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Albert Pujols’ 10-year, $254 million deal is extremely backloaded

Dec 29, 2011, 7:32 PM EDT

pujols getty press conference Getty Images

Just like the Marlins did in acquiring free agent shortstop Jose Reyes, the Angels are dabbling in some dangerous backloading in their 10-year, $254 agreement with first baseman Albert Pujols.

According to ESPN’s Jerry Crasnick, Pujols will get just $12 million in 2012 and $16 million in 2013.

Because of those low early salaries, the deal jumps to over $30 million annually near its conclusion.

The Angels recently signed off on a huge television contract that will guarantee them between $100-$150 million per season over the next 20 years, and they have a dedicated fanbase in Southern California that generates yearly attendance totals over 3 million. But we’re thinking there will come a day when the Angels’ higher-ups greatly regret the structure of the Pujols deal. He’ll be 41 years old when the 10-year pact expires, and he’s already showing subtle signs of decline. Remember, Pujols also got a full no-trade clause.

  1. Gordon - Dec 29, 2011 at 7:51 PM

    Not a Cards fan, but I have to give them credit. They made the right call. This contract is awful.

    • 78mu - Dec 29, 2011 at 8:49 PM

      I am a Cards fan and I too am happy to see the team not match the Angels offer.

      I remember the Tino Martinez contract and that was only for 3 years. Or the Danny Jackson contract when he went 2-12 with an ERA+ of 71. I keep looking at the Cubs and the Soriano contract.

      I’ll miss him and wish he had stayed in St. Louis but when the Angels him those dollars and those years I don’t blame him for going to Anaheim.

      • baccards - Dec 29, 2011 at 9:11 PM

        Also a card fan (of several decads) and also am glad StL passed on the numbers…As great as it was seeing Albert in his prime watching his decline over the next 10 years at those numbers would bring back painful memories… Better to spend for the future…there are good players coming up through the system…Now I can look forward to watching the next generation

    • sfbookreviews - Dec 29, 2011 at 10:20 PM

      The contract would be awful for the Cards, but it isn’t awful for the Angels. With that tv contract, their payroll is pretty much covered before they sell a single ticket. Before they sell a single hot dog. Before they let one car into the parking lot. Before one corporate sponsor cuts a check. The Cards, without that tv deal would be hamstrung for years. The Angels are so far in the black that they go out and sign the number one free agent pitcher afterward. The Angels will be fine financially, even if Albert fails miserably.

    • benedick47 - Dec 29, 2011 at 11:12 PM

      This contract shows what a sucker Pujols is and what a load his agent handed him. If the Angels have problems in 4 or 5 years, they can also file for bankruptcy and cut him loose to be a 36 year old free agent. What will he be worth then?

      • mrfloydpink - Dec 30, 2011 at 10:39 AM

        1. You can be confident that the Angels, with their $150MM/year TV contract, and their 3MM a year in attendance, will not be filing bankruptcy anytime soon.

        2. And even if they do, that will not void Pujols’ contract. If, for some reason, they could not pay the contract then MLB would step in.

        It’s a shame that no MLB teams have gone through a bankruptcy anytime recently, so that you would know how these things work.

      • dcfan4life - Dec 30, 2011 at 3:22 PM

        Thats funny cuz the LA Dodgers had to be taken over by MLB just last year, showing him EXACTLY how it would work if the team suddenly couldn’t afford to pay their players payroll. MLB handled that, and everyone was paid. And what caused the Dodgers not to be able to function despite being worth a $ Billion? The voided TV contract. Something the Angels have as a done deal…

    • pjmarn6 - Dec 30, 2011 at 7:05 AM

      You see pujols sticking out his tongue in the picture? For the joke that baseball has become, I rather go fishing, watch the lawn grow, or float in my pool.

      • Kevin S. - Dec 30, 2011 at 11:36 AM

        You go do that. I think everybody will be happier.

  2. mrfloydpink - Dec 29, 2011 at 7:57 PM

    This is a curious post–the general notion seems to be that a backloaded contract is somehow “worse.”

    If you want to take exception to the total value of the contract, then that is a defensible position. But the revelation that the deal is highly backloaded is nothing but good new for the Angels. If they could get away with it, they would love nothing more than to pay him $1 million for the first nine years and then $245 million in year 10.

