Assessing Roster Moves IV: Prospect Value

In the previous installment of this series, a reader comment provided an excellent point about judging prospects: monetizing prospect value appears to inflate their potential value, compared to MLB players. That this should not be surprising does not diminish the salience of the point — analysts have much, much more information available about MLB players. Moreover, MLB players and prospects perform in completely different worlds, which means that even when both players are monetized based on WARP or potential WARP profile their assessments may mean different things. Essentially, in my roster assessment posts, I am using a form of Cost-Benefit Analysis, which holds that different entities can be analyzed and assessed in monetary terms; while Cost-Benefit Analysis may be more straightforward in a policy setting, these types of assessment difficulties exist in the policy world as well (say, comparing the impact of losing a species versus the economic impact of limiting logging activities). While this type of monetization model is imperfect, placing MLB players and prospects on the same scale can help create a comprehensive vision of an MLB team’s roster, transactions, and future value.

Related Reading
Creating Surplus Analysis and Depreciation Models
Normative Analysis
The Ideal 40-Man Roster

On the Difficulties of Assessing Prospects and MLB Players
First, that an “MLB player” has actually cracked the big leagues and developed some type of role can either enhance or diminish that player’s value. Either way, once that player’s value is expressed in WARP, or some other clearly defined MLB statistic, it becomes much clearer and therefore (usually) “depressed” compared to the OFP of a prospect. (Only a few can be, say, Scooter Gennetts, 50-grade prospects who actually become 4.0 career WARP MLB players! [This is a good thing, not a dig at Gennett.]). Obviously, there are MLB players with non-linear career arcs, role changes, fast or slow declines, etc., across the prospect spectrum — no 60 OFP prospect is guaranteed to become an All-Star, and a 45 OFP prospect may put together a season as a starting player at some point. Future grades and future roles are not concrete.

Second, prospects are judged in completely different ways than MLB players. An MLB player is almost always judged according to three criteria: (1) production, (2) role, and (3) contract. Sure, “production” could be nitpicked with advanced analytics — one could write programs valuing players based on physical and mechanical traits, instead of outcomes (like, say, Strikeouts / Walks / Homers for a pitcher). This is still a concrete analysis of “what has happened” that will arguably weigh what has happened much heavier than what will happen (unless one is attempting to work on a specific type of regression analysis that aims to forecast a player’s traits as future production).

But a prospect can be judged according to best possible ceiling, actual floor, distance between ceiling and floor, proximity to the MLB, risk, individual tools (i.e., the Brewers took a chance on Adam Walker because of his power), aggregate approach / mechanics, projection, and — if you’re bold — even statistics! Even a player like Brett Phillips or Miguel Diaz is difficult to judge, not to mention someone like Phil Bickford, Demi Orimoloye, or Gilbert Lara.

• Miguel Diaz was assessed with a 60 OFP grade during an immensely successful 2016 campaign at Class-A Wisconsin, but he was somewhat old (age-21) for his level and has mechanical, size, injury, and workload questions that leave some to lean on the chance that Diaz is a relief pitching wildcard. So…striking a balance here is quite difficult, between the odds that Diaz has a chance to reach 3.0 / 2.0 / 2.0 WARP seasons as an MLB player, or that his career takes a 1.0 / 0.0 / 0.0 reliever path. Without even considering risk or any other aspect of Diaz’s development here, monetizing those WARP figures suggests that Diaz could be worth anywhere from $7.0 million to $49.0 million in terms of production value for an MLB team. There’s nothing satisfying about that spread.

