What is the value of a prospect?

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.

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.