"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Thursday, January 5, 2012

Pujols' Deal with Angels.... Hmmmmmmmm.....

There must have been more to the Pujols-Cardinals divorce than just money... he must have really wanted out of St. Louis, no matter what sugar-coating he put on it.    Here's what the Angels' deal ended up being, according to ESPN:

A breakdown of Albert Pujols' 10-year guaranteed contract with the Angels, with additional provisions:

2012: $12 million

2013: $16 million
2014: $23 million

2015: $24 million
2016: $25 million

2017: $26 million
2018: $27 million

2019: $28 million
2020: $29 million

2021: $30 million

Personal services agreement
Sides agree that after the expiration of the contract or Pujols' retirement as a player, they will enter into a 10-year personal services relationship and Pujols will be paid $1 million annually.

Milestone accomplishments
The sides agree they will enter into a separate marketing agreement in which Pujols will be paid for the promotion and marketing of specified milestone accomplishments. Among them are a $3 million payment for 3,000 hits and a $7 million payment for 763 home runs.

Award Bonuses
Most Valuable Player: $500,000
MVP second or third place: $75,000
Gold Glove: $75,000
Silver Slugger: $75,000
All-Star election or selection: $50,000
World Series MVP: $100,000
ALCS MVP: $75,000

This just isn't as good as it was made out to be.   Pujols is guaranteed only $230 million in salary over ten years, but only $100 million of it is guaranteed in the first five years!   That means that the Cardinals' offer of $130 million over five years was actually significantly better than the Angels' deal, at least over those first five years.   To be sure, Pujols gets silly guaranteed money for his 37-41 year-old seasons ($130 million), but those are inflated somewhat due to the time value of money.   (For instance, the $26 million per year in 2012 the Cardinals were offering, at a rate of return of 8%, is the equivalent of $56 million in 2021; even at an inflation rate of 3%, it's still worth $35 million.)   The personal services agreement is meaningless... Pujols as a St. Louis icon would be worth much more than $1 million a year had he stayed.    And the incentive clauses are both typical (everyone gets an incentive for being an MVP) or unlikely (I don't think AP gets to Bonds' HR record).... realistically, I see him getting about $4 million in incentives ($3 million for 3000 hits plus some All-Star and Gold Glove money, plus maybe 1 MVP at most.)  

Finally, the highest marginal California state income tax rate is 9.3%, while the highest marginal Missouri state income tax rate is 6%.   Think that's not significant?   3.3% on Pujols' deal is getting up near $8-9 million over the life of his contract.   Couple that with a higher cost of living in SoCal, and the money is close to being a wash.

So, at the end of the day, I don't think Pujols much liked the St. Louis management team of DeWitt and Mozeliak, and he wanted to try something new.   Nothing wrong with that.   We'll see if we hear very many stories next year about how much the Cards miss Pujols' influence in the clubhouse.   It might not be very much.   (Sort of like how many Packers talk about how they miss Brett Favre... none.)

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