Breaking Down The Jhonny Peralta Signing

While many pundits expected a few deals in the four-year, $50-55MM range to be issued this offseason, few thought that Jhonny Peralta would be on the receiving end of such a lavish payday. Yet that's exactly what took place over the weekend, with the Cardinals agreeing to a four-year, $53MM contract with the former Tiger and Indian.

At first glance, Peralta's contract appears to be an alarming overpay, however that's more due to the fact that there was clearly a disconnect between his market value and the media perception of his worth. This isn't said to pat myself on the back by any means (I was off by $17MM on the total value of his contract, after all), but my own projection of three years and $36MM for Peralta was among the most aggressive numbers I saw around the baseball sphere when looking at other predictions. News that Peralta was seeking $56-75MM late last week was widely scoffed at by MLBTR readers both on Twitter and in the comments section of the post.

Reports have indicated that the Mets believed, initially, that they would be able to land Peralta on a two-year contract. They weren't the only ones thinking along those lines, as ESPN's Jim Bowden pegged him at two years and $20MM. Meanwhile, over at CBS Sports, Jon Heyman spoke to an agent and an unnammed GM, and that trio pegged Peralta in the two-year, $16-21MM range. When I presented my own three-year, $36MM prediction to MLBTR's Tim Dierkes as we were discussing the free agent profile series, he was struck by its aggressive nature.

As it turns out, I, like many others, failed to properly weigh three key components that played a vital role in Peralta's contract:

• The middle infield and third base markets offered little to no competition. Even with a limited number of teams looking to spend big on a free agent shortstop, the bar was set higher than any of us imagined, as the floor for Peralta appears to have been three years and $45MM.
• Teams' strong desire to hang onto draft picks is likely greater than any of us have taken into account. Stephen Drew, who is connected to draft pick compensation after rejecting a qualifying offer, represents the only true everyday alternative to Peralta on the open market. The amount for which he signs will be one of the most interesting stories of the offseason from this point forth.
• Teams may not be as hesitant to sign players connected to performance enhancing drugs as we would initially think. If this is the case, it's good news for Nelson Cruz and Bartolo Colon as they look to maximize their free agent paydays. I predicted three years and $39MM for Cruz and one year at $10MM for Colon in their respective free agent profiles — two projections that are feeling a bit light given the early direction of the free agent market.

From a performance standpoint, Peralta is a solid player that's probably deserving of a $13MM AAV. I won't rehash the fine work done by Eno Sarris and Dave Cameron over at Fangraphs in illustrating why a slightly above-average hitter (relative to the rest of the league, that is; Peralta dwarfs the average shortstop in terms of offensive prowess) and a reliable defensive shortstop is worth such an investment, or why this is the going rate for such players.

While many will be quick to label this contract an "overpay," we need to be more mindful of what that term really means. Should an "overpay" be defined by our own expectations, or should it be defined by the possibilities within the structure of a given free agent market? Each free agent market is its own animal, unique in nature and unlikely to be repeated. In this instance, a three-year deal likely wasn't happening, and there are even reports that have indicated Peralta left money on the table to join a stacked Cardinals organization. If that's the case, Peralta's signing is likely a bargain relative to the realm of realistic possibilities, even if it's an eye-popping number for which most of the world was ill-prepared. Kudos to agent Fern Cuza of SFX for dissuading teams from the media's perception of his market and more than doubling most prognosticators' expectations in terms of years and dollars.