UPDATED: Some finer details around the "marketing agreement"
The deal was reached between Albert Pujols and the Los Angeles Angels on the last day of the Baseball Winter Meetings, but has taken until the last day or two to be finalized. With it, the details will likely re-write how massive contracts in MLB are written.
The contract is really broken into three smaller agreements. There is the 10-year player contract, a personal service agreement after Pujols retires, and marketing agreement based on the slugger hitting certain milestones. Between the three, Pujols could top out at a staggering $265.75 million over twenty years.
I broke the base salary out earlier this week for Baseball Prospectus, but now award bonus details are out. Here’s how the 10-year player (back-loaded) contract for Pujols busts out:
- 2012 - $12 million
- 2013 - $16 million
- 2014 - $23 million
- 2015 - $24 million
- 2016 - $25 million
- 2017 - $26 million
- 2018 - $27 million
- 2019 - $28 million
- 2020 - $29 million
- 2021 - $30 million
Note that in 2012, Pujols will earn $4 million less than in 2011, his last year with the Cardinals. And, it isn’t until 2013 that he reaches that 2011 salary mark ($16 million). The contract escalates drastically from there. It’s been reported that Pujols allowed for this salary structure over the life of the agreement to allow the Angels to pursue C.J. Wilson.
Award bonuses have become practically boilerplate in all contracts these days. The difference is, Pujols is practically guaranteed at least one of these (All-Star election or selection), with the others within reach. Here’s the bonus provisions:
- Most Valuable Player - $500,000
- MVP second or third place - $75,000
- Gold Glove - $75,000
- Silver Slugger - $75,000
- All-Star election or selection - $50,000
- World Series MVP - $100,000
- League championship series MVP - $75,000
- Total = $8,750,000
We saw this in the Alex Rodriguez deal, and look for this type of thing for big free agents that sign on with clubs that are skirting the edge of the Luxury Tax ceiling. Tim Brown of Yahoo! Sports reported this a couple of weeks ago:
The sides agree they will enter into a separate marketing agreement in which Pujols will be paid for the promotion and marketing of specified milestone accomplishments. Among them are a $3 million payment for 3,000 hits and a $7 million payment for 763
This aspect is really slick. As mentioned, clubs like the Yankees and Red Sox – possibly the Phillies – could do these type of provisions as the bonus money for marketing the milestones. It's not a pure loophole (both MLB and the MLBPA agree the $10 million would count against the Luxury Tax), but milestone bonuses act more like a typical bonus provision. Rather than the Angels having the guarunteeing the money now, and having it count 10 percent of each year against the Competitive Balance Tax (as is the case with a typical signing bonus), it instead kicks in only when those milestones are hit. At that point, the milestone money would count against the CBT (also called the Luxury Tax) threshold.
Personal Services Agreement
After the 10-year deal expires in 2021 (or possibly earlier, depending on how his play goes), a new 10-year deal kicks in. The sides agree that after the expiration of the contract or Pujols' retirement as a player, they will enter into a 10-year personal services relationship and Pujols will be paid $1 million annually, or $10 million total. What is involved in the contract is not totally known, but we can assume that one possible route would be to use Pujols as a hitting coach, or possibly an emissary for the Angels in a PR capacity.
Doing the Math
- Base Contract Value - $240 million
- Personal Service Contract - $10 million
- Potential award bous - $8.75 million
- TOTAL - $268.75 million
Pujols has been a huge part of the community in St Louis via his charitable Pujols Foundation. Those efforts will continue in the Anaheim/LA area with a “Charitable Provision” within the contract. Pujols will contribute at least $100,000 annually to the Angels Baseball Foundation, of which half will be distributed at the direction of Pujols and half at the direction of the team.
Nuts and Bolts
Here’s the other details of the contract
- Pujols may not be traded without his consent.
- Pujols gets a hotel suite on road trips.
- Pujols Foundation gets the use of a luxury suite for 10 home games per year.
- Pujols has the right to buy a luxury suite between first base and third base for all home games.
- Pujols receives four mutually agreed-upon seats for every home game and has the right to buy the same season tickets after the contract ends for a term of his choice.
Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).
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