For the sake of getting too in depth, I am using two statistics for this argument. I'm using Weighted On Base Average (wOBA - explained here) for the offensive side, and Ultimate Zone Rating (UZR/150 - explained here) for the defensive side. Let's get to it.
First, here's the list of the available free agent shortstops, sorted alphabetically:
Clint Barmes, Yuniesky Betancourt, Orlando Cabrera, Jamey Carroll, Ronny Cedeno, Craig Counsell, Rafael Furcal, Alex Gonzalez, Jerry Hairston Jr., Cesar Izturis, John McDonald, Nick Punto, Edgar Renteria, Jose Reyes, Jimmy Rollins, Ramon Santiago, Jack Wilson
Let's look at the offensive numbers first. Here are the players and their 2011 wOBA followed by their career wOBA, in order.
2011 wOBA:
Obviously, Reyes is the best of the bunch, he is one of the game's best players, and just because of that fact; the Pirates have no chance at signing him, so let's let that fantasy die.
You can see Cedeno doesn't compare too well on the offensive side of the ball. All but five of the available free agents had better seasons with the bat than Ronny in 2011. Now let's look at defense:
2011 UZR/150:
Cedeno compares much more favorably with the glove. That is partly thanks to the fact that Cedeno played much better defense in 2011 than he had on average in his career, and there is no way to know if that will happen again in 2012 or he will regress (although the more likely option is probably the latter). However, Cedeno is one of the better defensive free agent shortstops.
There were three players that were better in both categories than Ronny in 2011: Hairston Jr., Barmes, and Santiago. Here are the ages and 2010 salaries of those three players:
Jerry Hairston Jr. (35) - $2.0M
Clint Barmes (32) - $3.925M
Ramon Santiago (32) - $1.35M
For all three players, the Pirates would have to pay more (if not much more) than the above numbers to get them to come to Pittsburgh. Considering the fact that they had the chance to give a 28 year old Cedeno 3 million to stay, I'm guessing they aren't going to be too interested in giving an older player more money than that.
Now obviously, those three players are not the only ones that would be an upgrade from Cedeno. As an offensive-minded guy, here's a rough list of the players I would take over Cedeno from this year's free agent pool:
Reyes, Punto, Rollins, Hairston Jr., Carroll, Barmes, Santiago, Furcal, Gonzalez.
Again, you can scratch off Reyes and Rollins right away, the Pirates do not have a prayer of getting either of them. The only players from that list that the Pirates could get cheaper than Cedeno would probably be Carroll and Santiago. I wouldn't rule the Pirates completely out of the bidding war for anybody besides Reyes and Rollins, but it certainly will not be easy.
Bottom line is, there is a chance here to upgrade at the position for 2012 and still save money (or not lose too much of it), but I still don't understand the risk of downgrading. Cedeno is comparable to any player the Pirates have a chance at getting, he is younger than most of them, and they had the guarantee of getting him had they just forked the $3 million. This could turn out positively if the Pirates can sign Santiago (who I think is the best choice) or one of the other above players, but until we do that, I say it was a poor decision to let Cedeno go.