Jason Vargas Rumors

Paul Maholm And The Starting Pitching Market

The free-agent market for starting pitching has been slow to develop this offseason, but now that Masahiro Tanaka has chosen a team, signings are trickling in. Two recent NL West contracts demonstrate how uncertain that market can be. The Diamondbacks agreed to terms with Bronson Arroyo on a two-year, $23.5MM deal that includes an option for 2016, and the Dodgers signed Paul Maholm for one year and $1.5MM guaranteed, with the chance to make up to $5MM more in incentives.

There are clear differences between the two pitchers — Arroyo is a righty and Maholm is a lefty, and Arroyo has been the more durable of the two. That's a trend that might not persist, given that Arroyo is five years older than Maholm. But Maholm did miss a start in September due to elbow soreness (although an MRI revealed no structural trouble) and he pitched 49 fewer innings than Arroyo last year.

Arroyo and Maholm aren't that different, however. They're both low-upside, pitch-to-contact types who give their teams decent chances of winning as mid-rotation or back-of-the-rotation starters. And statistically, they're reasonably similar.

Arroyo

Year K/9 BB/9 fWAR
2011 4.9 2.0 -1.5
2012 5.8 1.6 2.4
2013 5.5 1.5 0.8

Maholm

Year K/9 BB/9 fWAR
2011 5.4 2.8 1.7
2012 6.8 2.5 2.2
2013 6.2 2.8 0.7

One could actually make the case that, over the past three seasons, Maholm has been better than Arroyo. As Fangraphs' David Cameron noted yesterday (via Twitter), Maholm appears to be quite a bargain in comparison. (I made a similar observation at my own blog.)

Others have noted the huge disparity between Maholm's contract and that of Jason Vargas, who received four years and $32MM from the Royals earlier this winter. Like Maholm, Vargas is a 31-year-old, pitch-to-contact lefty. Vargas has produced 4.5 WAR over the last three seasons, compared to 4.6 for Maholm.

The common thread here may be the perception that Arroyo and Vargas are more likely to give their new teams 200 innings. (Vargas only pitched 150 last season after missing time due to a blood clot, but he threw at least 201 in both 2011 and 2012.) If that's the case, however, the market seems to be overreacting. In theory, a team could easily get two Maholm-type fragile pitchers and hope for them to combine for 250 or so decent innings, rather than paying Arroyo or Vargas many times more. A team would have to clear an extra spot on its roster that way, but that seems like a small matter compared to the savings in dollars.

In fact, in a way, this seems to be what the Dodgers are doing — they'll have Clayton Kershaw, Zack Greinke, Hyun-Jin Ryu and Dan Haren for the first four spots, and then Maholm, Josh Beckett and Chad Billingsley will soak up the remaining innings. (Beckett and Billingsley are both returning from injury.) If Arroyo posts 200 innings, that's surely useful, but given that his innings aren't the highest quality, a team should be able to compensate for reduced back-of-the-rotation certainty with greater depth.

Among Arroyo, Vargas and Maholm, Maholm is probably the outlier. MLBTR's Tim Dierkes' projection for Arroyo's contract was almost exactly on the money, while Maholm's contract, at least the guaranteed portion, falls well short of Dierkes' projected one year and $7MM. Perhaps teams are simply extremely concerned about Maholm's elbow. (In fact, that seems at least somewhat likely, given Maholm's apparent openness to pitching in relief. One would think a pitcher of his caliber would be able to find a sure starting job somewhere.)

If not, though, Maholm's deal doesn't bode well for a pitcher like lefty free agent Chris Capuano. Capuano's value has been similar to Vargas or Maholm the past three seasons (with 4.8 total fWAR), but he only pitched 105 2/3 innings last year due to a series of injuries, and he has two Tommy John surgeries in his past. Given Capuano's tendency to pitch reasonably strong innings when healthy, though, he could give his next team great value. Maholm's contract could be a bargain for the Dodgers, and the team that picks up Capuano could be in line for a bargain as well.


Royals Sign Jason Vargas

FRIDAY: ESPN's Jerry Crasnick reports (via Twitter) that Vargas will receive $7MM in 2014, $8.5MM in 2015-16 and $8MM in 2017.

THURSDAY: Looking to fill a void in the rotation, the Royals announced that they have signed left-hander Jason Vargas to a four-year contract that will reportedly pay the southpaw $32MM. Vargas-JasonVargas is represented by Nez Balelo of CAA Sports.

