Thursday, December 8, 2011

How much more of a discount could you possibly want?

Albert Pujols was paid a total of $104 million for the first 10 years (and almost certainly the best 10 years) of his Hall of Fame career. It is safe to say the Cardinals got the single-greatest bargain in the history of the sport, relative to the market.

Ryan Howard will be paid $180 million for the first 10 years of his career. Mark Teixeira will be paid $144 million. If Prince Fielder is signed to a contract that pays him $20 million or above for the next five seasons, he will make at least $135 million for his first 10 years. And these are just Pujols' three main contemporaries at 1B. Without checking, I'm confident that at least 20 players have made, or will make, more than Pujols in the first 10 years of their careers, and none of them will offer the same level of production.

Pujols isn't necessarily deserving of sympathy: He made the decision to sign a below-market extension with the Cards, and the team was well within its rights to not renegotiate that contract. But to dismiss the fact that while Pujols was busy being the best player in baseball, the Cards went out and signed a great, but inferior player in Matt Holliday to a higher salary than Pujols' is to purposely prevent yourself from getting the point. The Cardinals knew they were getting a massive bargain in Pujols, and took advantage of it to sign a lesser player for more money, without offering their best player at least a matching salary.

And this is where I get to my (hopefully) succinct point: The Cardinals were playing with at least $35 million in house money, when you compare what they would have had to spend to get 85 percent of his production from another player. You could argue that the figure is probably closer to $100 million, when taking into account how much better Pujols has been than his contemporaries, one of which is going to be paid $80 million more for his first 10 years. The Angels have no credit with which to work, so the $250 million they'll pay for Pujols is based entirely on what they hope he produces for the next 10 years. The Cards, on the other hand, could have offset the inevitable years of overpay in his late 30s and early 40s with the money they already banked from his services while he was drastically underpaid.

The Cardinals had every economic incentive imaginable to ensure they offered Pujols more than any other team. You can argue they made the correct decision to not take on the risk of that 10-year deal, but you cannot argue that Pujols was disloyal for taking the highest bid after 10 years of being underpaid by a very large amount. Loyalty in an employer-employee relationship is always based on money, which is how we measure the esteem with which the subordinate is held. In this case, the employee got a pretty good idea of how his employer felt about not only his future worth, but the worth of his past efforts, and made the entirely rational decision to head elsewhere, where he was wanted more.


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