it's not overspending when the cost of the goods and services is established in an open market. Spending more on a player than the other teams is not overspending it's the nature of the business.
this is a blanket statement that is historically false. there is always an established market value, but anyone who holds up the final contract amount, and calls it the "market value", clearly doesn't understand basic economic principles. and while the pro sports industry doesn't fit within the usual boundaries of business, it still follows economic principles.
here are some exceptions that discount your assertion. these are some examples that qualify as overpaying for a player.
Alex Rodriguez & Texas - Tom Hicks bid against himself and offered a contract that dwarfed the next highest offer. if I remember correctly, they gave him 3 times the nearest bid.
Manny Ramirez & Boston - The Red Sox offered a contract that was reportedly twice as as high as the next highest offer.
Alex Rodriguez & NYY - no one was interested in signing him to a 10 yr contract at age 33.
Albert Belle & ChiW- he was given $11M/yr. I think the next highest offer was $6M.
these are just a few that immediately jumped to my mind.
and just to show that I'm not biased against the highest contract, here is a recent exception that shows how the highest offer is not an example of market value, but for opposite reasons than I described above.
Kershaw & LA - $30.7M/yr
Kershaw's contract is the highest ever given to a pitcher. but it isn't a market value contract. the MV of a player is essentially the amount of money it would take to replace him. this usually falls between net value and net value + reasonable profit margin. replacing Kershaw would force the Dodgers to blow by $30.7M/yr. how far? we don't know. the only way to determine that figure would be if he was free to negotiate with all 30 teams. if that would have happened, it's pretty safe to assume he would have been offered more than $30.7/yr by several teams. and no doubt, one of those teams would have gone well in excess of the others.
"There are three kinds of lies: lies, damn lies, and statistics." - Benjamin Disraeli