    To start, the value of $1 (or $1 million) will be considerably less in 10 years. Roughly speaking, $30 million in 2022 is something like $23 million today. That means the AAV of the contract in constant dollars is something like $20 million. Eminentlly reasonable in a world where Derek Jeter earns $17 million, Mark Teixeira earns $25 million, and A-Rod earns $30 million.

    Further, 10 years is a long time. If the Angels still have Pujols in 10 years, then that is fine. But he could insist on a trade. He could decide to retire. He could do something to void the contract (unlikely, but possible). Better to pay less in the years that you’re sure he’ll be on the payroll, and more in the years where you’re not sure.

    • Drew Silva - Dec 29, 2011 at 8:30 PM

      I get what you’re saying, but it’s a year-to-year flexibility issue. The Angels will be paying Pujols over $30M per season (a large chunk of their budget) when he’s in his 40s. That doesn’t leave much for the rest of the roster.

      And the suggestion that he would retire and leave money on the table is sort of silly.

      • Ari Collins - Dec 29, 2011 at 9:10 PM

        But paying Pujols $30MM in 2020 will be like paying him $23MM now. It won’t take a $30MM chunk out of the payroll, because payrolls will be much higher in 8 years.

        Mr. Pink (why do I have to be Mr. Pink?) is absolutely right. This is great news for the Angels.

      • okwhitefalcon - Dec 29, 2011 at 9:14 PM

        With the scope of the Angels TV deal and Moreno having $0 Angels related debt, $30 million in AP’s 40′s may very well not be the roster related budget constraint in the future as it appears to be now.

        The Angels are in the same financial league as the Yankees and Red Sox now and aren’t going away anytime soon.

      • cktai - Dec 30, 2011 at 5:58 AM

        As long as they don’t have to pay luxury tax, they can stock some cash now to pay his future contract. If anything that will increase their future flexibility.

      • mrfloydpink - Dec 30, 2011 at 10:14 AM

        The Angels’ payroll is in the neighborhood of $160MM right now. $30MM is not really “a large chunk of their budget” even at this moment (when Pujols is, of course, earning much less than $30MM). Assuming even a modest increase each year, their payroll will be around $220MM in 10 years, maybe far more (that’s a 37% increase over 10 years; from 2000-2010 they increased 318%). Pujols’ $30MM will represent, then, something like 15% of their budget (maybe less). Not really a “large chunk” and not enough to hamstring them. It most certainly does leave money for the rest of the roster.

        And I was simply listing possibilities. You can characterize the possibility of his retiring as “silly,” but the chances are not zero percent. By all accounts, Pujols is a very proud player. He is also a very rich player. If his skills somehow decline to the point where he’s unhappy playing and/or feels embarrassed, are you absolutely certain he wouldn’t consider walking away? It’s unlikely, given the money involved, but certainly not impossible.

    • pkers - Dec 29, 2011 at 8:44 PM

      Not arguing against your point, but aren’t you having your cake and eating it too by bumping down the value of Pujols contract because of inflation, and then comparing it to Jeter, Tex, and ARod without also bumping down the value of their contracts?
      Also, I think that, several years on, ARod’s 30 million still seems like a lot of money and no one has approached its value…even though the 30 million from several years ago is worth less now, it’s still 30 million now, and I’m confusing myself. Somewhere, there’s a point in there.

      • mrfloydpink - Dec 30, 2011 at 10:32 AM

        Fair question, but I would say I am not having my cake and eating it, too.

        Pujols is earning $12MM this year in 2012 dollars. I think nobody will argue that $12MM for a year of Albert Pujols right now is a far better value than what the Yankees are paying for A-Rod, Jeter, Tex.

        What I am saying is that, at the end of his contract, Pujols will be earning something like $23MM in 2012 dollars.This year, the Yankees are going to pay $17MM-$30MM in 2012 dollars for A-Rod, Jeter, and Tex. In other words, the current price for a hitter who is starting his decline (Tex), is well into the decline phase (A-Rod), or is getting close to the end of the line (Jeter) is something like $22MM a year. So for the Angels to pay $23MM for Pujols’ decline years is not too bad given the market, and that doesn’t even include the fact that they are going to get his remaining prime years at well below market value.

