Playing Roulette with Danny Duffy and Wil Myers

January is notoriously slow for baseball activity, but the other week gave us two interesting extensions to digest. Wil Myers was extended for six years and $80 million, while Danny Duffy received five years and $65 million. Both of these players have had interesting careers thus far. Wil Myers has been polarizing in various ways since he was traded for James Shields. The most recent development has been his transition from playing OF to 1B, and seeing if he would be a valuable asset. As for Duffy, he spent part of the season in the Royals’ bullpen before sinker/slidering his way to potential ace status. If you look at both of their production over the last four years you see the following:

Year Duffy Myers
2016 2.8 3.8
2015 1.2 0.6
2014 1.9 -0.1
2013 0.5 2.3
Total 6.4 6.6
Average 1.6 1.7

The table above doesn’t exactly inspire much confidence paying these two individuals the approximate GDP of Qatar. Obviously, the Royals and Padres liked what they saw this past year and were ready to buy into the future. Both Duffy and Myers have youth on their side at 28 and 26 so the teams are buying recent improvements and prime years. Steamer, too, is optimistic about both players, projecting Duffy for 3.1 WAR and Myers for 2.4 WAR.

These deals are not without risk and there is real concern about the inconsistency of both players. As illustrated above, both Duffy and Myers have had years of above-average production and also years where they barely scratched replacement level. These deals may be seen as opportunistic for both player and team, but let’s take a look to see where the value may lie. First, we need to look at how much the team paid and the expected breakeven value.

 Name Contract Value Expected War War Per Year
Duffy 65,000,000 8.1 1.6
Myers 83,000,000 10.4 1.7
Assumes 8M / 1 WAR

Based on this analysis, the teams are paying these players to be exactly what they have been over the past four years. At first glance, this seems like a steep price for the pair who have had middling results but players who have shown superstar upside, even inconsistently, have immense value. A similarity both players share is signing these contracts under team control. Each presumably would have done better on the open market but decided to sell after career years.

Given the significant swings in performance, these contracts are unique because the total value of the contracts may be recouped over 1-2 years. Just this past season, Duffy and Myers were worth 2.8 and 3.8 WAR, respectively. Using the 99th percentile outcome for both these players, a 5 WAR outcome seems to be the absolute ceiling for these two players. Using the same 8M per WAR valuation, a 5 WAR season would produce a value of $40M. This would account for 62% of Duffy’s breakeven WAR and 48% of Myers’. If they were to return to their previous form and be worth 1.6 WAR each year for the remainder of the contract, the team would still enjoy a significant amount of surplus value. If you think 5 WAR is optimistic and prefer to think of their ceiling as closer to 4 WAR, the math still favors the teams’ side of these deals.

Danny Duffy and Wil Myers represent players who offer youth and inconsistency, and they have shown glimpses of stardom. Their respective contracts build both optimism and risk into the final dollar value. The unique part of these deals is quantifying the risk associated with these players. Given their inconsistencies, the teams should potentially expect to receive most of the value in one year while receiving middling results in the others. The Padres and Royals are betting on talent and recent improvements. Teams generally extend players with the idea of receiving consistent year-to-year value. Duffy and Myers portray a more boom-or-bust scenario. Generally, we have an idea of how a contract will go after Year 1; given these two players, we won’t know the result of the deal until the very end.

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