Pujols signs with Angels pg 151

[NCCubFan]

just to pile on the fantasizing

 

Castro

Soto

Pujols

Ramirez

Soriano

Byrd/Jackson

Colvin

Pitcher

 

Could be fun. Even with aging Ramirez in Soriano, you have to figure that to be a top 5 offense.

Minor detail, but most lineups include a second baseman.

[Little Slide Rooter]

just to pile on the fantasizing

 

Castro

Soto

Pujols

Ramirez

Soriano

Byrd/Jackson

Colvin

Pitcher

 

Could be fun. Even with aging Ramirez in Soriano, you have to figure that to be a top 5 offense.

Minor detail, but most lineups include a second baseman.

 

Pujols can cover 1st and 2nd. Hes that damn good.

[Jazz]

just to pile on the fantasizing

 

Castro

Soto

Pujols

Ramirez

Soriano

Byrd/Jackson

Colvin

Pitcher

 

Could be fun. Even with aging Ramirez in Soriano, you have to figure that to be a top 5 offense.

Minor detail, but most lineups include a second baseman.

 

Pujols can cover 1st and 2nd. Hes that damn good.

 

im going with this.

[SouthSideRyan]

If it were up to me, I'd frontload the deal. Pay him 36-37 for the first 5-6 years, and then taper it way down as he approaches 40. That way, the bulk of his deal will be paid out when our young guys are still cheap, then decreases in AAV as they start making bucks in arbitration.

 

Then you're making the contract more expensive

[davearm2]

If it were up to me, I'd frontload the deal. Pay him 36-37 for the first 5-6 years, and then taper it way down as he approaches 40. That way, the bulk of his deal will be paid out when our young guys are still cheap, then decreases in AAV as they start making bucks in arbitration.

 

Then you're making the contract more expensive

...which makes it more appealing to Pujols.

 

I would do something like this:

10 years, 280M

30

30

30

30

30

27

24

21

18

15

Plus deferred payments of $5m/yr for 5 additional years to bring it up to the $280M.

 

The frontloading and the deferments somewhat cancel each other. The NPV of the deal is $238.1M @ 3%, versus $238.9 for 10 equal annual payments of $28M each.

 

If he'd agree to make the last year or two mutual options, all the better.

[davearm2]

Or try this on for size: 9 years/$270M, w/ 6 years of deferred payments:

 

30

30

30

27.5

27.5

27.5

25

25

25

5

5

5

2.5

2.5

2.5

 

Pujols hits the magic $30M AAV, the NPV is contained somewhat by the deferments ($231.1M @ 3%), and most importantly, the annual salaries are set up to mirror (loosely) the expected age-related decline in production.

[woodchip2153]

Haven't baseball contracts increase at usually 10%, at least before last year? Definitely should use something higher than 3% when figuring the NPV.

[SouthSideRyan]

1. Baseball contracts won't continue rising at 10%, there's a ceiling to how much money is out there.

 

2. Why would that matter when it came to the value of the contract?

[davearm2]

Haven't baseball contracts increase at usually 10%, at least before last year? Definitely should use something higher than 3% when figuring the NPV.

To figure the NPV of the contract, you need to estimate the risk-free rate, not the rate of salary growth.

 

If Pujols thinks baseball contracts are going to increase 10% a year indefinitely, then he should sign for one year, not ten.

[Bull]

If it were up to me, I'd frontload the deal. Pay him 36-37 for the first 5-6 years, and then taper it way down as he approaches 40. That way, the bulk of his deal will be paid out when our young guys are still cheap, then decreases in AAV as they start making bucks in arbitration.

 

Then you're making the contract more expensive

...which makes it more appealing to Pujols.

 

I would do something like this:

10 years, 280M

30

30

30

30

30

27

24

21

18

15

Plus deferred payments of $5m/yr for 5 additional years to bring it up to the $280M.

 

The frontloading and the deferments somewhat cancel each other. The NPV of the deal is $238.1M @ 3%, versus $238.9 for 10 equal annual payments of $28M each.

 

If he'd agree to make the last year or two mutual options, all the better.