    • paperlions - Dec 29, 2011 at 9:10 PM

      In addition, there is the luxury tax issue to consider, if they are ever bumping up against that while Pujols is giving them very little value, it won’t look good when adding payroll costs you even more because you aren’t getting anything from your $30M/year 38-41 yr old DH.

      • Kevin S. - Dec 29, 2011 at 9:58 PM

        For what it’s worth, their luxury tax considerations would not have changed regardless of how they structured the deal, since MLB uses AAV over the life of the contract for determining luxury tax standing.

    • djpostl - Dec 29, 2011 at 9:23 PM

      @okwhitefalcon lol, even with this deal they are nowhere near the same financial clout as the Yankees & Red Sox. Those clubs already do better off of their networks and will only do better going forward.

      • randygnyc - Dec 29, 2011 at 10:42 PM

        The angels upper expectations are 150 million from tv. My understanding is the Yankees gross income from YES is $425-450 million per year. This is 2x what nesn yields for the red sox.

    • redbirdfan81 - Dec 30, 2011 at 8:44 AM

      What time value of money (interest rate) are you basing the $30M then = $23M now figure? At today’s low interest rates, you may be over-calculating. I’m a huge Cardinal fan since I knew what baseball was and I’m tickled the management team didn’t bow to his agent’s idiotic demands. A contract like that would have crippled the Cards’ flexibility. Card fans cheer for the name on the front, not the name on the back. I’m looking forward to 12 in ’12! Go CARDS!

      • mrfloydpink - Dec 30, 2011 at 10:22 AM

        $30MM in the year 2010 had the buying power of $22.5MM in 2000. I presumed the same rate of inflation from 2011-2021.

        Conditions may be unusual, at least right now, but that’s a short- to medium-term thing. It would be a rare 10 year period in U.S. history that did not see inflation of this sort, if not more. Even during the Great Depression, the figure would be $30MM = $25MM now. If we see a decade of very high inflation (like, say, the 1970s), then the figures would be even more favorable to the Angels, to the tune of $30MM = $15MM.

  3. dadawg77 - Dec 29, 2011 at 7:57 PM

    Question, do agents get paid by the NPV of a contract or just the total dollar amount? Given some of the stories about Albert agents, wonder if he would lead to a deal that would be worth less but a greater dollar amount so the agent would get paid more.

    • 78mu - Dec 29, 2011 at 8:52 PM

      Agents usually get their percentage each year from what the player receives.

  4. southcapitolstreet - Dec 29, 2011 at 8:08 PM

    Maybe Jerry Dipoto’s counting on some Weimer Republic-style inflation, in which case, he’ll only owe Pujols thirty million useless scraps of paper in 2020.

  5. Ben - Dec 29, 2011 at 8:10 PM

    Given general economic inflation, the rising value of a win, and the time value of money I don’t understand how you could make an argument that backloading a contract is bad for the team. Pujols is the one getting screwed here.

    • paperlions - Dec 29, 2011 at 9:14 PM

      The cost of wins on the FA market is actually declining because teams are getting smarter about spending their money….most teams will spend big bucks on stars and solid starters, but are not throwing money away on more fungible resources (average to slightly above average position players and relievers). In addition, more teams are locking up young players to team friendly contracts that take those players to the back end of their prime, keeping most young stars away from FA until they are older.

      • Kevin S. - Dec 29, 2011 at 10:00 PM

        Wouldn’t that increase the cost of wins on the free market, since there’s a greater supply of dollars and a lesser supply of players available?

      • paperlions - Dec 29, 2011 at 10:10 PM

        No, because the surplus of players is driving the price down for most FAs….a few guys get bigger dollars, but most get less….teams are (or were) spending more of their money on drafts and international amateurs, and on keeping their own players before they reach FA….so teams are spending a smaller proportion of their money on FAs….all teams aren’t doing this yet, but more are every year.

    • randygnyc - Dec 29, 2011 at 10:52 PM

      Especially if the angels win a world series or 2 during the life of the contract. That would increase their ticket sales anywhere between 20-25%. Merchandise could double the years proceeding a win, etc.

