Indians Sign Chris Perez: Is New Deal an Overpay?

The Indians came to terms with five of their seven arbitration-eligible players on Tuesday, right before the deadline for teams and players to exchange salary figures. Some of the contracts, like the deal they agreed to with Jack Hannahan and the terms they came to with Shin-Soo Choo, were big bargains.

But at least one of the players Cleveland re-inked on this week may have gotten more than he deserved. Closer Chris Perez certainly isn’t a bad signing for $4.5 million, but the deal does suggest an implicit overestimation of what Perez is worth.

As a rule of thumb, second-year arbitration-eligible players usually get about 60 percent of what they would earn on the open market. Thus, that Perez’ got $4.5 million contract now suggests that he could get a deal worth $7.5 million annually when he hits the free agent market in 2014.

Assuming that a marginal win is worth about $5 million in the current player market, a $7.5 million valuation implies that Perez will provide about 1.5 WAR worth of production in 2012. That’s certainly not out of the question—Baseball-Reference had Perez at 2.7 WAR in 2010—but is it really likely?

Beneath Perez’ 3.32 ERA and 36 saves in 2011 lay some extremely troubling trends in his statistics. Perez’ average fastball velocity dipped from 94.5 mph in 2010 to 93.3. Opposing hitters chased fewer of his offerings out of the zone (19 percent, down from 24 percent) and made contact more frequently when they swung (90 percent contact rate, up from 86 percent).

As a result, Perez’ strikeout rate plummeted from 8.7 K/9 to just 5.9. Meanwhile, his groundball rate fell to just 28 percent, the lowest of his career. If not for a HR/FB rate of just 6 percent—given his declining fastball velocity and strikeout rate, it’s fair to say that was largely luck—he might’ve lost his job as closer.

Normalize his home run rate, and according to my quick estimates his ERA would have bounced all the way up to 4.06. In this run environment, a relief pitcher who gives up almost a run every two innings isn’t worth anywhere close to $7.5 million.

Heck, look at Joe Smith. Perez’ teammate, who was also arbitration-eligible for the second time, just got a deal that puts his implied value under $3 million. This is a player who threw 67 innings with a 2.01 ERA last year. Is he really worth less than half what Perez is?

Part of the problem is that Perez is a closer—even sabermetrically inclined front office executives are quick to overpay for relievers with demonstrated abilities to close out the ninth inning. But is Perez really better than Frank Francisco, who just got two years at $6 million a season from the Mets? Unless you take his ERA at face value—and even if you do—he’s not in a class with Francisco Rodriguez or Ryan Madson. Yet the deals they just signed (Rodriguez got an $8 million contract from the Brewers, Madson is getting $8.5 million from the Reds) imply that baseball people think Perez is in their league.

The actual contract isn’t worth worrying about. Paying Perez $4.5 million isn’t exactly highway robbery, but it’s worth the Indians’ while to keep him around. I’m certainly not suggesting that they should have non-tendered him—even if Cleveland didn’t want Perez for that price, someone would be willing to trade for him.

Nor am I saying that Perez’ production necessarily won’t be worth $7.5 million. He’s 26 years old, so he’s definitely not washed up. If he can regain the velocity he lost with his fastball, induce more ground balls, and start missing bats again, he could reestablish himself as one of the game’s better closers.

The Indians weren’t wrong to make this deal—Perez very well could have gotten more through arbitration. But given the implicit suggestion that he’s worth $7.5 million a year, this contract seems like an overpay.

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