Rationalizing the Next Pujols Contract

If you haven’t heard anything about what Albert Pujols’ value will be over the next 7-10 years, I suggest you go here…Or here…Or here…Or take a look at the discussion here. Haven’t had enough? Read on.

Somebody is going to sign Pujols to a massive contract in the next 12 months. That contract will likely be hard to justify in projected on field value alone. If you are a fan of the team that gets him, after you get done saying PUJOLSAWESOMEBASEBALLYAY, you may want to know what his expected value will be and then take some time rationalizing the contract to yourself and justifying it to rival fans.

Through his age 30 season, Pujols has accumulated 80.6 WAR. Only 17 position players have accumulated even 70 WAR through their age 30 season. I eliminated Babe Ruth because his first few seasons were as a pitcher and his average WAR was astronomical as a position player to the point it would not be fair to include him as a comp. Ty Cobb’s 106.1 also puts him out of Pujols’ range. That left the following list of players who averaged 81.03 WAR through their Age 30 seasons.:

Ken Griffey Jr Jr. 78.6
Eddie Matthews 82.3
Alex Rodriguez 79.4
Jimmie Foxx 91.5
Rickey Henderson 71.8
Mel Ott 85.9
Mickey Mantle 74.6
Lou Gehrig 78.7
Eddie Collins 81.6
Rogers Hornsby 94.6
Stan Musial 78.8
Ted Williams 72
Tris Speaker 82.2
Hank Aaron 83.2
Willie Mays 80.3

Here are the averages for their next 11 seasons (Only the first five years include A-Rod’s stats; the last 6 seasons are averaged over 14 players):

Age 31-7.51 WAR
Age 32-6.87
Age 33-7.23
Age 34-4.64
Age 35-4.79
Age 36-3.58
Age 37-3.01
Age 38-2.1
Age 39-2.4
Age 40-1.5
Age 41-.59

Cardinals fans should be happy with Pujols’ production in the last year of his current contract, where he projects for $37.55 million in value on a $16 million salary. However, production tails off severely in what would be years 7-10 of the contract. The total average value of the players Age 32-41 seasons comes to 36.71 WAR, and at $6 million per WAR, we are looking at $220.26 million over 10 years. If Pujols is getting $300 million, the team is likely to get less than value. However, the contract can be rationalized. Here’s how:

Option 1: Assume Pujols can stay reasonably healthy*

Matthews, Fox, Mantle and Gehrig did not even play during years 6-10. By removing all the years where a player did not play at least 100 games significantly helps Pujols’ numbers. During the Age 32-36 years, 15 of the 75 seasons did not reach 100 games. In the other 60 seasons, the players averaged 6.46 WAR per season. Over the first five years of a Pujols contract, using $5.5 million per win, we have $177.65 million in value. During the second five years, only 32 of 75 seasons reached 100 games, averaging 3.61 WAR. Using $6.5 million per win over the last five years of the contract we come to $117.33 million in value. Adding the two numbers, we come to 294.98 million, within range of the targeted 300 million. If he stays healthy the first five years at 6.46 WAR per season, he would need 18.8 WAR over the last five years to justify $300 million, something only Williams, Aaron and Mays did.

Note: Pujols would not need to remain completely healthy to achieve these numbers, but would need to average a 139 games every year, not an easy task to do through age 41.

*Option 1 could also be assisted for the Cardinals or an NL team that signs Pujols by Bud Selig’s retirement, people getting tired of seeing pitchers hit poorly or injured while hitting, and the NL then getting the DH. Or, signing with an AL team. Of his comps, only Griffey, Jr, and eventually A-Rod, had the DH as a possibility, and Griffey did not have it until midway through his Age 38 year.

Option 2: Assume massive inflation in baseball salaries over the next ten years

If free agent salaries skyrocket and reach $8 million per WAR over the next ten years, as opposed to the six I used, the projection above makes Pujols worth $300 million over ten years. If salaries reach 8 million per WAR, there may be a whole host of other problems that I would rather not consider.

Option 3: Take your chances he continues the course of becoming the greatest right-handed hitter of all time.

Of the players listed above, six of the 14(jury is still out on A-Rod) hit it big (Collins, Musial, Williams, Speaker, Aaron, Mays), averaging 56.22 WAR, and providing 337.32 million in value in 2012-2021 equivalents. Pujols has been fantastic. He may very well establish himself as an All-time great alongside the above-mentioned well-aged stars.