Vargas, 31 in February, pitched to a 4.02 ERA with 6.5 K/9, 2.8 BB/9 and 40.2 percent ground-ball rate in 150 innings. A blood clot shelved Vargas for nearly six weeks, but he made all of his starts upon returning. Vargas proved his health by finishing strong and hurling a shutout against the A's on Sept. 24. Aside from the blood clot, Vargas has been a highly durable arm, averaging 190 innings per season dating back to 2010. In that time, Vargas has a 3.97 ERA with 5.9 K/9 and 2.5 BB/9 in 761 innings. Though he averaged just 87.7 mph on his fastball in 2013, he posted a swinging-strike rate of 8.6 percent that wasn't too far off from the league average of 9.3 percent.

Vargas has always been a fly-ball pitcher, so moving to an environment like Kansas City should be a natural transition. Kauffman Stadium was one of the least homer-friendly stadiums in the league in 2013, per ESPN's Park Factors, which should help to maximize Vargas' effectiveness. While he was fairly stingy with homers in 2011 and 2013, he did average 1.4 homers per nine innings in 2012, so he has a propensity to get homer-happy at times.

The Angels originally acquired Vargas last offseason in a one-for-one swap that sent Kendrys Morales to the Mariners. Anaheim declined to make Vargas a qualifying offer at season's end, meaning Royals GM Dayton Moore will not have to sacrifice a draft pick in order to make this signing. In my free agent profile for Vargas, I predicted that he would sign for three years and $28.5MM, so while the total years is a bit surprising, the overall commitment is in line with the expectations at the time of that post.

The Royals had a clear need in the rotation with Ervin Santana and Bruce Chen both hitting free agency, and Wade Davis flopping in his initial attempt to reprise his role as a starting pitcher. Vargas will join ace James Shields, Jeremy Guthrie and presumably youngsters Danny Duffy and Yordano Ventura in Kansas City's 2014 rotation.

Jeff Passan of Yahoo Sports first broke the news of the signing (Twitter link), and Ken Rosenthal of FOX Sports reported the $32MM value (also on Twitter).

Photo courtesy of USA Today Sports Images.


Royals Overpay In Years To Get Low AAV On Vargas

In Jason Vargas, the Royals added an innings-eating, low-upside arm for $8MM per season yesterday. While news of Vargas' four-year deal initially elicited some shock, the contract actually looks reasonable in terms of Vargas' average annual value.

The first thing to do is accept this fact: free agency is an environment in which few players are able to be secured at a bargain rate. Unless a player is coming off an injury or a terrible season, the odds are against him signing for anything other than a premium in terms of years, dollars or both. In Vargas' case, the Royals paid a premium in years in order to avoid doing so in terms of dollars.

Vargas is a slightly below-league-average starter overall in terms of ERA+ (96 over the past four seasons) that has shown flashes of being a slightly above-average starter (104 ERA+ in 2010). He's likely to deliver a season of roughly league-average work in any given year — sometimes a bit more, sometimes a bit less.

What Vargas provides is innings, and save for a freak blood clot that isn't likely to cause any recurring issues, he's been a durable source of those roughly league-average innings since 2010. Vargas averaged 204 innings from 2010-12 and has averaged 194 frames per season from 2010-13, even when accounting for the lost time due to this year's fluke DL stint. Durability pays on the free agent market, and Vargas hasn't had arm-related troubles since 2007 when he had minor surgery to remove bone spurs from his elbow. Consistently delivering innings and consistently delivering similar performances (his ERA has sat between 3.78 and 4.25 over the past four seasons) gives teams peace of mind. The Royals paid for that peace of mind and consistency.

Some detractors will point to Vargas' somewhat incriminating xFIP over that same stretch and say that he has the skill set of a 4.50-ish ERA pitcher, but xFIP assumes a league-average homer-to-flyball ratio. Flyball pitchers like Vargas tend to see a lower percentage of their flyballs leave the yard, so it's reasonable to assume that Vargas can continue to post HR/FB marks around nine percent and keep his ERA in the low 4.00 range.

