Albert Pujols and the salary compensation system
The career of Albert Pujols perfectly encapsulates all the problems inherent in the system by which players are and should be compensated.
And since that debate is likely to dominate the ongoing discussions over a new Basic Agreement, the lessons from the financial and production sides of Pujols’ career need to be learned.
Albert Pujols shows what is wrong with MLB’s compensation system
For decades, really since the start of the free agent era, baseball’s compensation system has been premised on two prongs. These are the two:
1. For the first half dozen seasons of a career, the game screws the player. For a good player, those tend statistically to be his most productive seasons, yet he is paid prescribed and – by baseball standards – subsistence rates that rarely approach his value to the team.
2. After his sixth season, assuming he remains in the game, the player screws the game. By that I mean his salary – for the marquee names negotiated on the open market and subject to all the leverage that brings – is rarely commensurate with the diminishing value be delivers.
Related Story. Where Pujols ranks amongst the greats. light
Something is wrong with that picture, and in a perfect game, it would be fixed. Pujols is the archetype of the problem.
Over the course of his career, Pujols has earned $344.04 million. In return, he has produced 99.5 units of value as measured by career WAR. We can say, then, that Pujols was compensated to the tune of $3.46 million for every WAR he produced. The system said that was his fair value.
The problem is that the way the present compensation system works, Pujols rarely did anything even close to generating that value on a season-for-season basis. Either the system screwed him or he screwed the system.
The table below redistributes Pujols’ compensation based on his seasonal performance and on the calculation that each WAR he produced was worth $3.46 million. In a perfect compensation world, this is how much he would have been paid based on what he did. Note that in no season does his dollar value come anywhere close to $3.46 million, his actual career average.
Year Salary WAR Earned salary
2001 $ .20 6.6 $22.82
2002 $ .60 5.5 $19.20
2003 $ .90 8.7 $30.08
2004 $ 7.00 8.5 $29.39
2005 $11.00 8.4 $29.04
2006 $14.00 8.5 $29.39
2007 $12.94 8.7 $30.08
2008 $13.87 9.2 $31.81
2009 $14.43 9.7 $33.54
2010 $14.60 7.5 $25.93
2011 $14.50 5.3 $18.33
2012 $12.00 4.8 $16.60
2013 $16.00 1.6 $ 5.53
2014 $23.00 3.9 $13.48
2015 $24.00 3.0 $ 10.37
2016 $25.00 1.5 $ 5.19
2017 $26.00 -1.8 ($ 6.22)
2018 $27.00 0.3 $ 1.04
2019 $28.00 0.2 $ 0.69
2020 $29.00 -0.1 ($ 0.35)
2021 $30.00 -0.5 ($ 1.73)
Albert Pujols played for 21 seasons. Yet in none of those seasons did his compensation come within $3 million of reflecting his value to his team in terms of production.
In all of his first 10 seasons with St. Louis, in only a few of which does a player have any real contract leverage, he way over-performed his contract. Conversely, in nine of his final 10 seasons – reflecting the years when players have great contract leverage – he way under-performed the deal he and the Angels negotiated.
This is not unusual, and is dramatic only due to the extreme variations in Pujols’ career performance level. It is typical for the compensation system to take advantage of good players early in their careers, and for those players who survive to subsequently take advantage of the same system later in their careers.
If a player enjoys a lengthy career, in the long haul the value evens out to the player, although not necessary to the team. The Angels certainly did not derive commensurate on-field value for the deal they signed, while the Cardinals worked the system for all it was worth and then – at the appropriate moment – walked away.
Of course, not every player enjoys a lengthy career; many are jettisoned after three or four seasons as the cost of carrying them pushes the likely limit of their productivity.
The Major League Baseball Players Association is onto this, demanding changes to the compensation system for younger players. This is precisely the group most disadvantaged by the present system, and the union’s complaint is valid…as far as it goes.
The problem with the union’s position is that it addresses only half the inequity. The union is disinterested in the market inequities created during the latter half of careers, when leverage swings heavily toward the players. Again, Pujols’ career productivity is the perfect illustration.
In his first six seasons, when a player’s market leverage is least, Pujols’ average WAR was 7.7. That is truly elite level. But from his 10th season onward, the seasons when the existing system maximizes a player’s market leverage, Pujols’ productivity cratered, even as his earnings more than doubled.
Three things can be said in response, each of them to a degree true. The first is that in the case of Pujols, the Angels got more in return for their payout than on-field value. They also got a drawing card. That’s true, although that only helps at the ticket window, not on the field.
The second is that the contract was freely negotiated, and so if there were inequities they are the fault of the Angels.
The third is that Pujols’ value ought really to be reflected by comparison with his peers: that is, season-by-season with first basemen and then DHs rather than entirely over the course of his career. If that were done, the numbers would change, but the essential point would not be affected.
But even granting the elements of truth in those arguments does not alter the fact that the existing compensation system discriminates mutually, first against the player and then against the team.
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The career of Albert Pujols is the consummate illustration of that mutually discriminatory system. The whole thing needs to be fixed. Not just part of it; all of it.