Option 4: Lower your expectations when it comes to on-field value

This one is the most subjective. If you knew you were going to keep the best player in baseball and one of the All-time greats for the rest of his career, might you take less than full value? If one of the other options was your hated rival, might you pay a little bit more for less on the field? Those are generally fan questions, but don’t think they wouldn’t cross an owner’s mind as well. Would you cement your legacy as the one who kept Pujols or the one who let him leave? Are the attendance and jersey sales greater than if you simply put out a winning product? What happens if he approaches 700 or even 800 homers? Is there a value on ensuring he does not do that with another team? The question is how much of a loss on the field are you willing to take. If Pujols’ value is 220 million over ten years, you would have to discount about a quarter of the expected performance.

If you discount his on-field performance, what should a team offer?

If his value is 220 million over ten years, and you are willing to take a 10 percent discount on performance, you’ve got a ten year deal for 244 million. This is a non-starter as the average annual value is less than what Ryan Howard just received.

What if we bumped it down to a nine year deal. Pujols’ comparables averaged 36.12 WAR over their Age 32-40 seasons. At 5.9 million per WAR, this amounts to 213.11 million. Taking a ten percent discount in on field value, you have 236.8, an AAV of 26.31. This one is fair, and an option to be presented, but it doesn’t exceed the AAV for A-Rod’s deal.

How about an eight year deal? Pujols’ comps averaged 34.62 WAR over eight years. At 5.8 million per WAR, it amounts to 200.8 million, and 223.1 million with a ten percent on-field discount. The AAV is 27.8, trumping A-Rod and another option to be considered.

Under a seven year deal, with the comps averaging 32.2 WAR, at 5.7 million per WAR and a ten percent on-field discount, we arrive at 203.9 over 7 years, and an AAV of 29.1 million.

Should a team provide an on-field discount regarding expectations? Some criticize the statistical community for failing to consider intangibles when it comes to valuing players. The reasonable response is that whatever the intangibles are, they are borne out in the statistics. If the intangibles relate to fan reputation, merchandise, Jeterness, or, in Pujols’ case, the valuation of the franchise itself, should there be a different standard? Are any of my proposals reasonable for Pujols and ownership?



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Craig Edwards can be found on twitter @craigjedwards. His writing also appears regularly at VivaElBirdos.com where he is the Managing Editor.


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Half Full
Member
Half Full

Nicely written. I feel that after reading this I don’t need to read the other articles you plugged but I will anyway.

(The third “here” link returns a FG page not found. I’m guessing it’s Dave Cameron’s article here —> http://www.fangraphs.com/blogs/index.php/the-pujols-contract/ )

Dave
Guest
Dave

I think option 1 is significantly possible. Of the 15 players listed, 12 played more defensively challenging positions, that could lead to more missed games. And of the 4 who didn’t play at all in years 6-10, 1 stopped playing due to an extremely rare illness, something we can’t possible project for Mr. Pujols.

Jono411
Member
Jono411

So using your WAR numbers by year, and going with $5 million per win for this season then increasing by 5% per year, we end up with a “fair” value of $220 over the 10 years (remarkable it ended up being exactly the same as what you got assuming $6 million per win). However, that’s assuming it’s a front-loaded deal (ie he gets paid each year what he’s projected to be worth that year). if we were to spread it out to give the same annual salary, i would guess that that numbers raises to somewhere in the 230-240 range. add in the fact that arod’s numbers haven’t been added to the second half war numbers, and i would guess that 10 years @25 million per year makes sense.

also, by raising the 5% inflation number to 8%, it adds about $30 million to his value over the 10 years. so really, it seems like anything between 220 and 300 is reasonable, depending on how it’s structured (front vs. back-loaded) and what your expectations of inflation are.

evo34
Member
evo34

Option 5: Realize that the money you will owe toward the end of the contract can be offloaded to a team with excess cash (Yanks, Red Sox, Mets, etc.). Any long-term contract offer from a team is done with the expectation that it will not be on the hook for all x years, bc certain teams are able and willing to overpay (take on a bad contract). I.e., the spending habits of the high-revenue teams are effectively driving the contract terms offered to free agents by mid-level spending teams.

robclark52
Guest
robclark52

It is a useful exercise to value contracts on the basis of $/WAR, but it is not the bottom line for a baseball team as a business. I think any team should pay a larger $/WAR for a player that has spent the first 10yrs with that club. And even more if that player is one of the 2 greatest players in the history of the franchise. If you look at other assets in the world of equal scarcity – say the best property in Manhatten or London, or the most sought after artwork, then common valuation metrics fail to explain the prices in the market. The same should be true for Pujols.

Put another way, Cardinals fans will be happier (and spend more money on the franchise) with Pujols even if that means they average 2 less wins/yr for the next decade. 2 wins/yr is trivial in fan happiness compared to losing Pujols.

And for context, Pujols at $30mm/yr would cost St. Louis $2.5mm/mo. By comparison, the people of St. Louis have spent $74mm/mo funding their share of the Iraq War every month for the past 8yrs. He may look expensive on a per-WAR basis, but he looks like a great investment as an entertainer and public project!

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