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Why the Angels went with Vargas over Saunders "seems" to clearly be a case of contract years.
Has everyone forgotten when Branyan was demanding a multi-year and Z refused to give in. What happened? Z goes out and gets Kotchman ... because he needed to fill the slot ... he had no team controlled bodies as a fall back ... and he wasn't willing to be patient (having no fallback), in hopes that nobody would come up with the extra years for Branyan. The fact Branyan returned fairly screams the choice was not a diss of Branyan's ability - but of his demands.
Look at the FA SP market. It's Death Valley. If the Angels wait and Saunders actually gets a 3 year from somebody in February BEFORE the Angels plug that hole, then the cost the Angels MUST pay to plug that hole jumps. Remember, part of the value equation is "how much does a team NEED your commodity?"
Z is in a perfect negotiating spot precisely because he has a the Brady Bunch of young arms sitting in AAA ready to move to the big time next week.
Z was in a position where he COULD deal Vargas and "worst case" he is "forced" to move Hultzen or Paxton or Maurer, etc., etc., into the lineup a month or two earlier than he might like - oh darn. Instead, he waits out the competition, until Saunders sees the pool of suitors vanish and it is Saunders that caves and lowers his demands.
The Angels NEVER had a choice of Vargas or Saunders. They had a choice of Vargas - this instant - or maybe Saunders later - or maybe nothing at all later.
Likely that the Angels would have been fine with Saunders (given the deal he signed) ... if that had been avvailable 4 weeks ago. It wasn't. Ironically, the very move they made to get Vargas, (removing themselves from the Saunders speculators list), was one of the variables that forced Saunders to lower his demads and allow Z to sign him. (I'm pretty sure that Z was aware of the implications at the time).