  6. okwhitefalcon - Dec 29, 2011 at 8:23 PM

    This scenario is actually almost as good as an interest free deferred deal for the club, smart move on the Angels part.

  7. dondada10 - Dec 29, 2011 at 8:25 PM

    There’s several reasons why this is advantageous for the Halos. One thing not mentioned is that they could begin allocating Pujols’ later salary now and simply accumulate interest on it. By allocating the funds early in the contract, they could in theory pay the latter portions of it with the interest that accrued early.

  8. janknessgv - Dec 29, 2011 at 8:30 PM

    id really like to hear why dee dee made the comment that they would have stayed with the cards had their offer not been so backloaded. the more that comes out the more it really makes Albert look like a money grubbing hypocrite.

    • okwhitefalcon - Dec 29, 2011 at 8:57 PM

      I believe Dee Dee’s comment(s) were targeted at non guarranteed monies, not backloaded dollars.

      Joe Strauss of the St Louis Post Dispatch had a blurb (either on a chat or via twitter) regarding how if AP would’ve accepted the Cards final offer and not the Angels deal it would’ve have been the largest amount of guarranteed money ever walked away from in American sports history, somewhere in the neighborhood of $65 million…

      • paperlions - Dec 29, 2011 at 9:17 PM

        Actually, her comments referred to deferred money, which was still guaranteed. Deferred money isn’t all that different that a backloaded contract, except that it is paid at some point after the contract ends….a backloaded deal defers money to a later point during the contract.

  9. andyreidisfat - Dec 29, 2011 at 8:39 PM

    Lol @ anyone who thinks this deal is good for the team. No one in business makes a deal based on projected inflation. That would be silly, our economic future is so uncertain right now their is just no way to predict what will happen. Also folks saying he might not be on the team in the last few years of the deal lol, yeah and the Yankees wouldn’t trade arod right now if they could. Nobody is going to take a deal where they are paying deferred payments from years they didn’t have the player.

    Not to mention the fact people still claim Albert is older than 31( I tend to believe he is 31 myself.

    The main reason you sound silly though is that your all assuming as fact that Albert is going to be belting 50 hrs and hitting 300 for the next 7 years. How did that work out for arod, or even bonds when was forced to quit roids. Players decline at this guys age

    • djpostl - Dec 29, 2011 at 9:24 PM

      I agree, anyone trying to argue this, no matter how they rationalize it, don’t get it. He’ll still be a guy who is (if you’re lucky) putting up numbers like Arod is now, unable to play full seasons etc…who is being paid 1/4 of their payroll.

    • Ari Collins - Dec 30, 2011 at 12:05 AM

      You don’t understand economics even at all.

  10. tn16 - Dec 29, 2011 at 8:46 PM

    That is going to screw the angles
    This is going to be worse then the Vernon wells contract

    • 78mu - Dec 29, 2011 at 8:54 PM

      Somehow the Wells contract did not hamper them when it came to signing Pujols though.

    • yahmule - Dec 29, 2011 at 8:55 PM

      How could they be so obtuse?

      • Ari Collins - Dec 29, 2011 at 9:22 PM

        That is a cute comment.

      • churchoftheperpetuallyoutraged - Dec 29, 2011 at 9:31 PM

      • Kevin S. - Dec 29, 2011 at 10:01 PM

        yahmule demeans what he can’t comprehend.

  11. lostsok - Dec 29, 2011 at 9:29 PM

    Pujols is a class act and a great player…but the odds are better this will turn out to be the worst contract in baseball history–Manny and Kevin Brown included–than Newt Gringrich winning Mr. Congeniality.

  12. cardinal1965 - Dec 29, 2011 at 10:00 PM

    As a Cards fan of 30 some years, I have to say I am glad they didn’t tie that much money up in Albert. Unlike some I am thankful to him for the excitement he brought to the game, for the thrill of seeing him play all those years in his prime and wish him no Ill will. If the NL had a dh spot things might be different, but I think he did the best thing he could to extend his career by going to the AL.

