The two best players in baseball were recently rewarded with historic new contracts. One of them appears to be a brilliant decision to lock up a once in a generation talent, while the other is destined to be a disaster. These predictions are not based on where each of these MVP caliber performers are at this stage of their careers, but rather the direction they are trending in.
Miguel Cabrera has won the AL MVP award in each of the past two seasons. In 2012 he also completed the rare accomplishment of capturing the Triple Crown. There is no denying that he is the best hitter in baseball, which made him a relative bargain at the $44 million total he was owed over the final two years of his contract. The eight year extension the Detroit Tigers recently gave him is another story.
When including the final two years of his previous deal, the extension makes his contract worth $292 million over 10 years, which eclipses the 10-year, $275 million deal Alex Rodriguez was given by the Yankees in 2008 for the largest deal in league history. Cabrera will earn an average of $31 million per season over the course of the deal, beating Clayton Kershaw's $30.7 million for the highest annual average.
Cabrera was worth 7.5 Wins Above Replacement (per Baseball-Reference.com) last season. A win is worth approximately $6 million on the open market. Forbes estimates that it is actually $5.9 million per win, but even at a more conservative estimate closer to $5 million, Cabrera is still worth the $31 million per year as long as he continue to put up 7.0+ WAR seasons, as he has done in each of the past three years.
The problem is that we can't expect Cabrera to produce at this level for the next 10 years. He'll turn 31 later this month, which means this extension will last through his age 41 season! Hitters generally tend to decline by their mid-30's, which means by the time the extension kicks in two years from now, his skills may already be starting to erode. Also consider that essentially all of his value comes with a bat in his hands. He adds no additional value as a base runner and actually has negative value defensively. Baseball-Reference has rated him below replacement level defensively with a negative dWAR in every season of his career. The move back to first base this season will help, but it's fair to say there are no Gold Gloves in his future. He's ideally suited to be a DH and will inevitably shift to that position as he continues to age. In fact, it would come as no surprise if we see Cabrera spend more time at DH as early as next season, after Victor Martinez's contract comes off Detroit's books. The game's highest paid DH is Boston's David Ortiz, who just agreed to an extension that will pay him $16 million next season. Ortiz is coming off a 4.9 WAR season, which is a far cry from the level Cabrera is at, but the gap isn't nearly wide enough to justify paying Cabrera nearly twice as much. Ortiz's value is limited due to the fact that he rarely fields a position, which explains why he's never had a 7.0+ WAR season, despite finishing among the top-5 in MVP finalists five times. Voters have actually used the argument that he's "only" a DH against him, yet somehow Cabrera's poor defense isn't held against him by those same voters.
The most baffling thing about this extension is the timing. Why now? Cabrera wasn't eligible for free agency for another two seasons and it's unlikely his value could have gone any higher than it is now coming off back-to-back MVP campaigns. Did they learn nothing from Philadelphia's disastrous extension with Ryan Howard? The Phillies slugger is another former MVP winner who was granted a pricey extension two years before his existing contract ran out. The deal looked bad at the time, but would become the laughingstock of the league before the extension years actually kicked in, as the injury plagued first baseman has seen his value decline to barely above replacement level. While Cabrera's decline shouldn't be expected to come quite as swiftly, that decline is inevitable.
The only case for making this type of deal with Cabrera now is because the Tigers were intent on rewarding him with the richest contract in history. Waiting two years would have given them the chance to re-evaluate his value, but also would have prevented them from offering him a contract that would have surpassed the A-Rod deal.
None of this is to take anything away from what Cabrera has accomplished, as he is truly an amazing talent and should continue to be for the next several years. However, he will no longer be at this same level for the majority of this contract. While the Tigers could potentially be getting a slight bargain based on the level he's at now, there is almost zero chance that he will provide enough value over the next 10 years to come close to living up to this contract.
On the other end of the spectrum is Mike Trout. The Angels star center fielder recently signed a new 6-year, $144.5 million deal. He is already set to earn $1 million this season in his first year of arbitration eligibility, with the extension starting next year, ensuring Trout remains in LA through 2020. He will be paid base salaries of $5.25 million next year, $15.25 million in 2016, $19.25 million in 2017 and $33.25 million in the remaining three seasons. It also includes a $5 million signing bonus. Given that Trout is only in his third season and not eligible for free agency until after 2017, he had a lot less leverage than Cabrera. However, this is still an enormous deal. Trout is the first player with less than three years of service time to sign a deal worth more than $20 million annually. That makes this contract as historic as the one Cabrera just signed, but the difference is that Trout is worth it.
The biggest factor in Trout's favor is his age. He's only 22 years old, which means he'll still be in his 20's when this contract is up. The Angels are paying a premium price, but they are paying for Trout's best years, not overpaying for past production. In fact, once this contract is up, Trout could sign the same 10-year deal Cabrera just got and it would still be a better value than it is for Cabrera right now.
The other factor in Trout's favor is that he's already the superior player. I've made the case before that Trout should have won the MVP the last two seasons because he's the better all around player (he finished second, behind Cabrera, both years). In 2012 Trout posted a league best 10.8 WAR, putting him miles ahead of Cabrera, who won the award primarily based on his overvalued Triple Crown numbers. Trout is an elite base runner and defensive player at a premium position, which are areas of the game that Cabrera contributes little in. Trout's value took a dip last season to 8.9 WAR, due mostly to a decline in defensive metrics. That was likely attributed to switching from left field to center, as well as not benefiting from the handful of Home Run robbing catches that boosted his value the previous year. He's still considered a very good outfielder and his value was still easily above Cabrera's.
Plus, Trout will conceivably get better. He hasn't even reached his prime yet, so we may have only seen the tip of the iceberg in terms of what he's capable of. Despite the drop in WAR, he still managed to make some improvements at the plate last season. His OPS went up and he hit more extra base hits. He also walked more and struck out less. Angels fans must be drooling over the improvements we're likely to see this season and in years to come.
Unlike the Cabrera deal, Trout's contract appears to be fair for both sides. For Trout, the extension provides long term security that sets him up for life financially and protects him in the event of a catastrophic injury that could limit his future earning potential. The pressures on him now should be about winning rather than about his next contract. While this is an unprecedented deal for a young player with such limited experience, Trout is also an unprecedented talent. Locking Trout into an extension now not only sets a level of cost certainty for the Angels, but also avoids the hassle of dealing with what could have been some very tricky arbitration hearings over the next three years. Arbitration salaries are generally negotiated based on the recent salaries given to similar players with the same amount of service time. The problem is, there are no players similar to Trout, which would likely result in record rates through his remaining arbitration years. After that, Trout would have been in position to bolt to the highest bidder, so this extension buys out three years of free agency. While the Angels may be paying Trout a bit more over the next few years than they might have under normal arbitration procedures, he's still a huge bargain based on the value he provides. In the last three years of the extension, the Angels will pay Trout about what the market would likely value him at, but locking him up now protects them against further inflation.
Trout and Cabrera are the best hitters in the game today, but they are trending in different directions. Cabrera has already reached his peak and will very likely decline as he ages, while the best has yet to come for Trout. That's what makes the Angels locking up Trout at a young age such a brilliant move, while the Tigers burdening themselves with what inevitably will become an albatross long before it's over will prove to be a monumental mistake. Trout has the upside to actually outperform his contract, while Cabrera has virtually no chance of ever living up to his.
Perhaps it would be more fitting if the two superstars switched contracts.
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