Wednesday, December 7, 2011

The Economics of Albert Pujols

I was in St. Louis this weekend, accompanied by a bunch of people who couldn't give a baker's shit about the Cardinals (and one guy who would pay good money to see Busch Stadium burn to cinders in a tire fire, but we'll set him aside for now). The subject of Pujols' free agency of course came up.*

*-And while I've got you here, let's just clear up that that's exactly WHY pro athletes get away with outrageous contracts- because we all secretly LOVE them. Here we were, in the city that just won the World Series, talking about the TEAM that just won the World Series, and we're talking contract negotiations. We can bitch all we want about greed and money and how we'd play for free if someone would let us, but it's all horseshit. We LOVE talking and thinking about this stuff.

Anyway. Pujols. My companions asked me where he was going, and given the latest news about the Marlins and the MYSTERY TEAM, it's obviously a good question. Too bad my answer is so shitty- I JUST DON'T KNOW.

It all comes down to this: Will someone significantly outbid the Cardinals? The Cardinals' latest offer is HUGE- 10 years, $220 mildos. And by all accounts, Pujols likes the Cardinals, likes St. Louis, likes toasted ravioli, etc. So, is some other team going to go significantly above and beyond that?

There's significant evidence that they'd be pretty dumb to do so. In 2011, Albert Pujols started to look vaguely human, which is to say he merely hit the shit out of the ball with a baseball bat, as opposed to raping the psyches of opposing pitchers with his terror (Albert Pujols led the league in RPs in 2004, 2005, and 2007. Tim McCarver won the award in other years, but for other reasons.) He had nagging injuries. His production was noticeably down. He had some mental lapses. And of course, he's 31 years old (or 57 years old, if you believe every baseball pundit out there, though they have absolutely nothing to prove it).

So, essentially, if you pay out more than 10 years for Pujols, you're probably buying at least 4 shitty years, and spending hundreds of millions of dollars to do so. Why in god's name would you do that?

See, there's this thing in economics called the "Efficient Market Hypothesis", which is essentially that if the free market has all the proper information, it will correctly value something- y'know, put it at the exact right price point to balance out supply and demand, or whatever.

But if you think that smells like bullshit, your nose is in fine working order. I'm a big fan of what Larry Summers said about that: "THERE ARE IDIOTS. Look around." Markets are all just made of people, and people are dumb. We get distracted, we get emotional, we get suckered, we don't do proper research. We basically suck, it's just that we've got the thumbs, so the rest of the planet can sit the fuck down.

That brings us to the Miami Marlins. It is almost certainly NOT in their best interest to offer Albert Pujols more money than the Cardinals are offering him. They've already overpaid for Heath Bell, and maybe Jose Reyes. And Friend of the Blog Ozzie Guillen will make them pay out a lot more, either in league fines or player blood. And Pujols has all of those downsides listed above.

BUT...that doesn't mean the Marlins won't do it anyway. They want to make a big splash in the free agent market, to go along with their shiny new stadium, fiery new manager, uniforms. So, just 'cause they SHOULDN'T offer Pujols more money than the Cards, doesn't mean they won't.

Stay tuned. Look around.

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