The $300 Million Man?

Baseball games are great.  Really groundbreaking stuff going on here right? Even if you aren't a fan of the game or the teams playing, most people can enjoy: being outside in the nice weather, partaking in the sport of people watching, having a beer, and occasional crack of the bat.

A 2006 Gallup poll found that over 47% of Americans admitted to being fans of the game.  I would venture to guess that number had increased over the past few years as we get further away from the 1994-95 strike.  A conservative estimate has over 150 million people "liking" the game of baseball.

Most of those fans count a particular team as their favorite for one reason or another.  When I played little league, I lived in Seattle and played for the Mini-Mariners.  I was instantly a fan for life.  While my Mariners have their own problems, I decided to write this post concerning the St. Louis Cardinals and their future Hall of Fame 1st baseman, Albert Pujols.

Albert is widely considered the best player in baseball.  His contract runs up next year and he is reportedly asking for $300,000,000 over 10 years.  That would make him the highest paid baseball player (which he probably deserves to be) as well as provide him with a guaranteed contract until he is 41 years old.  You can catch all of the gory details at your favorite sports website as it seems everyone is talking about Albert today.

I wanted to explore a different angle.  What if baseball, and all American sports, were modeled after every worldwide soccer league (except for the MLS which has its own weird rules so it can compete with both entities)?  In soccer, a player and a team must both hold up their end of a contract.  We will use World Cup winner and recent transfer Fernando Torres to help explain my point.  Fernando played for a prestigious English team, Liverpool, and was unhappy.  While he still had a couple of years left on his contract, he requested a transfer to another team.  Ultimately Chelsea, another prestigious English team, agreed to terms with both Liverpool and Fernando and he was "traded" there.  Chelsea had to pay Liverpool almost $80 million in order for them to agree to release him from his contract.  Chelsea then had to come to an agreement with Fernando over what he would be paid.

Now lets apply that concept to Albert.  If Albert truly thinks he is worth $300 million over 10 years, and the Cardinals don't agree, then the only options American sports have to offer are: 1) Albert finishes this year, becomes a free agent and StL gets nothing in return or 2) StL trades him for a likely haul of players that wouldn't come close to equaling Albert's value.  Now if baseball were run like soccer, then Albert could turn in a transfer request and both Albert and the Cardinals would be allowed to ask for a fair compensation.  It is likely that the Cubs and Yankees would be interested in Albert's services.  The Cardinals could opt to charge the Cubs more than the Yankees because the Cubs are in the same division.  Albert could choose to give any team a salary discount because he has always wanted to play/live in their city.  If the Yankees agree to terms with both Albert and the Cardinals, the Cardinals could use the money from the Yankees to go find another new player.  The possibilities are endless and would result in a fair market value deal for both Albert and the Cardinals and their fans.  One that I don't think would end up as $300 million dollars for Albert Pujols.  To me, he is holding the Cardinals hostage and trying to get them to overpay him because he is astutely aware of the backlash that will result if the Cards choose not to resign him. 

Like nearly everything, people will be resistant to change and argue that this would give "big money" teams like the Red Sox and Yankees an unfair advantage.  For one they already have an unfair advantage, and by adopting this new system it would create a more fair market for all teams and owners to do what is really important to them.  Some owners may choose to pocket the money earned from players like Albert Pujols, and others may choose to re-invest.  I argue that owners of sports teams have the right to do what they want with their assets just like the owner of Microsoft or the local bakery does.  It is unfair to owners like the Cavs' Dan Gilbert to be subject to the whims of a 25 year old basketball player and lose over $100 million of value to his franchise overnight because LeBron wanted to "take his talents to South Beach". 

Fans will also benefit from this system change.  While many people will continue to do what I did and cheer for their local team, at least now you won't be subject to the luck of a ping-pong ball or have to go through a 4-12 NFL season in order to have hope for next year.  Smart general managers, like smart CEOs, will be rewarded and people who are just out to make a buck will be lambasted by their fans and ultimately lose value in their franchise instead of making money off of profit sharing systems like we have today.

So is Albert Pujols really worth $300 million over 10 years in a free market?  Since today's deadline has come and gone, we might find out next year.  I hope for the fans of the St. Louis Cardinals it doesn't come to that and they don't end up losing their favorite, and best, player for absolutely nothing.  However, that is the way the sports business landscape is set up in America.  Would you feel better as a Cardinals fan if you knew that the team was getting $80 million for selling the rights to Albert Pujols and that the team would likely reinvest that in new players? I would.