Worth The Debate: Pujols Contract

I was watching the news recently, a story about people out protesting the spending by the federal government, and I was struck with a thought: I wonder if the recent worries I’ve been reading on blog posts about the Cardinals and large player salaries could be related.

Perhaps this is a recent phenomenon, brought on by recession-related news in the media, but I don’t recall reading many concerns from fans in the high-living days of 12-figure free-agent salaries handed out to one player after another. Quite the contrary; the calls from fans for their favorite team to nab the cream of the free agent crop were pretty common. The only concern was from fans complaining of an increase in ticket prices as a result of these new signings.

There have been several studies over the past few years indicating there is limited correlation between winning percentage and player payroll, including one from the University of Iowa that tracked data from 1995-2007, adjusted for inflation, that showed a correlation of winning percentage and a team’s player salaries of just 18 percent.

Then there’s the type of players upon owners lavish these salaries. Bill James did a study in the Baseball Abstract more than 20 years ago which demonstrated in the aggregate, a typical player’s performance peak is at or near age 27. Yet most free agents, who are required to put in at least six years’ service, are older than this and are at risk for decline.

The anecdotal evidence for teams such as the Cubs, who signed a number of free agents and extended the contracts of several others in an attempt to end a century-long championship drought, demonstrate the risk both of high salaries and the players they sign. There’s very little the team can do to move Derrek Lee, Aramis Ramirez, Carlos Zambrano, Alfonso Soriano or Kosuke Fukodome, aging players with mediocre numbers and large salaries. A number of other teams, like Houston with Carlos Lee, find themselves in similar predicaments. Spending on these proven veterans crowds out opportunities for emerging young stars, who find themselves blocked at the big-league level, and crowds out opportunity for stretch-drive trades and payroll boosts for a club fighting for a playoff spot.

Which brings me back to the introduction. After years of both quantitative study and anecdotal experience available, fans who otherwise might support a club signing a big-name free agent or providing a multi-million dollar extension over several years have begun to voice their concerns with such risks. Such as concerns federal and state government spending crowds out private sector investment in the marketplace, the concern for these fans is that high salaries paid to players over 30 is unsustainable for a team seeking long-term competitive and financial viability.

Which brings us to Albert Pujols.

Prince Albert turned 30 in January, and the Cardinals may have to consider an annual salary between $25-$30 million and perhaps an extension of up to seven years to keep him with the Birds on the Bat. Even Joe Strauss of the Post-Dispatch wonders if the club has a better than even chance of signing him to such a lucrative deal, especially after the team obligated so much of its player salary resources for the next seven years to Matt Holliday this past winter.

There is no question the Cardinals want to sign Albert Pujols, and need to sign him. He’s a fan favorite, he’s the face of the franchise, a genuine marketing phenomenon, one of the great men to play the game. His numbers ensure an easy path to enshrinement in Cooperstown five years after he retires.

But those fans who protest spending by the team have a point. Do the Cardinals make an emotional decision to obligate another large share of scarce financial resources to a second player and risk a situation as both distance themselves from that aggregate peak performance age of 27 that the Cubs now face? Or do they make perhaps the wiser fiscal decision to allow Pujols to walk knowing that the club then would be better positioned to capitalize on unknown opportunities in the future?

Like Joe Strauss, I am amazed that a share of Cardinals fans greater than zero actually would entertain either trading Pujols or allowing him to depart. And I wonder to what extent an awareness of financial issues in general thanks to these people out protesting government spending and our current recession has to do with it.

6 thoughts on “Worth The Debate: Pujols Contract

  1. I wrote a piece about the Pujols situation earlier in the season for a local newspaper. I didn’t go into the economics of baseball like yours does, but I did crunch the numbers and explained that, no matter how much we try to deny it, the money isn’t there to resign Pujols.

  2. Agree that it seems impossible for ownership to invest $210~ish million in 2 players for a 6-8 yr window… esp before they make similar commitment to Wainright. Would the ownership group agree to a 3 to 5% stake for Pujols when his playing days are over? I don’t even know if it is a viable solution… but if they want Holliday, Pujols, Wainright, *AND* fans that can afford ticket prices – it may be the only solution.

  3. I am willing to bet emotion and tradition will trump any well-meaning advice about risky financial investments when it comes to a superstar fan favorite like Albert. Great article Michael!

  4. I dont know anything about economics, but do know a little about baseball. I think if you take Pujols out of the lineup it hurts beyond the numbers he puts up. His leadership and knowledge helps the whole team. I think if the Cards let him go it will equal the Red Sox getting rid of Babe Ruth. And it would probably be to the same team (the yankees). And personally I cant imagine Albert in and other uniform. I am prepared to sell the arch if we have to, to keep him. I’ll even help tear it down…..haha

  5. Aron, I completely agree with the emotional component of Albert Pujols in the lineup — and his impact with the Cardinals and the team’s fans far exceeds the contribution of his numbers.

    You know, I’ve often wondered if there was a means for fans to put their money where their feelings lie. If there were some means for the team to float a commercial bond issue to help pay for a player’s contract or meet other expenses — that way, a fan could purchase a bond which would provide the operating capital to sign a player like Albert. Basically, it would be a loan, at low interest, for the team’s benefit, a creative financial structure that could help defray the impact on payroll.

    Even I would buy a few Pujols bonds if it meant the team could stay within its financial means and be flexible for the future, and keep Prince Albert with the Birds on the Bat.

  6. Bottom line, does the money he brings in through leadership, playing, moral support … what ever it maybe, equal 4x the amount he is asking in a contract? Why 4x? 1x to pay for his salary, 1x to pay for his other benefits [health, stock, etc…], 1x for the collective amount of raise the other players will be demanding over the next few years, 1x for the profit needed for all of the other needs of the ball team, and stadium… if he doesn’t help bring in 4x that amount … how close is he? Does he bring in enough to cover the cost of the salary? The Salary and his own benefits?


    Then, how bad would it hurt without him? Sales down [more then just tickets, tickets will recover], fans down, team down … can we afford to buy a talent that COULD BE another super star?

    After we make this decision, will we be as disappointed should he turn out to have a McGwire skeleton in his closet?

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