Tag Archives: synergy

Synergies in Business – A $250 Million Example

So Albert took the money. Good for him, good for the Angels, and yes even good for the Cardinals. After a few days to let the dust settle and get the emotion out-of-the-way, it is clear that there were quite literally no losers in this quarter billion dollar deal. Imagine that, a quarter billion dollars for a baseball player, and everyone wins…crazy.  Actually, the word is synergy.

Synergy was one of those words that it takes a bit of life experiences to really grasp. Granted, Stephen Covey did a great job adding “synergy” to the everyday lexicon thanks to “The Seven Habits of Highly Effective People”.  Thinking win-win is also a factor of maturity and just having the ability to see the bigger picture; of taking the long view.  That is a lot of Covey cliché in a short paragraph.

Clearly Albert won in this deal – to the tune of a quarter billion dollars.  (Note to Charlie Sheen…$250 million is real “winning”).  Granted, Albert was relatively speaking “underpaid” during his time with the Cardinals.  However, even he has to be grateful for the stage and opportunity – he was able to showcase his skills with a great organization, build an amazing track record of success, and frankly set himself up for the massive payout that is his new contract with the Angels.   The real question is, how is it a win-win for everyone else?

The Angels now have the face of the sport, an offensive powerhouse, as well as the marquis Latin American player and role model in a huge and growing Latin American market.  I have been to Angel Stadium in Anaheim…it is a great ballpark and it has a very strong Latin American feel and vibe – Albert fits – he is a huge asset to the team on and off the field.  And yes, the Angels are an American League club – Albert can DH for a lot more years in the American League than he could ever play in the field with a National League team.  The Angels got a good deal.  They will certainly make up the $250 million they have invested in Albert…no question.

But what of the Cardinals – how did they win in this example of synergies?  I have said before, there is such a thing as addition by subtraction, and especially so when it comes to staffing.  Albert Pujols is without question one of the finest baseball players to ever play.  The first 11 years of his career have been absolutely epic.  He is already in the company of DiMaggio, Williams and Ruth when it comes to offensive production.  Add in a Rookie of the Year, 3 League MVP awards, 9 All-Star selections, and two World Series Championships and you have one amazing legacy in St. Louis.  All of that for the relatively low-cost of around $105 million…a screaming good deal in hindsight.  And now the Cardinals save an enormous amount by not paying Pujols massive salary on the back half of his career.  They can sign other, younger players at much lower cost.  In raw business terms, it is a huge advantage.  The Cardinals will add to their team in the long-term by loosing one player in the short-term.  Business is harsh sometimes.

$250 million plus for 10 years of work.  It is a staggering sum.  But if it is that amount of money that is required to teach everyone a lesson in synergy, then I guess it was money well spent…just wish someone would slide me a slice of that pie.

Leave a comment

Filed under Business, Sports