Brian Morrow was watching his son play in an under 11's game at the club's Sundorne Castle ground in February 2016 when the posts came down and knocked him unconscious.
The freak accident caused serious head injuries, including facial and skull fractures, and meant he had to give up his lucrative career as a financial adviser.
He suffered a brain injury which left him with tinnitus as well as hearing and balance problems.
Mr Morrow, from Oswestry, was awarded the settlement in a High Court ruling.
Shrewsbury Rugby Club admitted liability for the accident, but claimed Mr Morrow had overstated the impact of the accident on him.
Mr Justice Farbey said: "But for the accident, he would not have stopped work when he did."
As it was a junior match, the game was held across the width of the field, with parents and others watching from the try line close to the posts. Mr Morrow was watching with his wife Beth Hartey-Morrow.
Mr Farbey said: "About half-way through the match, Mrs Hartey-Morrow went into the clubhouse to buy some coffee.
"Mr Morrow continued to watch the game, whereupon one of the upright rugby posts fell away from the crossbar, striking him on the head and rendering him unconscious.'
He was treated at the scene by paramedics and taken to Royal Shrewsbury Hospital. Mr Morrow had suffered multiple skull fractures and a cut which had to be sutured, leaving a permanent scar.
Following the accident, he went back to his work as Manchester branch head at LEBC Group, a financial advisory company, but ultimately stopped working there in April 2017.
He has since taken on a voluntary unpaid role at the National Trust's Chirk Castle, near Wrexham, tending the gardens.
Mr Morrow said the accident had left him incapable of ever doing well-paid work again, robbing him of the best years of his career. His initial claim was for £1 million, but Mr Farbey said he had exaggerated his claims of future earnings.
Mr Farbey said: "He was not dishonest. His psychiatric or psychological condition may have made him prone to exaggeration and prone to pursue his claim beyond what common sense and realism would dictate."
Shrewsbury Rugby Club has been contacted for a comment.