You are not correct. Let's take an easy, relatable example.
https://www.uline.ca/Product/Detail/S-1719/Indestructo-Mailers/4-x-4-x-4-White-Indestructo-Mailers
As you can see, buying 100 bundles of mailer boxes costs $86 per bundle. Buying 1000+ costs $59 per bundle. Why? You're being incentivized to buy more, therefore ensuring that U-Line gets more money, even if they had to discount the boxes.
Baseball contracts are exactly the same. One year of Bauer is very little risk, and you pay a premium for that. If you give him more years, the AAV goes down accordingly, as risk is transferred from the player to the team.
So no, no one would consider Bauer signing for 1/30 to be the 7th highest pitcher contract of all time. They are literally never measured that way.