 

Do we still operate under the assumption that payrolls will continue to rise? Do we also still operate under the assumption that a dollar today has more value than a dollar in 10 years?

 

If so, you don't have to frontload to frontload.

[woodchip2153]

Haven't baseball contracts increase at usually 10%, at least before last year? Definitely should use something higher than 3% when figuring the NPV.

To figure the NPV of the contract, you need to estimate the risk-free rate, not the rate of salary growth.

 

If Pujols thinks baseball contracts are going to increase 10% a year indefinitely, then he should sign for one year, not ten.

 

I was just using that to show that the baseball teams earn more than 3% on their money. Even in this economy I assume 5% for 10 years and we don't get the returns that baseball does.

[davearm2]

Haven't baseball contracts increase at usually 10%, at least before last year? Definitely should use something higher than 3% when figuring the NPV.

To figure the NPV of the contract, you need to estimate the risk-free rate, not the rate of salary growth.

 

If Pujols thinks baseball contracts are going to increase 10% a year indefinitely, then he should sign for one year, not ten.

 

I was just using that to show that the baseball teams earn more than 3% on their money. Even in this economy I assume 5% for 10 years and we don't get the returns that baseball does.

10-year treasury bill rates are not at 5% anymore.

 

The returns that baseball gets are not relevant. They are not risk-free.

 

Some would argue that a truer indicator of the risk-free rate would come from a 3-month t-bill. Those are well under 1%, and have been for a few years now.

[davearm2]

If it were up to me, I'd frontload the deal. Pay him 36-37 for the first 5-6 years, and then taper it way down as he approaches 40. That way, the bulk of his deal will be paid out when our young guys are still cheap, then decreases in AAV as they start making bucks in arbitration.

 

Then you're making the contract more expensive

...which makes it more appealing to Pujols.

 

I would do something like this:

10 years, 280M

30

30

30

30

30

27

24

21

18

15

Plus deferred payments of $5m/yr for 5 additional years to bring it up to the $280M.

 

The frontloading and the deferments somewhat cancel each other. The NPV of the deal is $238.1M @ 3%, versus $238.9 for 10 equal annual payments of $28M each.

 

If he'd agree to make the last year or two mutual options, all the better.

 

Do we still operate under the assumption that payrolls will continue to rise? Do we also still operate under the assumption that a dollar today has more value than a dollar in 10 years?

 

If so, you don't have to frontload to frontload.

Fair points. A certain amount of quasi-frontloading is implicit.

 

Here I'm just exploring mechanisms to expand the impacts, since there are advantages to both the team and the player.

[SouthSideRyan]

Part of the appeal of monster contracts is a matter of pride for the player and precedent for the agent. I'd imagine most would prefer a backloaded deal for extra 5M total value than frontloading for less total contract dollars.

 

How the Cubs budget the money is a different story. If they want to give out a 9/270, and pay him 30M per, it's not a terrible idea to take an extra 8M put it in the Pujols fund and collect interest, then 6M the next year, and so on down the line. Put it as 38M in your budget, but only pay the player 30M of it.

[woodchip2153]

Haven't baseball contracts increase at usually 10%, at least before last year? Definitely should use something higher than 3% when figuring the NPV.

To figure the NPV of the contract, you need to estimate the risk-free rate, not the rate of salary growth.

 

If Pujols thinks baseball contracts are going to increase 10% a year indefinitely, then he should sign for one year, not ten.

 

I was just using that to show that the baseball teams earn more than 3% on their money. Even in this economy I assume 5% for 10 years and we don't get the returns that baseball does.

10-year treasury bill rates are not at 5% anymore.

 

The returns that baseball gets are not relevant. They are not risk-free.

 

Some would argue that a truer indicator of the risk-free rate would come from a 3-month t-bill. Those are well under 1%, and have been for a few years now.

 

By using the risk free rate, I think you're a underestimating the value of back loading a contract. You should use all the information available to make assumptions to come up with a better estimate. IMO, you should use at least 5%.

 

But I think your initial point was that if you pay more initially but defer payments after the 10 years it will be about the same as just giving a flat amount every year, and whatever interest rate you use, won't have much of an effect on that.