Aiding Vargas' case is that he and his flyball tendencies will be calling the spacious Kauffman Stadium home — a park that suppressed home runs better than all but eight stadiums in 2013 (including Angel Stadium and Safeco Field). He'll also have a solid outfield defense on his side, as Alex Gordon will man left field with some combination of Lorenzo Cain, Jarrod Dyson, David Lough and Justin Maxwell patrolling the other two spots (barring another outfield addition). Cain, Lough and Dyson each carry a sterling defensive reputation, per UZR and The Fielding Bible's Defensive Runs Saved metric.

When it comes down to it, the AAV is the key to this contract for the Royals. Paying a mid-rotation or back-end starter $8MM annually seems alarming to some, but consider the following comparison of two pichers, if you will:

  Games Started Innings Pitched K/9 BB/9 GB% ERA FIP xFIP SIERA
Pitcher A 131 847.2 4.81 2.03 46.4 3.88 4.07 4.24 4.46
Pitcher B 120 761 5.88 2.53 38.2 3.97 4.22 4.46 4.45

The two aren't that far apart, so we can reasonably expect that they'd sign similar contracts. While one might think that's the case, Pitcher A is Mark Buehrle from 2008-11, who signed a four-year, $58MM contract following that four-year stretch. Pitcher B, of course, is Vargas, from 2010-13. While Vargas doesn't come with as lengthy a track record, the past four years indicate that we can reasonably predict his output, at least for the next few seasons. Is Buehrle worth $6.5MM more than Vargas on an annual basis? Here's that pair's 2010-13 campaigns side-by-side:

  Games Started Innings Pitched K/9 BB/9 GB% ERA FIP xFIP SIERA
Buehrle 128 821.2 5.17 2.03 44.4 3.94 4.04 4.23 4.40
Vargas 120 761 5.88 2.53 38.2 3.97 4.22 4.46 4.45

Vargas probably isn't as good as Buehrle, but he has age on his side and fits a similar profile. Looking at other four-year deals, Edwin Jackson signed for $13MM annually just last offseason. While his peripheral stats are superior to those of Vargas, is he worth $20MM more over the life of a four-year deal? The market simply doesn't create opportunities to sign pitchers of Vargas' ilk for $8MM per year anymore. That level of AAV lands players like Joe Saunders and Joe Blanton or serious injury reclamation projects like Brandon McCarthy.

Sticker shock reigned supreme when Vargas' agreement was announced, but it's my feeling that most focused on the wrong of the two relevant numbers. Rather than looking at the four-year term, which admittedly feels like an overpay, the $8MM AAV is far more important. When I wrote my free agent profile on Vargas, I projected him to sign for three years and $28.5MM — an AAV of $9.5MM. I wound up being pretty close in terms of his total guarantee, but the Royals were able to secure that fourth year just a few million more.

There isn't a ton of room for upside in this deal, but 190-210 innings of league-average baseball has value, and the Royals secured that value at a relatively low annual rate by making the decision to pay a premium in terms of years. Had the two concepts been reversed and Vargas signed for two years and $22MM, would the contract have elicited such backlash? I lean toward no, since we're conditioned to expect that type of overpay. Overpaying in terms of years isn't something we're as accustomed to, but it could work out better for the Royals than doing so in terms of dollars. I certainly don't love this deal, but it's a defensible contract given the landscape of today's free agent market.



Reactions To The Jason Vargas Signing

The Royals made the biggest signing of the day so far, announcing a four-year, $32MM deal for lefty starter Jason Vargas. Here are reactions and fallout from around the web.

  • Four years for Vargas is too many, ESPN's Keith Law argues (Insider-only). Vargas is already a below-average starter, Law argues, and it's optimistic to think Vargas' finesse style will hold up for four years, particularly given that his results so far have partly been a creation of favorable home parks in Seattle and Anaheim.
  • The Angels were evidently in agreement that four years was too many. They would not give Vargas a fourth year, and instead offered him three years and $24MM, Mike DiGiovanna of the Los Angeles Times writes (Twitter links).
  • Focusing on the number of years in the contract misses the point, writes Dave Cameron of FanGraphs. Vargas' deal only costs $8MM per year. He only needs to produce about 5 WAR over the course of the contract to justify the deal, and that seems possible, even if he isn't that likely to pitch well in the final season of the contract.

