$430 million! Twelve years! The biggest deal in sports history! The mind reels!
That’s the first response of just about everyone but, once you think about Mike Trout’s new contract with the Los Angeles Angels, you realize that it’s a team-friendly deal. In fact, it’s a bargain.
One way to think about it is to look at how good a player is vs. how good other highly-paid players are.
Now, I’m sure I don’t need to go into the gory details of why Mike Trout is the best player in baseball. If you doubt that, well, there’s not much I can do to help you, frankly, because it means you’re immune to most external stimuli. But what I don’t think people truly understand is just how much better Trout is than even the other top players in the game. Since this is a story about money, let’s compare Trout to the next two-highest paid players in the game: Bryce Harper and Manny Machado.
Harper has had approximately one year as good as most Trout years. Machado is consistently one of the best players in the game, but he’s never approached Trout in a given year. I don’t think that’s a slight on those guys to say that. They’d probably admit it themselves. But did you know that, according to WAR anyway, Trout’s eight big league seasons have been worth more than Bryce Harper and Manny Machado’s fourteen seasons combined? Yep. Put the two most highly paid players in baseball history before today and they don’t add up to one Mike Trout. Harper and Machado will make a combined $660 million over the next ten years while Trout will make $430 million over the next 12. That’s a deal!
Here’s another way to look at it.
Mike Trout is going to make around $36 million a year for the next 12 years. In 2018, baseball revenue was $10.3 billion. That number will, presumably, go up this year and most other years going forward. That means that Trout will make, at a minimum, 0.35% of overall revenues. When Alex Rodriguez got his ten-year, $250 million deal from the rangers in 2001, baseball revenues were at $3.58 billion, which means that A-Rod made nearly 0.70% of overall revenues. A-Rod’s first ten-year deal — as opposed to the extension he signed after his opt-out — is considered by most to have, actually, been something of a bargain. Trout’s, proportionately, is far cheaper than that. Oh, and if inflation is a concept floating around your head right now, know that once you adjust for inflation, Trout and A-Rod’s contracts are roughly the same amount in absolute dollars. Once you adjust for inflation, however, baseball’s revenues have more or less doubled. Again, fantastic deal for the Angels.
OK, Craig, this is a bargain in the context of baseball. But is it not, possibly, an overpay for the Angels? Nah, hard to see it that way.
A lot is made of how much dead money the Angels have in the form of contracts to Albert Pujols and some other past-their-prime players. That’s rather unfortunate for them, but let’s not cry too much for Arte Moreno. The Angels play in the second largest media market in the country and are currently in the middle of a TV deal that pays them $3 billion over 20 years. Or, around $150 million a year. Which is around what their payroll is, even with Trout’s extension and even with Pujols’ (mostly) dead money. Which means that, before a ticket, a beer, a big foam finger or a stuffed Rally Monkey is sold — and before league-wide revenue sources are accounted for — the Angels are breaking even. Once the other stuff is accounted for — and they sell a lot of tickets in Anaheim — they are quite profitable. Oh, and the value of the franchise has appreciated madly too: Arte Moreno paid only $180 million for the team and it’s now worth over $1 billion and may be north of $2 billion.
All of which is to say, any claim that Mike Trout’s new deal is too big or otherwise unreasonable is, well, unreasonable. He is being paid less than he is worth in baseball terms. Proportionate to the numbers that actually matter, he’s being paid far less than a lot of big stars in the game have been paid in the past. And, with respect to the team who is paying him, he does not represent an unreasonable investment, let alone an unduly burdensome one.
Mike Trout is worth it. The Angels can afford it. In fact, the guy is a bargain.