The Captain's Blog

After agreeing to table contract extension talks with Albert Pujols until after the 2011 season, St. Louis Cardinals’ owner Bill DeWitt Jr. lamented, “We’re not the Yankees”.

Like Musial, will Pujols end his career as a life-long Cardinal?

Although that statement is literally true (unless the Steinbrenners secretly sold the team over the winter), the Cardinals have historically been thought of as the “Yankees of the National League”. Other than the Bronx Bombers, no team has been able to match the Cardinals’ success, which includes 10 World Series championships and 21 National League pennants. Based on that resume, the red birds have built both a rabid local and regional following that has helped make the team one of the most popular in all of baseball.

Considering his team’s success and popularity, is DeWitt right to sell his storied franchise short by crying relative poverty? According to Forbes’ most recent MLB franchise calculations, the Cardinals rank eighth in both overall value ($488 million) and revenue ($195 million), but check in toward the bottom in terms of operating profit ($12.5 million). Based on those figures, it certainly does seem as if St. Louis is not in a position to make Pujols the highest paid player in the sport by giving him a 10-year deal worth approximately $300 million. However, they should be.

2009 MLB Franchise Valuations

Source: Forbes.com

A closer look at the Forbes’ study reveals that the Cardinals have had relatively stagnant revenue over the last few years, with the only significant bump occurring after the team opened up its new ballpark in 2006. Most recently, the team enjoyed no revenue growth between 2007 and 2009 (the entire sport grew 7.5% during this period), according to Forbes. Instead of leading the sport’s expansion, as you would expect a brand like the Cardinals to do, the organization’s revenue growth has fallen more toward the middle of the pack.

The biggest reason the Cardinals’ financial performance has been limited is because it is in the midst of an unfavorable long-term television deal with FSN Midwest. Instead of doubling down on its brand new ballpark by forming its own RSN in 2006 (as several other clubs have done), the Cardinals signed a 10-year extension with the Fox Sports affiliate. Although terms of the deal have not been disclosed, it is widely believed that they greatly favor the network, which recorded baseball’s highest local market TV ratings in 2010. Considering the exploding market for baseball content rights, if the team was able to negotiate a new rights deal today, it would undoubtedly receive a significant bump.

As it turns out, DeWitt is right. The Cardinals aren’t the Yankees. Otherwise, the franchise would have properly valued its rights fees. Because of the team’s shortsightedness, it must now carefully consider how much money it can allocate to the game’s best player. Unfortunately, if DeWitt can’t even determine the value of his own product, why should anyone believe he can put an appropriate price on Pujols?

Even before the negotiations broke down, many were already asking the same question: how much does Pujols really need? After all, isn’t $200 million more than enough to remain a Cardinal for life? Unfortunately that line of thinking basically makes Pujols responsible for the organization’s financial shortcomings. It also ignores the fact that the future Hall of Famer is a big reason why the team currently enjoys such a vibrant brand and rabid following.

Another common theme has been an appeal to legacy. You can’t really put a price tag on spending a career with one team and basking in the adulation of its fans, the argument goes. Well, legacy does matter, but it’s a two way street. One reason the Cardinals have brand value is because of their legacy, and great players contribute to that. Pujols is among the greatest of them all. So, if his being a lifetime Cardinal does in fact add to his legacy, then it does to the Cardinals’ as well. Therefore, Pujols should be compensated for that added value.

Along the same lines, one final argument made by those who don’t think Pujols’ demands are reasonable centers on an appeal to authority. In this case, the authority is Stan Musial, who was not only one of the greatest Cardinals, but like Pujols, also one of the best players in the history of the game. For decades since his retirement, Musial has maintained a close relationship with the organization and served as one of its most treasured ambassadors. If Pujols were to sign an extension, he would undoubtedly inherit that mantle from Musial.

That’s all well and good, but does anyone really think Stan the Man wouldn’t have had the same expectations as Pujols? If not, guess again. In 1947, Musial held out for several weeks because he wanted to be paid the highest salary in the game. After a close examination of his statistics in 1946, you can easily see why. Musial eventually settled for a figure that was around double his previous salary, but it still fell well short of his demands. If not for the leverage of the reserve clause, you can bet Musial would have signed on better terms. Unfortunately for the Cardinals, they hold no such leverage over Pujols, at least not anymore.

The reserve clause is not dead in modern baseball. Although players are no longer beholden to one team for life, they still must promise six professional years to the club that first signed them. As a result, teams often get to enjoy the fruit of a superstar’s prime without even coming close to paying him fair value. In the case of Pujols, fangraphs.com estimates that the future Hall of Famer has contributed over $267 million worth of production since 2002, while only being paid $89 million. Fangraphs doesn’t make estimates for 2001, but if that year was included (Pujols had a WAR of 7.7 and was paid $200,000), the discrepancy would be even greater.

Albert Pujols’ Estimated Value Versus Salary

Source: (*)fangraphs.com and baseball-reference.com

Just because DeWitt gave FSN Midwest a major discount, doesn’t mean Pujols should give one to the Cardinals, especially when you consider that the team is already about $160 million in arrears to their superstar. It remains to be seen whether the two sides will come to terms on an extension at the end of the year, but whatever the outcome, the Cardinals have no excuse. Instead of focusing on who they are not, the franchise would be better advised to concentrate on what they would like to be. In that context, it shouldn’t be difficult to determine Pujols’ value.