Rosenthal’s Latest: Rangers, Vargas, O’s, Scherzer

Let's take a look at the latest from Fox Sports' Ken Rosenthal, who's out with a new column of rumors from around the majors:

  • A trade of second baseman Ian Kinsler or shortstop Elvis Andrus increasingly looks "inevitable" given the Rangers' crowded infield. "Some team is going to get a good middle infielder from the Rangers. The only question is which one," Rosenthal writes. It's unlikely, however, that the club packages infielder Jurickson Profar with other young players in a deal for a star such as David Price or Giancarlo Stanton. Rosenthal's sources say the Rangers want to keep their farm system stocked.
  • Matt Garza's elbow shouldn't scare off potential suitors. Though he missed much of 2012 with an elbow issue, officials with both the Cubs and Rangers tell Rosenthal that the righty wasn't treated for elbow issues at all in 2013.
  • There's mutual interest in a new deal between Southern California native Jason Vargas and the Angels, but Rosenthal's sources say the team is already examining other options and could move on from the left-hander if negotiations drag. Vargas may ultimately have to leave money on the table if he wants to remain with the club.
  • The Orioles are at least considering options for a backup catcher, as Matt Wieters managed just a .628 OPS against lefties last season. Rosenthal notes that the O's could seek to move Wieters and target a replacement such as Jarrod Saltalamacchia, as Wieters is unlikely to agree to an extension. However, trading him now would be selling low.
  • Baltimore will also have to consider how they'll approach J.J. Hardy's impending free agency. Though Rosenthal writes that the Orioles' front office eventually aims to move Manny Machado to shortstop, it also views Hardy, who becomes a free agent after next season, as critical to the club.
  • Executives from other teams are surprised at rumors that the Tigers are listening on Max Scherzer. Shipping Scherzer elsewhere and then losing Anibal Sanchez to an injury would be a major hit to the team's rotation.
  • The Diamondbacks continue to wait for a reply from Dave Duncan on whether he will take their pitching coach job. 

Central Notes: Bruce, Phillips, Arroyo, Johan

While Jay Bruce's agent, Matt Sosnick, said his client hasn't discussed an extension with the Reds, he didn't quash the idea either, writes Jeff Passan of Yahoo Sports.  "Obviously, Jay loves playing in Cincinnati. He's made it clear in the past that all things equal, he'd like to finish his career there and certainly would be open to anything," said Sosnick.  While the Reds control Bruce through 2017 with three guaranteed years at $34.5MM and a team option for $13MM, the idea of a pre-emptive extension makes sense since the slugger will only be 30 upon hitting the open market.  Here's more out of the Central divisions..

  • Passan spoke to one exec who said that Brandon Phillips is as good as "gone" in Cincinnati.  Yesterday we learned that the Yankees made a preliminary inquiry on the second baseman, but it's possible that they're simply looking for leverage in talks with Robinson Cano.
  • The Twins have expressed interest in free agent pitchers Bronson Arroyo, Phil Hughes, and Jason Vargas, sources tell Mike Berardino of the Pioneer Press.  While the Twins have yet to make a formal offer to Arroyo, the interest appears to be mutual between the club and the 36-year-old.
  • The Twins have also called on Scott Kazmir and Johan Santana, tweets Darren Wolfson of 1500 ESPN.
  • Ken Rosenthal of MLB Network (video link) spoke with Tigers pitcher Max Scherzer about dealing with trade speculation and the possibility of hammering out an extension.
  • It might not have made a difference, but the Red Sox weren't showing any indication that they were ready to let Torey Lovullo go to the Cubs, according to Jon Heyman of CBSSports.com (via Twitter).  The Cubs agreed not to poach personnel from the Red Sox after Theo Epstein left to take over their operations.

Angels Notes: DiSarcina, Vargas, Tanaka

The Angels have hired former infielder Gary DiSarcina to be their new third base coach, a source told Alden Gonzalez of MLB.com. DiSarcina, 45, spent his entire 12-year playing career in an Angels uniform, batting .258/.292/.341 in 1,086 games. He takes over for Dino Ebel, who was promoted to bench coach. Here's more on the Halos as the offseason gets underway…

  • The Angels would like to retain Jason Vargas, but they don't want to give him a three-year pact, writes Gonzalez. The Halos also don't want to approach an average annual value of $10MM for Vargas, who would slot as their fourth starter. As MLBTR's Zach Links explained in the Angels' Offseason Outlook, they'll be working with limited breathing room this winter as they try to steer clear of the luxury tax. Still, the team is currently prioritizing Vargas over other free agents, DiPoto tells Gonzalez.
  • Angels GM Jerry Dipoto confirmed that he has interest in Japanese sensation Masahiro Tanaka, tweets Mike DiGiovanna of the Los Angeles Times. Dipoto says that the club has scouted the right-hander "multiple times." Tanaka, who some executive believe will be more expensive than Yu Darvish, has already been connected to other big market clubs like the Yankees and Dodgers.

