Dustin Pedroia just signed a contract extension with the Red Sox, buying out four years of team control and two years of free agency for $40.5MM (actually, the year-by-year numbers say $42MM), plus an $11MM option for 2015. This is a steal for Boston, although locking up a guaranteed $42MM isn't a bad decision for Pedroia, either. Individuals should be much more risk-averse than teams. Pedroia was about a 6 WAR player in 2008 and a 3 WAR player in 2007. Let's be conservative and call him a 4 WAR player over the next seven seasons (through age 31). As a free agent, that costs about $20MM per season. Arbitration years tend to pay about 40%, 60%, and 80% of the free agent rate, for $8MM, $12MM, and $16MM. In 2009, the Sox can pay him whatever, say $1MM. Let's add up what Pedroia likely would have made, going year to year: 2009: $1MM 2010: $8MM 2011: $12MM 2012: $16MM 2013: $20MM 2014: $20MM 2015: $20MM Total: $97MM Let's compare that to the contract he just signed: 2009: $3MM (with signing bonus) 2010: $3.5MM 2011: $5.5MM 2012: $8MM 2013: $10MM 2014: $10MM 2015: $11MM (team option) Total: $42MM, $53MM with option Now, those estimates of the arbitration settlements seem a bit high to me, but it's still clear the Red Sox saved themselves at least $30MM with this contract. That money can be converted into six free agent wins, or about one per season over the life of Pedroia's contract. Hat tip to Baseball Musings.