  13. hammyofdoom - Dec 29, 2011 at 10:22 PM

    Even as a non-Cardinal fan, I was really sad to see Pujols leave St. Louis. He was associated to his city as much if not more than any other athlete in the US, I mean when I thought the Cardinals it was Pujols first, La Russa second, and the rest of the team third. With that said, seeing how much it would have cost to keep him, I am so happy (for the Cardinals sake) that they did not give him the money. Honestly, just look at how Arods new deal is looking: he was a guy who was as healthy as can be, but as he hit his mid 30s, he started to break down. That’s not even mentioning the elbow problems that Pujols has had in the past. As many have said before, this will probably be a deal where the first half is spectacular, and the second half is going to be full of “Oh my god how much are we paying this guy again?”. Hopefully the Angels can capitalize, because if they dont win a World Series before 2016 this would be a disaster

  14. hellmaca - Dec 30, 2011 at 12:26 AM

    Cool story bro

  15. harleypuppy - Dec 30, 2011 at 12:56 AM

    From a working mans perspective how much is enough I know they possess a talent that only a few have but if the best doctor I’m the world demanded that kind of money it would be an outrage even if it meant saving lives for all of you that have families and work for a living just think about how much is enough.

    • Gonzo - Dec 30, 2011 at 2:12 AM

      Either Pujols gets the money, or the owners get it. Either way, millions of fans are contributing to the billions in salary of professional baseball players. From the suits that pay $30K in season tickets, to the poor father taking his kids to the game paying for the $10 cheap seats. Don’t get pissy at Pujols.

      • 1historian - Dec 30, 2011 at 11:51 AM

        “Either Pujols gets the money, or the owners get it.”

        True as far as it goes, but I would add one word to that statement “Either Pujols gets the FANS money, or the owners get it.”

        FYI – I am a (retired) old fart. If I wanna watch a baseball game I’ll go watch the local H.S. or college team. On the way I stop and grab a brew (or 2) get to the game, get my chair out of the trunk, put the dog on the leash, sit on the sidelines and watch.

        MLB lost me when they struck in 1994. I have no problem with pro athletes making lots of money, but at some point enough is enough, and making north of $25,000,000 to PLAY baseball is MORE than enough.

      • Gonzo - Dec 30, 2011 at 4:03 PM

        Eh, I say that everyone should be allowed to make as much money as they want. And I feel no ill will against them. Capitalism at its finest.

        Disclaimer: I am unemployed and have never made more than $30K in a year. In case someone thinks I am some high horsed right winger.

  16. baskallen1 - Dec 30, 2011 at 1:39 AM

    Theyre gonna hate themselves when Pujols is 40 hitting .260 18 homers and they won’t be able to sign anyone else to help that lineup.

    • Gonzo - Dec 30, 2011 at 2:15 AM

      If he can hit .300 with 30 homers for the next 8 years, I think they’ll be okay with that.

  17. Gardenhire's Cat - Dec 30, 2011 at 6:15 AM

    By structuring Pujols’ contract this way, the Angels were able to sign one of the top free agent pitchers on the market — CJ Wilson. The Angels are built to win today, as opposed to five years from now like the Royals circa 2008, so ownership has pushed all their chips in to achieve this goal. It’s possible (likely?) the Angels in 2020 will regret signing Pujols for the amount of money they did; however, winning a title or two between now then will lessen the pain.

    • Kevin S. - Dec 30, 2011 at 11:45 AM

      This, by the way, negates the argument that the Angels would budget the AAV for Pujols now, earn interest on the surplus, and have that money available on the back end. That was never going to happen. The Angels are going to need the value of a win to greatly inflate for this to not be an anchor on the back end. Which isn’t to say it’s a bad idea to grab all of his surplus value up front – just that we need to acknowledge they’re.doing it at the expense of the back end of the deal.

  18. wardmanone - Dec 30, 2011 at 1:11 PM

    The Owners offer it, the player asks for more and how they structure it is agreed upon by the money folks or it doesn’t get done. Seems pretty crazy to backload but hey it’s still pretty good amount either way Furthermore I am all for the player getting his money and then some Owners can’t help themselves…

  19. tn16 - Dec 30, 2011 at 2:27 PM

    But still there new tv contract has paid for him and cj Wilson plus they will be seeing a increase in stadium attendance and sales

  20. wvugrad00 - Dec 30, 2011 at 9:15 PM

    They might be over paying in years 8-10 but they are underpaying in years 1-3.

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