Zach Links contributed to this post.


Free Agent Profile: Jason Vargas

Looking for more stability in their rotation last offseason, the Angels dealt from their surplus of corner bats and sent Kendrys Morales to the Mariners in exchange for innings eater Jason Vargas. A freak injury cost Vargas about 50 or so innings of his season, but his final numbers look similar to what he's produced over the three previous years. He'll look to cash in on that consistency as a free agent.

Strengths/Pros

Vargas is an innings eater, and there's something to be said for free agents who can be expected to take the ball every fifth day. Vargas-JasonA freak blood clot that required surgery landed him on the shelf for nearly two months, but aside from that, Vargas hasn't been on the disabled list since 2008. He's had only one arm-related injury in his career — a minor offseason procedure to remove bone chips from his elbow in October 2007.

Even though he missed nearly two months in 2013, Vargas still racked up 150 innings, and the missed time brought his yearly average down to a still-strong 190 innings dating back to 2010. Vargas has a 3.97 ERA in that time, thanks largely to his plus command (2.5 BB/9 in that stretch). His strikeout rate has steadily crept upward over the past four seasons as well.

Vargas pitches left-handed, but he doesn't have much of a platoon split. Over the past four seasons, lefties have hit .257/.306/.383 against him, and right-handers have a similar .253/.309/.419 batting line.

Vargas was a late bloomer and did some of his early work out of the bullpen. As such, he has just under 1,400 professional innings under his belt. He doesn't have a lot of mileage on his arm for a 31-year-old, and he won't be attached to draft pick compensation, as the Angels don't figure to make him a qualifying offer due to luxury tax concerns.

Weaknesses/Cons

Vargas' strikeout rate may be on the rise, but even the career-best K/9 that he posted this season was a below-average 6.5. His fastball sits in the 87-88 mph range, so he's not going to overpower any hitters.

Vargas is a fly-ball pitcher that has benefited from pitching in pitchers parks such as Seattle's Safeco Field and Angels Stadium in Anaheim over the past four seasons. Vargas' 4.61 road ERA, 4.70 road FIP and 4.73 road xFIP point to the fact that he's benefited tremendously from those spacious environments. His home numbers — 3.39, 3.76 and 4.23, respectively — are much stronger and suggest that he's best-suited for a bigger park.

In particular, he struggles with homers on the road. Vargas has allowed just 48 homers in 497 home innings (0.87 HR/9) throughout his career, but he's yielded 77 big flies in 482 2/3 innings (1.43 HR/9).

Personal

Vargas is an excellent athlete that played three seasons at quarterback in high school football and is an avid golfer in his free time. His arrival with the Angels reunited him with college teammate Jered Weaver. Baseball runs in Vargas' family, as he is the second cousin of Randy Velarde, who enjoyed a 16-year career as an infielder with the Yankees, Angels and A's. Vargas is very active in charities and co-founded Estrella Youth Sports in Goodyear, Ariz. — a non-profit youth program that aims to develop positive role models through participation in sports.

Market

Vargas isn't an elite rotation piece, and teams that need top-of-the-rotation arms aren't likely to make him a prime target. He's a strong back-end starter and can slide into the middle of a rotation if needed, and plenty of teams will be looking for such arms. The Angels will likely make an effort to re-sign Vargas to a multiyear deal, and the Apple Valley, Calif. native is interested in a return. The Orioles showed some interest on the trade market this summer.

In addition to the O's and Angels, I'd expect contenders like the Royals, Indians and Pirates to show interest. Teams that didn't contend in 2013 but simply need reliable innings could show interest as well, with the Twins, Mariners, Brewers, Padres and Giants coming to mind.

Teams in smaller parks will likely be more hesitant regarding Vargas, but the Phillies, Yankees and Blue Jays are all looking for pitching help as well. Vargas and agent Nez Balelo of CAA Sports should have plenty of interested teams to negotiate with over the course of the winter.

