The Los Angeles Angels have signed Albert Pujols to a ten year contract worth $254 million. The deal contains a full no trade clause. It’s the second largest contract in the history of baseball.

By my calculations, in order for this contract to work out, Pujols will have to be worth approximately 42 wins above replacement over the length of the contract, so from ages 32 to 42. In order for him to do that, according to a typical 0.55 WAR decline, he would have to be considered a 7 WAR player right now.

In 2011, Pujols was judged to be worth:

  • 5.1 WAR according to FanGraphs;
  • 5.4 WAR according to Baseball Reference; and
  • 5.8 WARP according to Baseball Prospectus.

Admittedly, Pujols missed some time due to injury and had a bad start to the season. However, this deal is not without major risks and they extend far beyond questions surrounding his real age.

If we look at the last three years to find Pujols’ true talent, we get values of:

  • 7.2 WAR according to FanGraphs;
  • 7.1 WAR according to Baseball Reference; and
  • 8.6 WARP according to Baseball Prospectus.

So, how you feel about this deal depends on how you feel about Pujols true talent level right now. Is he the 7ish WAR player reflected in the value that he offered over the last three years, or is he the 5.5ish WAR player reflected in the value that he offered in 2011?

When we looked at the way in which long-term contracts worked and why players prefer them to short-term deals, we looked at how baseball contracts share a lot in common with a mortgage. Teams essentially set up deferred payment schedules within their deals so that the value they offer at beginning of the contract, which ideally is worth more than the player is getting paid, ends up evening out during the back end of the deal when the player is presumably worth less than what he’s getting paid.

In other words, front offices in baseball justify the handing out of long-term deals, by treating a contract as though it’s a mortgage. Baseball history shows us that a player;s talent level will decline from its peak as they get older. A well-planned, long-term contract will underpay for the player’s value in the beginning of the deal and overpay for his value in the end. Similarly, at the beginning of a mortgage, the payments mostly cover interest, but as it nears the end, most of the equity gets paid off.

Tom Tango offers us the hypothetical scenario of a true talent 4.0 WAR player signing a six year contract for $78 million dollars who declines at a regular rate of .55 WAR each season. If you only look at the first three years of the contract, it’s a fantastic deal. If you only look at the final three years of the contract, it’s a horrible deal. However, if you think of the back end of the deal as deferred payments for the value from the front end, it is a fair deal.

Wins $/win EarnSalary ActSalary
4.0    $5.00    $20    $13
3.5    $5.25    $18    $13
2.9    $5.51    $16    $13
2.2    $5.79    $13    $13
1.4    $6.08    $9     $13
0.9    $6.38    $3     $13

What it all comes down to is that if Pujols is anything less than a 7 WAR player right now, the deal is a failure in terms of value added. So, as many opportunities this deal may give the Angels in the short term, I’ll predict that it won’t be enough to stop fans from being justified in saying that Los Angeles overpaid for Albert Pujols.