Valuing Minor Leaguers
When it comes to valuing prospects, we take into consideration the scouting done by such sites as Baseball America, Baseball Prospectus, Fangraphs, and MLB Pipeline. We are also indebted to the excellent research done by both Fangraphs’ Craig Edwards and the smart guys at the Point of Pittsburgh, whose findings generally align. Having said that, for our purposes, we needed to extend the findings of the latter two logically to include a wider gamut of prospects, consider a wider range of sources and scouting reports, and create a model that weighs all of those inputs proportionally. We then tested and refined those weightings against real-world market results to ensure they were consistent.
We should note, however, that by that we mean “consistent” in an aggregate sense — individual cases will vary. That’s because prospects have a much wider range of outcomes. A few will become stars; some will become productive major leaguers, but not stars; and a large majority of them will never make it to the big leagues. We don’t attempt to predict those outcomes; rather, we follow a probabilistic approach such that over time, the outcomes align with our approach. Just as a major rating service will apply a future value rating to them (typically on the 20-80 scale), we apply an equivalent trade value, in which that range of outcomes is baked.
What you may notice is that the prospect pool follows a long-tail model. Because the blue-chip prospects at the top of a team’s farm system have both a much higher probability of making the majors and becoming productive at that level, they carry a disproportionately higher trade value. Further, position players have higher valuations than pitchers due to the difference in injury risk.
The values then drop off at a fairly steep rate from there, until you get to the long tail of players who have low probabilities of either making the bigs and/or becoming productive. Their values are often in the low single digits, or even less. And there are a lot of them. At that end of the scale, you’ll find a lot of marginal pitching prospects.
One last note on this: Because the sources we follow update their prospect ratings on an irregular basis, there can be lag time that affects our valuations. When they update their ratings, we plug them into our model, but if they don’t get around to it for a while, our numbers might not reflect their latest thinking, until they release them.
After weighting the variables, we then make four adjustments: for position, performance, injury risk, and roster risk.
We give a little extra credit to shortstops and catchers. Why?
Shortstop prospects are typically considered the best natural athletes, and as such they tend to have more positional flexibility. Those who do stick at SS have the benefit of the defensive positional adjustment for WAR in the majors – in other words, they’ll become higher-WAR players, on average. Those who don’t stick have a better chance of sliding over to another position, because of their athletic skills. They have a good chance to turn into 3Bs, 2Bs, and even OFs. In other words, SS prospects tend to have both a higher ceiling and a higher floor. Teams that trade for SS prospects also know this.
“Honestly, you always start with the shortstops when building a team. Those are the guys who can move around the diamond,” said Billy Owens, Assistant GM of the Oakland Athletics, as told to Melissa Lockard in The Athletic.
We give catchers some extra credit also, because there is consistent demand for them. Good catchers are hard to find. It’s a difficult position to learn and master, and teams always need at least two of them.
Left-handed relievers are also given a small upgrade due to consistent demand for their specialized skills.
Beyond that, we don’t distinguish between CFs and COFs because there tends to be a lot of fluidity there. Similar story with corner infielders.
Future relievers are downgraded in our system because, on average, they won’t be as valuable as future starters. Granted, the sources we use have often baked that into their evaluations, so our adjustment is relatively minor.
We’ve also noticed that prospects who are performing well in their current or most recent season have greater appeal to potential trade partners, as you might expect. Uptrends matter — a bit. The opposite is also true. So we make a small adjustment for those cases.
As with veterans, player injury risk is a real concern for teams. However, for prospects, the degrees and timelines are different. Since they haven’t yet started their service time, for the most part, getting hurt doesn’t impact their trade value as much in this phase of their career as it does later. A pitcher who undergoes Tommy John surgery at the AA level may be just as valuable when he returns because of the success rate of the surgery (commonly understood to be about 80%) and the fact that the MLB service clock hasn’t started yet – it’s just delayed. We still adjust down for it, though.
What happens when a team has no room on its 40-man roster to accommodate a rising prospect on the bubble? He often gets left off, and is at risk of being lost for nothing in the Rule 5 draft. It’s a similar story for prospects who are out of MLB options – it’s a “use ‘em or lose ‘em” decision for teams. And the GMs of those teams know they have less leverage in those cases, which means the player’s value is discounted. So we adjust for that here.
Finally, note that for prospects, we don’t include data such as adjusted field value or salary, because there are too many unknowns. So we focus on surplus value, then apply a low/median/high range. And because of the high variance of most prospects, that range is larger than with veterans.
Questions? Contact us.