What is the value of a prospect? Doug Gray December 17, 2014 15 Comments Yesterday I came across a post on Fangraphs that began to look at what the current value is for prospects. The article grabs the information from the original source over at The Point of Pittsburgh. If you’ve been around here for any amount of time you have probably seen my annual posts in January or February (or this last year, in April due to health complications by one of the sources) where I show the value of each farm system in baseball. If you haven’t, you should probably go check it out. Essentially, using historical prospect rankings a group of people sourced together what prospects were generally expected to be worth between Baseball America’s Top 100 prospect rankings and John Sickels prospect grades. Over time the writers have changed at Baseball America and John Sickels has changed how he views prospects, and of course, as I’ve been saying for a while now, how prospects are used in the minor leagues certainly changes how their future is going to play out (particularly from a pitching standpoint when it comes to health). The study was using data from 1990-1999 when it was originally released back in 2008, so it was dated somewhat, but it had to be given that it tries to figure out how valuable the players will be over their first six seasons (how long the team controls them before free agency). The new study only looked at the Baseball America Top 100 list, but it used data from 1994-2005. Below I will show what the old values were compared to the new values and talk about a few changes. All values are in “surplus value” that uses what they were paid versus what someone of the same value (in WAR) would have been paid on the free agent market. Description Old Value New Value Change Top 10 hitting prospects $32.50 $48.40 $15.90 Top 11-25 hitters $22.30 $38.30 $16.00 Top 26-50 hitters $20.80 $20.30 -$0.50 Top 51-75 hitters $12.60 $14.50 $1.90 Top 76-100 hitters $11.10 $11.60 $0.50 Top 10 pitching prospects $13.50 $40.40 $26.90 Top 11-25 pitchers $14.20 $24.50 $10.30 Top 26-50 pitchers $14.20 $18.70 $4.50 Top 51-75 pitchers $10.80 $9.40 -$1.40 Top 76-100 pitchers $8.70 $9.60 $0.90 There is something to note before beginning to talk about this. When the original study was done the value of a “win” in free agency was $5M. That number is about $6.5M today, so there has been some inflation. That alone changes some of the math, increasing the old values by 30% on pure inflation. The Hitters While the value of hitters in the Top 25 has increased nicely, going from $55.8M between the two top groups to $86.7M, that’s just a 55% increase. A majority of that is simply from inflation, though it does seem that over time identifying guys to rank as highly improved. The group of hitters from 26-100 though didn’t keep up with inflation at all and guys ranked between 26-50 actually are now less valuable than they were prior. Cream of the crop hitters in all of baseball gained value, but the very good but not elite guys didn’t. They lost a little bit of value. The Pitchers Here is where we start to see some of the difference. A top 10 caliber pitcher saw his value jump from a mere $13.5M to $40.4M, an increase of 199% as they nearly tripled in value. If you go to the original article you will also see that they are also the only group who did not have a single player from the group that literally provided no value at all. Pitchers ranked in the 11-25 group also saw a big jump in value, going from $14.2M to $24.5M, a 73% increase. The guys ranked 26-50 stayed even with inflation, but the guys from 50-100 didn’t. Still, pitching prospects particularly the truly elite ones, made huge strides in the new sample size. What does it mean Well, if you still believed that pitching prospects were as risky as hitters, you lost a lot of that argument. Top 100 hitters are still worth more as a whole, but the pitching caught up rather fast by pushing forward just five years in the dataset and that really ignores a lot of teams truly changing how they handled pitching prospects in that 2000-2005 time frame where we really started to see changes being made. Nearly everyone eligible for this study is 30-years-old or older at this point. To put it in perspective Homer Bailey barely makes the cut for this list and Johnny Cueto doesn’t since he didn’t show up on a Top 100 list until later in his career. What it also means is that in the future when I do these farm system value rankings, teams that are heavy on pitching prospects will fair better than they used to. Much better. It always made sense that they should be more valuable, but I stuck to the numbers as much as possible to try and keep it as historically accurate as possible with as little number changing as possible (I did change it so that pitchers ranked between 1-50 were all worth the same since it didn’t make sense that guys ranked 11-50 were more valuable to a farm system than guys ranked 1-10 even though they historically had been. That was the only change made though.). I’d imagine that the values are even more today than this study shows, but we just can’t back it up in data. My belief is that it is night-and-day different in terms of how teams evaluate and even how analyst evaluate prospects today compared to even 10 years ago. The amount of data we have access to is so much of a difference maker. Today we can sit at home and watch these guys play from the comfort of our living rooms, or on our phones. Teams have more and better access to all kinds of information, video and there are more opportunities to see them on a national scale (particularly the high schoolers) thanks to more national events taking place. The statistical analysis boom across the industry has also really helped weed out some guys who at one point would have ranked much higher because they “looked the part” but their weaknesses have been shown to not translate well to the Majors even if they had good numbers on the surface in the minors (mainly strikeout-to-walk ratio for both pitchers and hitters) as well as being able to better normalize numbers from the minor leagues with better park factors being used. I’m just scratching the surface on things that make things easier today in evaluating prospects compared to 10, much less 20 years ago, but it’s why I believe that in 10 years when we can hopefully look back at this kind of study again, we will see another explosion in the numbers. 