[Northside Blues]

1. Baseball contracts won't continue rising at 10%, there's a ceiling to how much money is out there.

No, but they'll probably continue to rise at close to 5%, because of inflation and popularity growth. If there's any considerable economic growth in regions that like baseball, such as Latin America, that figure would increase in the short term

[Little Slide Rooter]

We will have a decent amount of money coming off the books after this year, and as far as free agent offensive targets, Pujols and Fielder are it. However, assume that we miss out on them. Pujols signs some massive extension in St. Louis, and we lose a bidding war for Fielder. Assuming that the Cards to resign Pujols, it likely means the end of Adam Wainwright in St. Louis. Would this make him a target for us? We do have a very solid rotation with young guys coming up, but no legit ace. Wainwright would give us that ace, assuming hes fully recovered from TJS. Another possible option is CC Sabathia if he walks away from the Yanks, although I cant imagine them letting him walk.

[Guest]

The Cardinals aren't going to let Wainwright walk. If re-signing Pujols made money that tight, they'd make cuts somewhere else. Carpenter, Lohse, and Westbrook all could be FA's by 2013, that's nearly 35 million dollars of pitching they could allocate towards Wainwright.

[CubColtPacer]

The Cardinals aren't going to let Wainwright walk. If re-signing Pujols made money that tight, they'd make cuts somewhere else. Carpenter, Lohse, and Westbrook all could be FA's by 2013, that's nearly 35 million dollars of pitching they could allocate towards Wainwright.

 

I would add the caveat that the Cardinals won't let Wainwright walk if they think he's worth anything. I could maybe see them declining the option after 2012 if he is showing signs of a poor rehab still. I don't expect that to happen (most pitchers recover very well) but it could. But the reason that the Wainwright injury was so devastating to them in the first place was because he was the key piece of the puzzle who was an elite pitcher that was still relatively cheap. They still have Garcia and Rasmus but having Wainwright become a question mark for the years ahead really hurt.

[shnsajax]

I wonder if Hendry slipped a blank check in Pujols pocket during that hug?

[Bote McBoteface]

Hendry said today that "Castillo will probably start sooner than later"

 

I wonder if moving Soto to first if they whiff on Pujols is an option.

[SouthSideRyan]

Hendry said today that "Castillo will probably start sooner than later"

 

I wonder if moving Soto to first if they whiff on Pujols is an option.

 

Context? That sounds a lot like, Castillo will start within the next few days, rather than he'll be our everyday starter soon.

[pitchcs]

Hendry said today that "Castillo will probably start sooner than later"

 

I wonder if moving Soto to first if they whiff on Pujols is an option.

 

That just does not sound like a good idea

a) Can Geo get his ass down far enough to play infield? Doubtful

b) Is he a good enough hitter for 1B for a championship caliber team? Think not

[SouthSideRyan]

The quote I found attributes it to Quade and is talking strictly about while Soto is out.

 

“Absolutely. Probably sooner than later. We like to get somebody involved right away. He’s a good-looking player, a good-looking prospect. He’ll split some time with Hilly, for sure. Things get earned around here. He didn’t come here to solely back up Hill once in awhile.”

[NOLA]

Hendry said today that "Castillo will probably start sooner than later"

 

I wonder if moving Soto to first if they whiff on Pujols is an option.

 

I like this idea much better going forward, but only if we get some power in RF. I hate the idea of signing anyone to a 10 year deal, especially since it flies in the face of an actual organizational philosophy we seem to have adopted. With the money saved we could find some pop in right field and still have money and flexibility to get a CJ Wilson, and still have the ability to resign Starlin and replace Aramis in the future. I like this lineup and it still gives us options in a couple of years:

 

SS Castro

2B Barney/Dewitt/Baker

RF Sizemore

3B Ramirez

1B Soto

LF Soriano

CF Byrd/Jackson

C Castillo

 

SP Z

SP CJ Wilson

SP Garza

SP Dempster

SP Wells/Cashner

 

RP Marmol

Edited May 12, 2011 by NOLA