Projecting Paxton

James Paxton will be a free agent in the winter of 2020, with or without a season. Acquired by the Yankees in a deal in November 2018 for Justus Sheffield, Erik Swanson, and Dom Thompson-Williams, he has pitched one year in the Bronx totaling 150.2 innings after pitching 582.1 innings in his career as a Mariner. He will be 32 when he takes the mound in 2021, yet will have only thrown 733 innings (plus however many he throws this year). This can be attributed to a couple of factors: first, he made 20 starts in a season for the first time at age 27. Second, he has had issues battling injuries throughout his career. Via Joe Rivera of the Sporting News, Paxton has suffered the following injuries: In 2019 he suffered a knee injury that kept off the field for a month and suffered a glute injury that was day-to-day. In 2018 he went to the injured list for a back injury. In 2017 he went to the injured list for a strained pectoral muscle. In 2015 went to the injured list for a strained middle finger tendon. In 2014 went to the injured list for a lat strain. And back in March, the Yankees announced that he would miss the start of the season due to a back injury. That was before the season was delayed. With the season having been delayed, the Yankees are hoping to get him back for whenever MLB and public health officials decide to start the season.

With all that being said, I thought it would be an interesting exercise to look at what type of contract Paxton will merit this coming winter. Obviously, teams will be wary of committing to Paxton long term for a lot of money because of the injury history. The rub is that, when he pitches, Paxton has been excellent. Over the past four seasons, Paxton has the 12th highest WAR of any pitcher (15.1 per FanGraphs) in the 54th most innings pitched (568). On a per 180 inning basis (an approximation of a full-year’s worth of work for a starting pitcher) that amounts to 4.78 WAR in a full season. That’s firm all-star and near Cy Young Award type production. 

Given that Paxton will be 32 at the start of his next contract, I projected his value over the life of his next theoretical contract. To do so, I used the framework provided in Ben Clemens’ piece about valuing opt-outs at FanGraphs. The gist of the model is to estimate the value of the player while factoring in aging and the change of the cost of a win on the free-agent market. On average I said that a player loses about half a win in value year over year after the age of 30 (Paxton is 32). To account for inflation, I said each win is worth an increase of 250,000 dollars each year and set the initial value at eight million dollars. One issue is that player aging curves do not follow this linear pattern nor does the going rate for a win. The amount teams paid for a win changed a lot between the offseasons leading up to 2018, 2019, and 2020, for reasons largely unknown to the public (read this Craig Edwards piece for specifics).  This issue needs to be remedied when projecting player cost. I addressed the fluctuations of value and cost by simulating a player’s value and the cost of a win each season 1,000,000 times over a set time frame by picking out random numbers in a normal distribution and adding or subtracting those numbers from both the player’s WAR and the cost of a win. The deviations were factors of 1.4 for WAR and 800,000 dollars for a win. From there, I could pick out percentiles of value over the life of a contract.

For Paxton, getting around a four-year deal as a free agent seems like a fair outcome. Paxton is represented by Scott Boras. In the offseason leading up to the 2018 season, Boras negotiated the contract of Jake Arrieta, who was going into his age 32 season. This past offseason Boras negotiated the contract of Hyun-Jin Ryu, who just turned 33. Since Paxton shares the same agency as Ryu and Arrieta and has a similar place in the hierarchy of the league as those two players (he is probably a bit better than both, more so Arrieta than Ryu) I thought using their contracts as a framework for a Paxton deal would be apt.