Expected Contract

Vargas doesn't come with a ton of upside, but he's a consistent source of 200 or so innings at or slightly below the league average. Even if he's not an outstanding performer, durability pays on the open market. Vargas is younger than Jeremy Guthrie, and his four years prior to free agency are similar to Guthrie's in terms of innings pitched, ERA+, K/9 and BB/9. In terms of superficial stats, Vargas stacks up well against Ricky Nolasco over the past four years, though the latter has him dwarfed in terms of sabermetric stats. He's similar to Scott Feldman in terms of performance, but Vargas has a much more consistent track record.

Balelo could try to parlay his client's durability and consistency into a four-year contract, given his relative youth, but three years is more realistic for someone with Vargas' limited upside. He should be able to top Guthrie's contract but is likely to fall short of whatever amount Nolasco will receive.

I waffled between a three-year, $27MM deal and a three-year, $30MM deal for Vargas, so I'm splitting the difference and predicting a three-year, $28.5MM contract.

Photo courtesy of USA Today Sports Images.


AL West Notes: Mariners, Angels, Astros

The Mariners interviewed Dave Valle for their managerial opening this week, Ted Keith of SI.com reports. Valle played in ten seasons for the Mariners, primarily at catcher, but has no prior coaching experience. As Keith notes, teams appear to value prior managing experience, at least, less than they once did, with Mike Matheny, Robin Ventura, Bryan Price, Don Mattingly and John Farrell all winning jobs without prior managing experience in the Majors or the minors. Valle has recently worked in broadcasting. Here's more on the AL West.

  • The Angels aren't likely to extend a qualifying offer to free agent Jason Vargas, but they might sign him to a multiyear deal anyway, Mike DiGiovanna of the Los Angeles Times reports. Vargas would likely decline the Angels' qualifying offer, DiGiovanna says, but the Angels don't want to offer one because the $14.1MM commitment if Vargas were to accept would move them close to the $189MM luxury tax threshold.
  • The Angels' luxury-tax issues will likely mean they'll attempt to upgrade their rotation primarily through trades, explains Alden Gonzalez of MLB.com. If they bring Vargas back, it would appear to be for less on a yearly basis than the $14.1MM qualifying offer. In the meantime, they'll hope to acquire young pitching by dealing players like Mark Trumbo, Howie Kendrick, Erick Aybar or Peter Bourjos. Doing so might also help them shed salary.
  • The Astros' payroll could rise to $50MM or $60MM next year, writes MLB.com's Brian McTaggart. That doesn't sound like much, but it's a huge increase over the team's $13MM 2013 payroll. "If you add three or four key positions and bring in a couple of guys [from the Minor Leagues] that are ready, this team is pretty competitive pretty quickly with the starting pitching we've got," says owner Jim Crane. "We're deep in pitching." McTaggart writes that the Astros will look for bullpen help, but they could also in a power hitter (perhaps a corner outfielder) and a starting pitcher.

Angels Notes: Dipoto, Vargas, Trout

Jerry Dipoto is plotting the Angels' future, even though, after a very disappointing 2013 season, it's unclear whether he'll still be around to see his plans bear fruit, Mike DiGiovanna of the Los Angeles Times writes. "I'm not going to get into it," says Dipoto when asked about his future. "I don't want to have this conversation." DiGiovanna notes that, although there's been buzz for months about the possibility of either Dipoto or manager Mike Scioscia leaving after the season, it looks increasingly possible that both could stay. Dipoto says that he will be looking for "young, controllable starting pitching," and DiGiovanna implies that one way of acquiring it would be to trade Howie Kendrick or Mark Trumbo. Here are more notes on the Angels.

  • The Angels appear unlikely to extend a qualifying offer to Jason Vargas, writes Alden Gonzalez of MLB.com. The team will already be close to the luxury-tax threshold of $189MM, and Gonzalez notes that if Vargas took the qualifying offer of around $14MM, the Angels would "basically already be over budget." Vargas has posted a 4.01 ERA with 6.6 K/9 and 2.8 BB/9 in 143 2/3 innings in 2013.
  • The luxury tax is an obstacle to signing Mike Trout to an extension, Gonzalez writes. The luxury tax is calculated based on the average annual value of the players on a team's 40-man roster. So, Gonzalez notes, if the Angels were to sign Trout to a ten-year, $300MM deal, $30MM per year would count toward the luxury tax, even if the contract is backloaded. Without an extension, Trout will again make near the league minimum in 2014.