The St. Louis Cardinals made the first big free agent splash of the (not quite yet) winter, signing free agent Detroit Tigers shortstop Jhonny Peralta to a four-year, $53 million deal over the weekend. The Cardinals were among the worst teams for offense at the shortstop position in 2013, so Peralta fills a definite need for them — he’s a league average defender and a slightly above league average hitter, which makes him a well-above average hitter among shortstops.
Peralta’s deal is interesting, though, because he served a 50-game suspension in 2013 for his connection to the Biogenesis performance enhancing drug scandal, and this contract is the longest, biggest deal a player suspended for PED use has ever secured afterward. That isn’t sitting well with people across baseball, from fans to many in the media to other players, including Arizona Diamondbacks relief pitcher (and union representative) Brad Ziegler, who tweeted his disapproval Saturday:
— Brad Ziegler (@BradZiegler) November 24, 2013
On the surface, that’s a plenty valid point. Peralta served a 50-game suspension and still got $53 million, a big top-line number. It’s easy to see that and think Peralta got off somewhat easy, even considering the suspension and lost pay that came with it. Take drugs, play better, get paid. Don’t take drugs, don’t get better, don’t get paid. It’s a simple formula, as HardballTalk’s Bill Baer outlined Sunday.
Except, like anything in baseball, it’s not that simple. Clear the eyes of outrage, and it’s easy to see that at $53 million, Peralta may be a major bargain.
Baseball teams, especially the smart ones, judge players based on how many additional wins they’ll bring a team. And additional wins have a price, thought to be around $5 million. That means a player who is worth one win above a replacement level player at his position is worth about $5 million a season. Peralta was worth 3.3 wins above replacement (WAR) in 2013, according to Baseball-Reference, so under the $5 million per win formula, he was worth about $16.5 million at that level of play.
At Sports Illustrated, Jay Jaffe projected that without the suspension, Peralta was actually worth 4.1 wins in 2013, and because the Cardinals are perennial contenders for whom wins are more valuable than standard, he calculated Peralta’s worth at about $6 million per extra win in 2014. Using that figure and applying a projected decline for Peralta’s worth, Jaffe found that he’s actually worth about $66 million over the next four years. So while the $53 million number looks big, the Cardinals are actually getting their guy on the cheap.
But they may be getting an even bigger bargain than Jaffe suspects. The cost of a win has been going up, thanks in part to the influx of TV cash. Beyond The Box Score’s Lewie Pollis, in fact, calculates that an extra win now costs about $7 million, which is why some of the contracts that seem obscene really aren’t all that bad. Applying the $7 million figure (plus annual inflation) to Jaffe’s projections for Peralta, I calculated Peralta’s yearly value at $21.7 million in 2014, $19.8 million in 2015, $17.7 million in 2016, and $15.4 million in 2017. That’s a total of $74.6 million over the life of the contract, which means that at $53 million, the Cards are effectively getting the first year of Peralta’s value absolutely free (even if you discount the inflation rate and leave the value of a win at $7 million over the four-year contract, Peralta is worth $70 million).
So in a market that is still slightly overvaluing some players, Peralta signed for far less than his actual projected value. And even if you hold the belief that his value has been inflated by drug use, it would take a major drop for him to be significantly overvalued at $53 million (in Jaffe’s projections, using the $6 million per win figure, he doesn’t reach a $53 million value until you bake in a much larger annual drop in production). I wouldn’t go as far as to say that Peralta’s drug use cost him that extra money, whether it’s the $14 million in Jaffe’s projection or the $22 million in mine. But it hardly suggests, as so many have, that Peralta’s drug use got him paid. Peralta being an above average free agent shortstop in a weak market for shortstops at a time when teams are flush with cash and still adjusting to the new price of victory got him a contract, and if those projections are right, that contract is worth far less than his actual value. So unless you think every player who ever tests positive for PEDs once should be banned for the game for life — and that’s never going to happen — there’s not much reason to be outraged by the contract the Cardinals gave Peralta.
Still, that perception matters. The baseball media, which is hardly objective when it comes to performance enhancing drugs, is going to look at Peralta’s contract and see nothing but drugs as the driving factor. Players are too, and many of them who watched the Biogenesis scandal unfold and want nothing more than to fight the perception that baseball is still “dirty” are going to use Peralta’s contract to argue for tougher drug penalties. Ziegler indicated exactly that in follow-up tweets that said the Major League Baseball Players Association and the league are “working on” plans to bolster the Joint Drug Agreement, and it isn’t hard to infer that to mean stiffer penalties and, perhaps, more testing.
That, as I’ve written before, is a path that probably isn’t necessary and certainly isn’t guaranteed to lead to success. But it’s the path baseball is likely to follow, because the way the sports world handles drugs is more about fixing perception problem than it is about dealing in reality.