Albert Pujols: Los Angeles Angels' Quarter-Billion Dollar Bargain

It’s not very often in sports that teams throw out a quarter of a billion dollars on a single player.

In fact, it has only happened two other times – once when the Texas Rangers signed Alex Rodriguez to a ten-year deal prior to the 2001 season, and again when the Yankees gave Rodriguez a new decade-long deal following the 2007 season.

One could argue that had the original deal given to A-Rod by the Rangers run its course and not been extended by the Yankees, it would not have been a bad contract.

From 2001 through 2010, A-Rod hit 418 home runs, drove in 100 or more runs each year, scored runs in eight of those seasons, played in 154 games or more in seven of them and hit .286 or higher in all but the 2010 season, including hitting .300 five times.

Does this mean Albert Pujols will put up similar numbers into his decade deal? Not likely.

For one thing, Rodriguez was only 25 at the start of his deal. Pujols will be 32. Most sluggers peak between the ages of 25-32 years old and begin to decline after age 34, so it’s safe to say that Rodriguez’ original contract locked him up for all of his peak years while Pujols’ contract will only give the Angels a few of the twilight years of his peak.

I’ll leave it to the stat nerds to break down the projected performance of Pujols in ten years. Regardless of what he does in the latter years of the deal, however, the deal is a great one for the Angels. In fact, I would even go so far as to say it is a bargain.

Before you scroll down to the comment section and call me insane, allow me to explain my analysis of the deal.

Over the course of his career, Pujols has been a lock to hit .300 every season and smash out 35-40 bombs each year while knocking in 100 or more runs. After seeing how he rebounded from an early season slump in 2011, there is no reason to think he won’t do the same in Anaheim for at least the next three seasons.

For the Angels, they are getting the elite run producer they have sorely lacked, which will translate into more wins and better odds at post-season success. More wins and playoff success will lead to more revenue. More people will buy tickets to Angels games this year to see Albert Pujols man first base and bat third or fourth in the Angels' lineup.

If the Angels win more games and have deep playoff runs, even more people will buy tickets. And they’ll buy t-shirts and jerseys. More local businesses will buy pricey club seats and suites and pay to slap their logo on the outfield wall.

Prior to the 2011 season, Forbes valued the Angels at $554 million, a 6% increase over their 2010 appraisal. Over the last few seasons, the Angels have seen their franchise value increase by about two to three percent each year.

Say the Pujols signing and the additional revenue it will generate allows the team to continue to grow their franchise value at a five to six percent pace each season. That means each year the value of the Angels will increase by $27 to 30 million.

That number could see an even bigger bump after the 2015 season when the Angels' broadcast deal with Fox expires.

The Angels' current broadcast deal pays them $50 million a season. A perfect blend of the large Southern California media market, continued on-field success and a heavily-bankable superstar like Pujols could see the Angels double that number on their next deal. This would not only help their bottom line each season, but ensure increased gains in franchise value.

It is quite likely that the franchise value of the Angels could double throughout the life of the Pujols contract, which in and of itself would justify the size of the contract because many of those gains would be due to Pujols’ presence with the franchise.  

If you factor in the additional revenues that would come with increased ticket sales, merchandising, sponsorships and, most notably, broadcast rights, it's safe to say the Pujols deal was a no-brainer for owner Arte Moreno and the Angels.

In fairness to the Cardinals, the reason they could not offer Pujols a deal in the $250 to $275 million range that the Angels and Marlins offered was simply because it would not have paid those kind of dividends for them.

When teams spend $250 million (or even $100 million) on a player, it is not simply about on-field performance. It is a business transaction. Teams evaluate what the player will bring to the table off the field as much as on it, if not more. Teams are businesses and free agent deals are business contracts first and foremost.

The Cardinals are a very smart business organization. When they evaluated spending the kind of money on Pujols that the Angels did, they realized they would not see the return of a $250 million deal that could justify it, even less a doubling of their franchise value in the next ten years.

Even with Pujols, St. Louis could never see the kind of broadcast revenues the Angels do. Nielsen ranks Los Angeles as the second biggest media market in the country behind only New York. St. Louis is ranked 21^st behind markets such as Sacramento, Orlando, and Cleveland.

The Cardinals would also not see much of a boost in other revenues, as they had already established their brand with Pujols. Most Cardinals fans already own a Pujols shirt or jersey, and are unlikely to go out and buy another one simply because he re-upped with them.

At the end of the day, from a business point of view, the potential return on signing Pujols was astronomical for the Angels and prohibitively limited for the Cards.

That is why the Angels were able to offer Pujols so much more money. That is why he signed with the Angels, And that is why, ten years from now, regardless of when during the deal Pujols stops putting up Pujols-like numbers, the contract will still have been a bargain for the Angels.