 25, 2014 11:44:20 GMT -5
It isn't the arbitration years that have his agent upset, it's the years leading up to that. The player and the team could benefit with Trout being paid something more reasonable than what he's seeing. A 9-10 win player is worth two orders of magnitude more than what his paycheck currently shows. They could buy up his non-arb years and the arb years and that's not a small thing. If he were to go to arbitration, it's not unreasonable to expect that he'd end up with a $15-$20 million decision. If you're the Angels, why not show good faith while wrapping up those years? It might just ease the way to discussions about his free-agency, and you might even end up paying less than you would in the arb crapshoot.
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Post by fenwaythehardway on Feb 25, 2014 12:10:51 GMT -5
I don't want to speak for the board, but I doubt I am the only one here who thinks Trout would get 10 years at 27. Cano and A-Rod got 10 years in their 30's, and neither of them have ever had a 10 War season. Trout put up more than half of Cano's career war in just two seasons. If you look forward in this thread you would also find estimations of Trout getting 12-15 years, which would equal or eclipse 10 years at age 27. If the offer is 150M for 6 years, it is adding at a very conservative assumption 80M for 2 extra years of team control (if he makes 70M in arbitration years, 15,25,30. Pretty aggressive). He is getting security, a good wage, and the opportunity to still sign a mega deal or two while the Angels get team control. Like I said before, fair deal for both sides. Arguable, but either way, just because a deal is "fair" (for some definition of "fair"), that doesn't mean it'll actually happen. Again, if Mike Trout doesn't want to stay there, why would he give them two extra years of control? He can just offer them his arb years at a relative discount (say 3/40) and he stills gets financial security. Hell, he can just do nothing and get financial security in a year anyway. And if he does want to stay there, why mess around with just two years? Sign the 12 year super-contract right now and be done with it.
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Post by jrffam05 on Feb 25, 2014 12:36:28 GMT -5
I don't want to speak for the board, but I doubt I am the only one here who thinks Trout would get 10 years at 27. Cano and A-Rod got 10 years in their 30's, and neither of them have ever had a 10 War season. Trout put up more than half of Cano's career war in just two seasons. If you look forward in this thread you would also find estimations of Trout getting 12-15 years, which would equal or eclipse 10 years at age 27. If the offer is 150M for 6 years, it is adding at a very conservative assumption 80M for 2 extra years of team control (if he makes 70M in arbitration years, 15,25,30. Pretty aggressive). He is getting security, a good wage, and the opportunity to still sign a mega deal or two while the Angels get team control. Like I said before, fair deal for both sides. Arguable, but either way, just because a deal is "fair" (for some definition of "fair"), that doesn't mean it'll actually happen. Again, if Mike Trout doesn't want to stay there, why would he give them two extra years of control? He can just offer them his arb years at a relative discount (say 3/40) and he stills gets financial security. Hell, he can just do nothing and get financial security in a year anyway. And if he does want to stay there, why mess around with just two years? Sign the 12 year super-contract right now and be done with it. He doesn't get financial security in a year, at least not in terms of baseball players. If a normal person was handed 10M he would feel pretty good about himself, but that is out of context. Imagine getting an MBA or CPA and being worth 45-50 dollars an hour but only getting 10. That's about the same ratio that Trout will be getting next year, if he stays healthy and productive. There seems to be a lot of resistance to my statement, and I am just not getting it. Cano, Pedroia, Longoria all signed deals buying attribution years and adding team control and then signed much longer contracts after or during that deal. This stuff happens all the time. What is this Trout deal missing? Those two extra years are not coming cheap at all, I estimated 15M y1, 25M y2, 30M y3 in arbitration (please rebuff if you feel the need), which would make those two years at 40M each. That is more than 30% higher than Kewshaw's 30.7M per year. And if Trout breaks all the arbitration records and goes on to sign a 10Y 400M dollar contract at 25 he would have still made roughly the same amount over those 6 years.
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Post by okin15 on Feb 25, 2014 13:49:37 GMT -5
80 million for two years? That's crazy money. That's what the Angels are going to pay if they WAIT to sign him till then. To pay that now is nutty.
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Post by jimed14 on Feb 25, 2014 14:59:18 GMT -5
I also think some people are just discounting the security. He's making $500k now. There is a non-zero chance that he has Grady Sizemore-like injuries before he even hits arbitration. It is worth something to Trout to have that security up front, even if he's leaving money on the table at the end. That's why guys like Buchholz and Longoria among many others sign the deals they do.
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Post by beasleyrockah on Feb 25, 2014 15:09:08 GMT -5
80 million for two years? That's crazy money. That's what the Angels are going to pay if they WAIT to sign him till then. To pay that now is nutty. If they wait, they'll either have to give him 10+ years in a massive record setting deal or they will lose him. Trout isn't going to reach free agency and take a two year deal.
