I'm curious why you'd say the Holliday contract is an overpay. I realize not everyone is in love with Fangraphs' value computations, but according to them, he has so far provided $72M in value on a $120M contract with four years left on it. If that's more or less accurate, he'd have to average less than $12M a year in value the rest of the way for the Cards not to come out ahead. That's entirely possible, of course, but it seems reasonable to hope for better. One more 5-WAR-ish season from Holliday and the Cards are pretty much in the bonus round on that deal.
(BTW, looking at Holliday's career arc and numbers, it strikes me that he could easily end up in the conversation for the title of Best Player Ever Not to Make the Hall of Fame. )
I do think fangraphs grossly overestimates value, first of all. Further, all their numbers I've seen make me think they weight base running and defense too heavily. Matt Holliday is consistently a $20M+ player by their system, meanwhile guys like David Ortiz (only two seasons >$20M) and Manny Ramirez (only one season >$20M) don't rank nearly as high. I immediately question any metric that claims Manny's 1.000 OPS seasons were less valuable than Holliday's ~0.900 OPS seasons based on greater defensive value and base running.
Second, I've always viewed Holliday's defensive numbers by metrics like UZR to over sell him. Living in St. Louis and watching him regularly he's nothing more than a league average LF, probably slightly worse because he's prone to random mistakes defensively. I wouldn't trust him to play RF in any good sized OF either. If you look at the defensive fan scouting report for Holliday on fangraphs you see that fan opinion of his defense in 2010 was 1 run above average, UZR had him at +6.6. Fan voting had him at dead average in 2011 and UZR had him at +0.8. So knowing that and my own personal perception of Holliday you can probably see why I think his -4.0 UZR for 2012 is even a bit generous. Correcting his value for his statistically over sold defense and you would see a healthy drop in fangraph's estimated dollar value right there, since not only is it bringing an overestimate on Holliday's defense in line, it's doing it with a number that is already weighted too heavily (in my opinion).
Third, Fangraphs' use of wRAA and WAR to determine offensive value doesn't strike me as a great method, at least on the surface, for assigning dollar values to players on long term deals. I get the concept, they're trying to determine value based on what the rest of the league is doing. I just don't think that works from a philosophical standpoint when talking about long term deals though. That method gives you year on year differences like this:
2008 JD Drew season:
OPS - 0.927
wOBA - 0.400
wRAA - 26.8
WAR - 4.1
2010 Holliday season:
OPS - 0.922
wOBA - 0.397
wRAA - 41.2
WAR - 6.6
So simply based on 2010 LF production being down league wide compared to 2008 RF production we see a difference of 14.4 wRAA and a 2.5 point split in WAR, despite JD Drew actually posting superior stats.
Now I'm not saying I don't like wRAA or WAR, but I think grading long term deals with them doesn't pass the smell test. Long term deals are about getting that player's peak production over as many years as possible. The league improving or declining at his position is irrelevant once he's on that deal, your desire is just to have him repeat the production you signed him for.
In summary I think Holliday gets overrated for a lot of different factors but what it really boils down to is this - Matt Holliday is consistently very good. Because of that consistency he has a contract length otherwise reserved for only the very top tier of players, for money that lands somewhere between "very good" and "great". If he was on a 7 year deal at $15M per I think he'd be ideally priced. If he was on a 5 year deal at his current $17M I think he'd be ideally priced. The couple extra years at top tier money is why I think he's slightly overpaid.
That said, he signed as a free agent and by nature of how the MLB free agency market works he was all but guaranteed to get overpaid. If we could rewrite the history books and have signed Holliday to that deal instead of Lackey and then Crawford the next off-season I would gladly take it. Holliday is the kind of FA you can overpay on a little bit and give long term years to without getting bit too hard in the ass.
Back to the original point of this thread though, looking over these values makes me really interested in what Josh Hamilton is going to get. If he ends up with a 5 year deal you could go pretty high on the AAV and still have a nice window of having him pay off comparably to Holliday or Drew, a little bit of an overpay but what the FA market demands. Hamilton at anything between 5/$85M and 5/$100M and he could be a far better signing than someone like Nick Swisher. The big X factor here is the BJ Upton deal. If it drives up the AAV and years on Swisher we might be better off just paying the premium for Hamilton.