I will start with the Ryu contract, since it is a bit more straightforward. Ryu is coming off his best season of his career, tossing 182.1 frames in 2019. However, in his three seasons prior, he threw only 82.1, 126.2, and 4.2 due to a plethora of injuries. He missed the entirety of 2015 and in his first two seasons he totaled 344 innings, bringing his career total to 740.1 innings where he has been worth 15.1 WAR, the same total as Paxton the last four years. Ryu, like Paxton, had a lot of trouble staying on the field before his 2019 campaign. In December, he signed a four-year deal worth 80 million dollars with limited no-trade protection (can block a trade to eight teams). So, I fired up the contract value simulator for a four-year deal. Paxton’s depth chart projection this year is 3.9 WAR over 167 innings, which given his history, seems like a fair estimate. Since he will not be playing under this new free-agent deal until next season, I guessed Paxton would be projected for 3.5 WAR at the start of next season. In the simulation I plugged in the 3.5 WAR projection, his age, and a four-year contract and obtained the following results:

The numbers on top represent select percentiles in the 1,000,000 simulations and the figures in the second row represent his value, in millions of dollars, over the life of a four-year deal. His 50th percentile outcome comes out to about 107 million dollars, a bit more than Ryu but fair given the discrepancy in the two players’ abilities. So, if Paxton takes a four-year deal this coming offseason, anything in this 107 million dollar range, barring a serious injury, should be the expectation.

Next, I looked at Paxton taking a deal with a similar structure to Arrieta. Scott Boras has seemingly developed a new type of contract structure, one he has used with Arrieta, Yusei Kikuchi, and Zach Britton. Boras calls it a “swellopt”. Basically, at some point in the contract, the team has the option to tack on extra years to the deal (thus the contract swells). If the team does not opt to do so, the player can either opt-out immediately or play out the remainder of the deal. Let’s look at how this works with Arrieta. Arrieta signed what was technically a two-year contract worth 55 million dollars in March 2018 (30 million dollars in 2018 and 25 million dollars in 2019). At the end of the two-year deal, one of three things could happen: The Phillies could tack on two years and 40 million dollars, the Phillies could do nothing and Arrieta can opt-out, thereby becoming a free agent, or the Phillies could do nothing and Arrieta could opt-in to a 20 million dollar player option for the 2020 season (the Phillies ended up forgoing the team option and Arrieta picked up the player option). The benefits of this contract structure are it gives upside and agency to the teams (if the player exceeds the contract’s value they can lock it in for longer) while also giving the player agency if the team opts out.

So how would something like this work for Paxton? Let’s use a similar structure to Arrieta, a two-year base but give the team an option to tack on three years after as opposed to the two for Arrieta. I would consider this beneficial to Paxton because potentially locking in a fifth year at age 37 is something players do not often get the opportunity to do, especially given Paxton’s injury history. To come up with something that makes sense for Paxton, we need to project his contract worth over two, three, and five years, respectively:

Anything above or below the 50th percentile outcome represents upside and downside respectively. For the purposes of constructing a contract that makes sense, using the 50th percentile outcomes are most beneficial. I am going to assume that Paxton can get a deal for more than three years on the free-agent market given his age and abilities (given the contracts signed by Ryu, Zack Wheeler, and Madison Bumgarner this offseason). If Paxton took a deal of this structure, he would only be guaranteed three years. As a result, a prospective team is going to have to pay him a bit more than they would otherwise upfront. So, given the structure of a two-year base with three-year team option or a one-year player option, a fair deal for Paxton would look like two years for 65 million dollars, three-team options valued at 20 million dollars apiece (or 60 million total) and a 20 million dollar player option if the team opts out. That would either give Paxton 65 million over two years, 85 million over 3 years, or 120 million over five years. Paxton might be taking a bit under his five-year value in this case scenario if the team opts in, but 120 million dollar upside for a 32-year-old player of his caliber is very fair in this climate. Worst-case scenario he gets 85 million and if the team opts out but he thinks he will have some suitors after the 2022 season, he will get at least 65 million dollars with the upside for some more term. 

Ultimately, the goal of this was to show you what goes into both projecting players and coming up with sensible contracts. As you can see with Ryu and Arrieta, there are a multitude of ways to get paid what you are worth. Given Boras’ history of coming up with creative ways to get his clients compensated, I will be curious to see what he comes up with for Paxton.

All contract data via Cots Contracts