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How Much is Albert Pujols Worth?

Categories: Bidness, Cardinals

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How much would you say 500 of these are worth?
Lamar Pierce, an associate professor of strategy at Washington University's Olin Business School, wants to make it clear: He does not think Albert Pujols, who's likely to get a substantial raise in 2012 no matter which team he plays for, is overpaid.

"Pujols should be the highest-paid player in baseball, because he's the best," Pierce tells Daily RFT. "But in order to be paid the most, he should get paid more than Alex Rodriguez, who gets paid too much." Since A-Rod got paid $32 million last season -- he's midway through a ten-year, $275 million deal he signed in 2007 -- we would have to agree. Pujols, by contrast, earned a mere $16 million in 2011.

"It's hard to pay Albert Pujols what he's worth," Pierce continues. "It has to be fair compared to what Alex Rodriquez is paid. You have to think in relative terms rather than absolute."

Weirdly enough, Pierce says, most people would rather be paid a salary of $50,000 and know that it's higher than everybody else's than be paid $70,000 when everybody else is making $80,000. "You look at somebody else and think, am I better? How much is that person getting paid?"

Pierce just published a paper about this very subject called "The Psychological Costs of Pay-for-Performance: Implications for the Strategic Compensation of Employees," forthcoming in the Strategic Management Journal. CEOs' salaries escalate much the same way baseball players' salaries do: The highest-paid CEO's salary becomes the benchmark for everyone else's. If another CEO is perceived as better, his or her salary needs to be higher.

"It just takes one person to get overpaid and then everyone sees them as a benchmark," Pierce says. "And then it escalates."

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Lamar Pierce
​Pierce acknowledges that it is difficult to determine the value of a baseball player, even a perpetual All Star. "That's what that Moneyball stuff is," he says, "calculating how much a player is worth to a team. That doesn't just mean statistics, though. It also means the long-term effects of a star on attendance and the sale of merchandise. And that, Pierce says, is why Moneyball hasn't caught on among more teams.

"If all you care about is winning," he says, "there are more efficient ways of money than on big stars." But most teams pay for them anyway. And the ones who don't, notably the Oakland A's, whose executives pioneered Moneyball, don't win World Series.

Pierce won't say how much he would pay for Pujols, were he the Cardinals' owner. "I don't want to say Albert Pujols is overpaid," he says. "For most players, like Alex Rodriguez and Derek Jeter, I would say yes. But Pujols is the best hitter in baseball. That's worth a lot of money. I don't know what that number should be, but it should be worth it."


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10 comments
MandoMadMan
MandoMadMan

The Cardinals should make him an offer that no other team will -- the chance to be a part owner of the team as part of the compensation package. Not even Derek Jeter or Alex Rodriguez have that. 

Nothing says we really do love you like a chance to be part owner of one of the greatest sports teams in America. 

Brad Hicks
Brad Hicks

Here's the part that nobody has been able to explain to me: why does he care what anybody else gets paid? His one-year earnings, never mind his career earnings, are more than he can spend in a lifetime. What would an extra couple of million dollars per year do for him that his existing money isn't already doing?

Beyond that, it's all about competing with other people. Well, here's where I'm obviously crazy: I thought that athletes were competitive with each other on the field. I thought they were competing to show who was the better athlete, to see who wins the most games, to see who wins the most championships. If A-rod makes more money but Pujols is the better athlete, why is "I'm the better athlete" not enough for him? Is he really in it to compete over earnings, or is he in it to compete over baseball?

I say this not to pick on either of them; I just get this way whenever I hear about athletes' salary negotiations that are up there in the realm of CEO pay or NASA budgets.

KITTY
KITTY

Albert is worth a ton of money but if he gets too greedy let him go to another team. His total career earnings with the Cardinals is $104,040,436.00. If he can't accept an offer from the Cards of $210 million for a nine year contract, his greed gets in the way of common sense. How much is enough? And if he goes to another team, we still have the next big super star DAVID FREESE!

k_pr
k_pr

I'd gladly take $70k and know others were paid more. Please send it my way.

KittyLitterKing
KittyLitterKing

"And that, Pierce says, is why Moneyball hasn't caught on among more teams."  

Almost every team now has its own statistics department (even the Cubs!) to do their own monetary analysis.  Pierce is using outdated information if he really believes teams are not attempting to reassess player values.  

Aimee
Aimee

The point, I think, is that teams are still paying for that intangible called star quality, which is what the Moneyballers were trying to avoid.

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