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Post by beasleyrockah on Feb 25, 2014 15:13:18 GMT -5
I also think some people are just discounting the security. He's making $500k now. There is a non-zero chance that he has Grady Sizemore-like injuries before he even hits arbitration. It is worth something to Trout to have that security up front, even if he's leaving money on the table at the end. That's why guys like Buchholz and Longoria among many others sign the deals they do. Again, if he values security that much, he could just offer to buy out his arb years on very team friendly terms. What are the Angels going to do? Refuse and pay significantly more money through the process? Hope that he declines and they save a bit of money and suffer the consequences on the field? If Trout is willing to leave money on the table for security he can do it through the arb process, not at the expense of surrendering mid 20s free agent seasons (the most valuable commodity he has to offer). Comparing Trout (the best player in baseball the last two years) to Longoria (no MLB track record at the time) isn't fair.
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Post by Oregon Norm on Feb 25, 2014 15:19:32 GMT -5
...Imagine getting an MBA or CPA and being worth 45-50 dollars an hour but only getting 10. That's about the same ratio that Trout will be getting next year, if he stays healthy and productive... Off to remedial arithmetic class with you. A 9 win player would conservatively be estimated to be worth $50 million. He's being paid $.5 million. It's 100 times less! So that MBA hedge fund manager would have to be making $10/hour when he expects to be paid $1,000/hour. That's what's going on here. I think I can see his agent's point of view.
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Post by rjp313jr on Feb 25, 2014 18:26:14 GMT -5
Regarding security, isn't it likely that Trout most likely has a massive insurance policy on himself at this point so he's going to make huge dollars regardless?
I read in an article today about Kyrie Irvin that it would cost about $100k for a $50m insurance policy. Different sports but if anything trouts injury chances are lower and his earning potential much higher.
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Post by jimed14 on Feb 25, 2014 18:36:08 GMT -5
Regarding security, isn't it likely that Trout most likely has a massive insurance policy on himself at this point so he's going to make huge dollars regardless? I read in an article today about Kyrie Irvin that it would cost about $100k for a $50m insurance policy. Different sports but if anything trouts injury chances are lower and his earning potential much higher. Not sure if you can get insurance on anything that isn't career ending - like what happened with Ryan Westmoreland. It would be so difficult to prove that it was recurring nagging injuries which lowered your value from $X to $Y - like a Matt Kemp (if he weren't signed long term).
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Post by jmei on Feb 25, 2014 18:38:22 GMT -5
Insurance policies for athletes are tricky things. Read this for details, but the short version: they generally only cover catastrophic injuries (i.e., true career-ending ones), they don't pay out very much, and insurance companies will fight tooth and nail to avoid paying out.
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Post by jrffam05 on Feb 25, 2014 19:50:44 GMT -5
...Imagine getting an MBA or CPA and being worth 45-50 dollars an hour but only getting 10. That's about the same ratio that Trout will be getting next year, if he stays healthy and productive... Off to remedial arithmetic class with you. A 9 win player would conservatively be estimated to be worth $50 million. He's being paid $.5 million. It's 100 times less! So that MBA hedge fund manager would have to be making $10/hour when he expects to be paid $1,000/hour. That's what's going on here. I think I can see his agent's point of view. Off to remedial reading class for you. I was quoting the "he can just wait one year and have security", meaning one year from now he will be making at least 10m in arbitration. Sent from iphone
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Post by jrffam05 on Feb 25, 2014 20:26:01 GMT -5
And the security of signing his arb years isnt close to the security he would get for 6y/150m. If he just wants a 4 year deal the angels don't have an incentive to sign him, except for a small discount and player moral. The value on those first 4 years increase if you extend team controll. If your just buying team control years starting this year, I'd value the contract at a discount around 55m.
Am I that crazy? I'd like to hear the boards estimate. Mode these two scenarios. Assume trout stays healthy and productive.
1.trout signs a 6 year 150m deal. Hits fa at 27 and signs x deal.
2. Trout signs 4 year deal for arbitration years or goes to arbitration/settles for x amount. Hits fa at 25 and signs x deal.
My hypothesis is he would have about the same interest at age 27 that he will at age 25 and the megacontract he signs in scenario 1 is close to scenario 2. 1 may even be greater due to salary inflation and the precedent he sets getting 40m a year (my estimate). Now if you factor in the risk of injury and underperformance I say 1 looks much better. There is the possibility he gets hurt in the 2 years of extra team control and misses the mega deal, but thats betting on risk in a 2 year window instead of a 4. Here's my model.
1: 6 year 150 + 10 year 350m, incentives to push it to 450m. Opt out clauses. 500-600m over 16 years.
2: 4 years at 65m + 10 year 350m, incentives to push it to 450. Opt out clauses. 415-515m over 14 years.
In either of mine, I say trout opts out or gets extended into his upper 30's
Sent from iPhone.
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