Among other pitchers available, Peavy is the most accomplished and would have a lower salary than comparable free agents.
The logic seems simple. An ace like CC Sabathia will get $20+ million;therefore, Peavy’s $15 million contract represents a big savings over the free-agent alternative. (Peavy actually isn’t quite as valuable as Sabathia, but let’s just assume they are for simplicity.)
But the $5 million difference in salaries does not represent savings to the acquiring club. Peavy and Sabathia are assets who represent future income streams to their employers. Teams ought to be willing to pay salaries equal to the discounted present value of these revenue streams. As a free agent, Sabathia will capture all the returns of his expected value, and so would Peavy if he could be signed as a free agent. Instead, the Padres own the right to an annual income stream of greater than $15 million which they gladly lease for $15 million a season for the next four years. The fact that Peavy only gets $15 million doesn’t mean that’s all he costs. The Padres must be compensated for that additional lost income stream—a price that his new team will pay.
The only team who benefits from Peavy holding a good contract is the Padres, and this is likely a big factor in the team’s decision to move him. They hold a valuable asset and plan to cash it in.