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Valuing Pujols

2011 February 14
by Skip Sauer

Dave Cameron’s piece in today’s WSJ presents a simple calculation of Albert Pujols’ value.  Cameron’s analysis leads him to conclude that Pujols “deserves to be the highest-paid player in baseball history,” at a rate very close to what Pujols is reportedly asking from the Cardinals.  This makes sense to me, given his production and the healthy revenues coming into MLB.  But it doesn’t appear that the Cardinals see it that way

Cameron credits Pujols with producing an average of 8 WAR (wins above the hypothetical replacement player) per season.  With WARs pegged at $5 million each, his market value is an estimated $40 million per season.  Pujols’ salary of $15 million (below both Carpenter and Halliday on the Cards!) implies that he generated $25 million in economic rent for the Cardinals last year alone, and he can be expected to make a similar contribution this season.  The Cards have thus done extremely well by Pujols in recent years, and it would be a shame to see negotiations fail.  But as a Houston Astros fan, I kinda hope they do.  Taking away 8 wins from the Cards, with one of them switching to the Astros column, would improve a young Houston team’s chances in the coming years.

6 Responses
  1. Christ opher permalink
    February 14, 2011

    The problem with this approach is that we are valuing Pujols future contributions at the same rate as his past. There is no way that any team should be paying a 39 year old for he did as a 30 year, sorry. Overpaying for a single player entering his fading years is the same as a locality financing a new stadium on the premise that it will boost the fortunes of the city. 30 million a season will do more damage to the franchise than letting him go. Lets hope the St Louis brass can acknowledge the folly of signing Pujols to a bloated contract before it is to late.

  2. Skip Sauer permalink*
    February 14, 2011

    Nothing in my post said anything about Pujols’ productivity or pay at age 39. Cameron’s article does, and he adjusts for the expected decline in productivity due to aging.

  3. Dan permalink
    February 14, 2011

    The biggest issue for the Cardinals is the length of the contract, not the 30 million per season. They are willing to go out 7 years for a 32 year old player but not the ten years Pujols wants. And while Cameron takes the declining performance into account, who is to say it will be the nice standard curve he says? Carlos Lee had a couple of halfway decent seasons in Houston justifying part of his contract before dropping off the chart last season (I know because he was on one of my fantasy teams). Even at 7 years it is likely that Pujols will under perform at the end. With a ten year deal it is almost a certainty plus the team has to hope his elbow holds up.

    If the NL had the DH it might make sense that Pujols could contribute in ten years. But the Cardinals aren’t going to bet on the rules changing later in the decade. And what do you do for the rest of your roster when one player eats up 25% of the payroll? The Cardinals aren’t the Yankees and the fact that they are willing to pay him more than any player in history is a big risk. The sentiment in St. Louis seems to be running against giving him more than 7 years so it will be interesting to see what happens. But it’s really just a matter of whether he goes from really rich to really, really, really, really rich or just really, really rich.

  4. Skip Sauer permalink
    February 15, 2011

    Dan,

    I get your point, but it hinges on risk aversion. If Pujols’ expected value over ten years is in the neighborhood of $300 million, a risk neutral agent would be willing to bid that much. Also, some factors that would cause a decline in performance could be insured against. But ultimately it may be the Yankees that are the high bidder here, and Pujols may be simply waiting for them to come to the altar.

  5. Dan permalink
    February 15, 2011

    Skip, the Yankees are one of the last teams I expect to go after Pujols. They have Teixara manning first and Alex will probably be using the DH spot a lot more in 3 or 4 years.

    Pujols would seem a better fit in Anaheim or how about Kansas City? The Royals have some players that should help them in a few years and Pujols is from KC. Goodness knows they should be able to afford him with the young and cheap talent they’ll have. People forget that the Royals were a great franchise before and Pujols would jolt that city like nothing else. Nothing would make them happier than taking Albert away from St. Louis.

    Of course if he is not concerned about winning another WS he can always go to the Cubs.

  6. Greg Pinelli permalink
    February 18, 2011

    Let Pujols walk….yesterday! The real issue that I haven’t heard discussed is the relative future value of Pujols (much different by the way than IF he were 29) measured against a developmental system that would cost only a fraction of the same money over a 10 year period. A system that very likely could produce 5-10 excellent starting Cards that wouldn’t have been otherwise developed.

    By developmental system I mean worldwide scouting and a much greater emphasis on developing Farm System talent..I’m pretty sure Card fans will say they already do that..I’m positive the Cardinal front office would say so! I can guarantee you they don’t..IF they had the Cards would have already won more Championships…It took the Giants decades to figure this one out…ALL their young pitchers were internally developed…the most glaring “purchase” was Zito..another huge free agent mistake.

    Baseball has suffered from the Yankee..Red Sox “disease” for too long. Sign Pujols to a 10 year deal? They are 1 back problem away from wasted money. Lots of bad things happen to athletes right around 35….

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