You're using two examples (possibly rare examples) to support your case. The reality is that contracts are always based on what you have done in the past (see arbitration contracts). Can you imagine a team telling A-Rod or Peavy that they will not even consider what they have done in previous seasons and will only pay them what they believe they are worth to them in the future? 
Basically, it's based on both, which makes it all the more difficult for signing picks.It's both, because a team will only figure out what the player is worth to them/how much they will help the team by their past accomplishments.
