Dustin Pedroia signed a six-year, $40.5 million contract today with an option for a seventh year at a rumored, but not yet confirmed figure of $11 million. These six years buy out one club-controlled year, all three arbitration years and two free-agent seasons. Thanks to the research of many, we have a nifty general rule for average arbitration rewards that states that arbitration typically comes in at 40% the first year, 60% the second, and 80% in the final year. Because of this, we can easily figure out what the Red Sox are valuing Pedroia at.
First, let us lop off the half-million for his club-controlled year and we’re left with the three arbitration years and two market years for a price of $40 million. Since this covers Pedroia’s age 26-30 seasons, we can be pretty safe at assuming a static performance level for all five seasons. That is, lets ignore aging for now. Calling that performance level X, we have .4*X + .6*X + .8*X + 1.0*X + 1.0*X = $40M as our formula with X representing the market value that Pedroia has commanded. This simplifies to 3.8*X = 40M or just over $10.5M per season. Add back in the 10% discount that players take for long term security, divide by $4.5M per market win and the Red Sox are paying Pedroia as if he’s worth about 2.6 wins a year.
I’m not fully confident on how good Pedroia is at defense, but I think it’s safe to call him about average since I’m pretty sure that he’s not out of this world bad or insanely good (Gold Glove aside, that’s meaningless). Frankly, Pedroia’s defense would have to be butcher-level bad to make this anything less than a total steal for the Red Sox.
Pedroia was worth somewhere around four or five wins wins last year, depending on his defense. Even with the regression that should come on his bat next year, he’ll be just 25 and he seems like a sure bet to exceed three wins at minimum. In fact, the $40.5 million is quite similar to the same amount that Robinson Cano is going to get paid for the same relative time frame. Remarkable since Pedroia just came off an MVP award. Chalk another one up for Boston, who really don’t need any more help.
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