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Give Pujols an Ownership Stake

January 16, 2011

St. Louis Cardinals fans are a little more nervous this year than usual as Albert Pujols enters the final year of his 8-year, $111M contract.  Pujols has arguably been the most productive player in baseball over that 8-year period.  Since signing his last contract extension, which as of this writing narrowly cracks the top-25 in baseball history, his accomplishments include a World Series title, 3 NL MVPs, 2 gold gloves, and All-Star appearances in every year.

The Pujols talks have some similarities to the recent Derek Jeter extension in that both players have value to their organizations extending well beyond on-the-field statistics.  Pujols had the third best-selling jersey of 2009 according to MLB (Jeter was #1).  In 2010, Sports Business Daily rated Pujols as baseball’s 2nd most marketable player, just behind Jeter.  As the face of the Cardinals franchise, it’s more difficult to put a dollar value on things like Pujols’ impact on season ticket sales, but the impact is there.

What separates Pujols and Jeter is the difference between valuating a career at its peak versus one in decline.  The Yankees were looking more at Jeter’s value as a brand, and the decision to extend his contract had more to do with his value as a leader and as an icon than it did with his hitting.  At the age of 31, Pujols is in the prime of his career and likely has many more years of high production left.

One approach to retaining Pujols would be to include a percentage ownership stake in the team.  Like Stan Musial and Ozzie Smith before him, Pujols is an icon of the city.  A stake in the team would provide him with income and influence well beyond his playing career.  While the other baseball owners would likely hate this precedent, it would be immensely popular with fans.

Part of the societal appeal of sports is that they are much closer to true meritocracies than what we see in the business world.  Athletes can’t buy homeruns or a higher batting average, and regardless of whether someone is born into wealth or poverty, success is primarily a measure of performance on the field.  Pujols’ value extends beyond his numbers, and his contract should be designed with that understanding.  If Pujols were a top-performing attorney or a corporate vice president, making him a partner would be a sensible next step.  Why should it be any different in baseball?

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