The Company vs. Albert Pujols

Imagine that it’s July 25th and the Cardinals, injury plagued and pitching-poor, are seventeen games out of first place and on a fast track to oblivion for the 2012 season. However, Albert Pujols, still a Cardinal, is having his customary sparkling year, on a pace for 35 home runs, 120 RBIs, and a .325 batting average. The question: Are you going to be spending serious ticket bucks to go to the ball park and watch Albert do his thing, even though the team is out of contention and Albert’s thing, admirable though it may be, can’t change that? In a situation where it doesn’t really matter if the team wins or loses a given game, are you going to the stadium just to witness Albert’s baseball artistry? (Which, by the way, may or may not make an appearance that day.)

Well, not me.

On the other hand, imagine that it’s July 25th and the Cardinals, relatively injury-free and with a pitching staff that’s dealing game after game, are in first place, one game ahead of two or three very good teams in a race that could go down to the final day, but Albert is wearing the uniform of the California Angels. The question: Are you going to be spending big ticket bucks on Cardinal games?

Me.

The point: The Cardinals, like most professional athletic teams, have a fan base that responds to winning – to battles for the championship – and that loses interest when no such battle is in progress. That’s true with Albert Pujols on the team and it’s true without him on the team. The Cardinal franchise, in a city that is somewhat more baseball-friendly than most, usually draws in the vicinity of 3,000,000 people when the team is in contention for all or most of the season, and considerably less than that when it’s not. That was so before Pujols came here and it will be so after he’s gone. The game’s the thing; that, and the fate of the team. In a down year, any one player’s pursuit of statistical superiority is inevitably reduced to a curiosity.

It’s in that context that the St. Louis Baseball Cardinals LLC and Albert Pujols have been discussing the amount of money the former would pay to the latter for his baseball-playing services. Because the company understands that when it comes to producing revenue, winning is what matters most, it had to calculate what Pujols would contribute, over time, to that process.

Let’s back up a bit. To the extent that SLBC LLC operates as a normal business enterprise, its owners expect it to make a profit; so their challenge, like the challenge of all businesses in all market economies, is to maximize revenue and minimize cost. Or, more accurately, to set a profit expectation level, and to manage the revenue-vs. -cost equation to produce that profit level. So the job of the owners of the Cardinals – the investors who have put their money at risk in operating this enterprise -- is to manage all their costs, including labor costs, to produce the financial outcome they want.

That’s the business context within which Cardinals-Pujols pay discussions were being carried out. In these circumstances, it ain’t, to coin a phrase, personal. It’s business. Each side brings its needs and expectations to the table, along with whatever “weapons” it has at its disposal to get those needs and expectations met. The Cardinals would have liked to continue to employ Pujols because he helped them produce revenue, but not at a cost that had the effect of negating that revenue. Pujols presumably wanted to stay with his current employer, but not if it cost him a portion of the dollars he could get by offering his services to others. If the two positions were mutually exclusive, no deal. If they were not…deal. As we now know, they were.

Meanwhile, the company had no choice but to do due diligence – to think in terms of best and worst cases (and every case in between) and imagine what effect the various scenarios would have on its financial picture. Best case, vis a vis Pujols: He signs for ten years, continues his extraordinary winning ways for all of those years, helps the Cardinals win or be in contention every year, and the Cardinals sell a lot of tickets, hot dogs, and beer. Worst case: His production drops off precipitously in one or two years, the team falls into a protracted playoff-pennant dry spell, and the organization sells far fewer tickets, hot dogs, and beers.

The reality will in all likelihood be somewhere between those extremes, and it would have been irresponsible of the Cardinals not to craft its offer to Pujols based on how it believes the next several years will play out. So it was, and had to be, a financial calculation, having nothing to do with loyalty or gratitude or allegiance to the wishes of the fans, on either side. The two parties were vying for what they as business entities wanted, and the hope, from both points of view, was that they could make a deal that gave it to them. The team is not villainous for not giving money to Pujols that it can’t afford. Pujols was not villainous for marketing his skills to other potential employers in an effort to get the package he most desired – a 10-year contract, being the game’s best-paid player, or some combination of those things and others. Or maybe something else altogether.  We may never know.  What we do know is that from the outset of the salary discussions, he wanted more than the Cardinals were willing to give; so the argument we're hearing from some quarters that the Cardinals should have locked him up when they had the chance doesn't hold water.  They clearly never had the chance.

A general observation: Professional sports, despite what many people apparently believe, are not on a continuum of ever-increasing materialism, acquisitiveness, and moral bankruptcy. They were just as much a business in 1925 as they are in 2011. A sports franchise was then, and is now, an entertainment enterprise. And the owners and players were every bit as willing back then to gouge each other's eyes out for a bigger slice of the revenue pie as they are today. The only difference then was that the numbers were smaller and the owners were holding all the cards. A sports franchise is a business, and how to make money -- that is, how to survive -- next week, next month, next quarter, next year, and over the next ten years and beyond, is the job of those who manage the business.

Yes, ballplayers have every right to try to extract the most money from what they do, the same as rock stars and child actors. The operative words are "the right to try." No one is obligated to pay. So the issue isn't whether ballplayers "deserve" to make as much as other entertainers, as some have argued. They deserve to make whatever they can, as we all do. But they can only make what someone is willing to pay them. If the people doing the paying think it will be in the best interest of the entertainment package they are offering to make such an investment, they will make it. If they don't, they won't.

So, the question isn't who's right or wrong -- who's holding the moral high ground in all of this and who, therefore, "deserves" what. The only question is, who's gonna win? Which side has the most potent weapons -- and brains enough to use them effectively -- to get what they want.

As to the third "faction" in all of this, the fans -- they need to understand that there is no constitutional guarantee of access to low-cost sports entertainment. Sports owners, like all business people, will charge what the traffic will bear and not a penny less. So, ticket prices will continue to rise in the absence of any indication that people are unwilling to pay them. It could even be argued that pay demands respond to price increases as much as they cause them. The players want more of what we, the fans, have shown over and over we're willing to cough up. So if you don't like the price of a ticket, don't pay it. Don't go. Prices, and salaries, will start coming down before you know it. (It should probably also be noted that MLB ownership is in large measure responsible for its own labor cost problems, having set the bar far higher than was necessary by repeatedly laying riches at the feet of players who had no ability to move the revenue needle -- as will likely be the case with the Angels and Albert Pujols about halfway through his contract, or maybe sooner.)

As to the owners and players, the question isn't who's being most severely put upon by the beastly opposition. The question is which side is wise enough, and ruthless enough, in the uses of power to extract what they want from this enterprise, without bringing the whole thing crashing down around their ears.