15 Responses RedsFaninPitt December 17, 2014 Doug: Off topic here, but if the Padres trade for Wil Myers as is being rumored right now, they are suddenly going to have a pretty crowded OF. What do you think about trading for Seth Smith to fill our LF hole? His contract seems very reasonable at 2 yrs for about $13 mil. + option yr. His LH bat in GA BP could really play up. What do think? If you like, what do you think it would take to get him? Dale December 17, 2014 One thing that s missing in the value is subtracting what the player is actually earning… Including bonus money from the war value. Here is an example since i do not have any contract info on a minors guymi will use joey votto as an example 2014 salary 12 million war was rated 1.9 multiply by 6.5 million equal 12.35 subtract the 12 million salary and his value becomes .5 million Doug Gray December 17, 2014 Actually that is factored in. This is “surplus value”, what the team is saving versus paying the going rate for WAR on the open market. Billy December 17, 2014 Nice work, Doug. The Reds should fare quite well with all the pitching they have in the system. Maybe TINSTAAP is no longer a thing. Doug Gray December 17, 2014 I’ve never bought into the whole TINSTAAP thing. Of course there were always pitching prospects. They were harder to identify as legit than hitters, but I really think that ended a while ago…. but old habits die hard and people kept spitting it out at every turn. Dick Dowd December 18, 2014 What is Tinstaap? Doug Gray December 18, 2014 There is no such thing as a pitching prospect. stock December 17, 2014 Much more reasonable than the old set of numbers. Your previous set of numbers were so far off the results meant nothing to me. Very unrealistic. I was curious so I took a look at the top 20 prospects in 2009 (6 years experience and able to be FA). To create a larger sample size I looked at 2008 and 2010 also. My findings were as follows. 2008 12 hitters total WAR of 174.3 for an average of 14.5 (studs Longoria, McCutchen and Ellsbury. Duds Snider, Brandon Wood and Fernando Martinez) 8 pitchers total WAR of 109.6 for an average of 13.7 (Studs Kershaw and Price. Duds Morales) 2009 14 hitters with a total WAR of 140.8 for an average of 10.06 (Studs Heyward and Posey. Duds Snider, Lars Anderson and Logan Morrison) 6 pitchers with a total war of 73.4 for an average of 12.23 (Stud Price. No Dud) 2010 14 hitters with a total WAR of 126.4 and an average of 9.03. (Studs Heyward and Posey. Duds Jesus Montero, Smoak, Dominic Brown, Aaron Hicks and Logan Morrison) 6 Pitchers with a total WAR of 48.7 and an average of 8.12. (No Studs. Dud Martin Perez) Three year totals 40 Hitters 441.5 WAR with an 11.0375 average 20 Pitchers 231.7 WAR with an 11.585 average Pretty much the same over the 3 years. Stud was a WAR of 20+. Dud was a WAR < 3 Doug Gray December 17, 2014 Yeah, even when I was using the old numbers I always tried to note that it was based on old data from before the time when I felt teams started really changing how they were handling pitchers and thus there were far fewer injuries and busts from those ranks. It really does alter the numbers quite a bit. And of course, as I noted here, I think things are going to be even better when we look back at the next set of guys five years beyond this group. Stock December 17, 2014 I agree. This will give you reasonable results though. Where as before you were just better off giving them specific rankings like 10 for A, 8 for A-, 6 for B+ and so on. Jeff December 17, 2014 Doug, based on this what would you give up for 1 year of Justin Upton? Stock December 17, 2014 Based upon this, Stephenson is too much. They want Pitching so Lively and Moscot seem reasonable. Worst case scenario Travieso and Moscot. Doug Gray December 17, 2014 I wouldn’t base anything on this because it seems pitching is much more readily available these days than above-average hitting is. With that said, I’m not keen on giving up very good prospects for 1-year guys, which Upton is. For me, the top three guys are out of the question. After that, we need to talk specifics. I’d rather package 3-4 guys from the 8-15 range, sans Iglesias since he’s not going to be moved regardless of where I rank him, than trade a Top 3 guy and a guy in the 15-40 range. Exactly what the deal has coming back changes the math a little bit – perhaps the Braves toss in a little money for salary relief. Billy December 17, 2014 Just spitballing here… Steamer projects Upton to be good for about 3 WAR this season. At Doug’s $6.5 M/WAR, that’s a value of $19.5 M. He’s owed $14.5 M. So that’s $5 M of surplus value. You’d have to give up prospects that are worth $5 M in surplus value. That’s well below the cutoff for the top 100 in the data above. That raises two questions for me. First, how quickly does that surplus value tail off? It seems like it wouldn’t tail off too quickly, which would suggest that there are a LOT of prospects worth more than $5 M in surplus value. That leads to the second question. Upton has got be worth more than a surplus of $5 M given the prices of offense this offseason, right? Seems to me that maybe WAR for hitters is more expensive to acquire this season than WAR for pitchers. Anyone know if that’s actually true? Doug Gray December 17, 2014 Well, $5M surplus value in one season is a lot more valuable than $5M surplus value over the course of six combined seasons. Of course, $15M in one season is still $15M in one season versus what a total of less than 1 WAR would be worth over six seasons (maybe $5-6M total). There’s a lot of math that goes into it. Until the offseason is over, it’s tough to say how expensive things are to acquire.