• Phillips, a much more advanced and theoretically less risky prospect than Diaz, even exhibits the unsatisfactory aspects of grading prospects in a manner that allows them to be compared to MLB players (for the sake of grading trades and grading roster moves, for instance). There’s the 55 OFP Phillips, a tricky prospect with some bat questions but an overall full-package that allows him to project in either CF or RF, and there’s the 2016 Phillips that caused some evaluators to raise questions about platoon or bench futures. Digging deeper into Phillips’s campaign, nothing is easy — do you judge his statistics on the surface of his age, overall AVG / OBP / SLG line in the Southern League, and focus on issues of strike outs, or do you dig into the context for age-22 seasons in the Southern League and emphasize that even with all the warts, Phillips had one of the most productive seasons in the League? Again, nothing clear-cut or satisfactory here, although depending on how an analysts leans into this information, one could emerge with the positive picture of a left-handed bat that will draw the fat end of a platoon with some discipline and power promise to make the defense worth while (which is perfect counterpart to a current Brewers RF who may be short on chances to correct his own platoon issues). Again, nothing satisfactory here — the 3.0 / 2.0 / 0.0 WARP Phillips may be less likely, but even a platooning Phillips could do better than 1.0 / 1.0 / 1.0 WARP progressions.

Economics and Taking the Longview
The other issue with assessing minor leaguers is their contractual reserve status with their parent clubs. First, minor leaguers are criminally underpaid, leaving clubs that are looking to shed MLB contracts for prospects in the wondrous position of downgrading costs from (at least) $550,000 to maybe $10,000 (or less). When the Brewers swapped Carlos Gomez and Mike Fiers (and an international bonus slot) for Domingo Santana, Brett Phillips, Adrian Houser, and Josh Hader, they surrendered at least $14 million in likely contracts (for 2016-2017) for what was almost certainly less than $2 million in likely contracts (for 2016-2017). That salary relief is worth nearly 2.0 WARP, on top of the surplus value and OFP the Brewers acquired in Hader, Houser, Phillips, and Santana.

Moreover, it is problematic to consider whether prospects should be evaluated for their immediate likely contribution to an organization (i.e., their trade value and maybe their first two or three years as an MLB player), or evaluated on the grounds that an MLB club potentially reserves their contractual rights for six-to-seven years. This is a difficult judgment because it will twist the values of prospects with high floors that may be able to contribute almost immediately to an MLB club, and it will also twist the values of prospects that could have huge OFP payoff that may legitimately be a half-decade away (even players like Lorenzo Cain and Jake Odorizzi are solid examples of this, as they each took at least three years to morph into their best and most-productive MLB selves, even though they were both relatively advanced prospects when traded prior to the 2011 season). Cain himself is a prospect who looked like his 2009 “Perfect World Projection” was 100 percent accurate (4.2 WARP prior to 2014), and then he turned on the burners to nearly triple that value in his next three seasons. This may be a vote in favor of using a prospect’s immediate future as a valuation tool, but once again, there are many unsatisfactory aspects of this method.

As an example, the Zack Greinke trade shows just the issue with assessing prospects.

• Even slapping a 45 OFP relief grade on Jeremy Jeffress to enter 2011 gives the righty a huge potential contract surplus for years of control. Incidentially, Jeffress’s career WARP has almost perfectly matched the $14.7M approximate value of a 45 OFP ([1.0 / 1.0 / 1.0] * 70 percent), which leads one to wonder whether simply using a monetized WARP version of OFP is the best way to assess prospects on the same transactional scale as MLB players.
• By that measure, the Brewers received exceptional trade return from their Alcides Escobar-lead package, by more than 3.0 WARP ($29.2M).
• However, if one considers the value of contractual control — which the Royals adroitly demonstrated with Cain and Escobar, and did not with Jeffress or Odorizzi, the Brewers paid more than 9.0 WARP (-$66.5M) to acquire Greinke and Yuniesky Betancourt for a potential playoff push.
• In terms of what actually happened, both teams maximized their deals — the Brewers received actual contractual value and production worth 15 percent more than the advertised sticker price at the time of the trade, and the Royals turned Cain and Escobar into a whopping $277.1M total surplus (six times their advertised sticker price!) while spinning Odorizzi as a part of what became the club’s Pennant and Championship-defining trade.

Hypothetical Modeling
As an example of the difficulties of judging prospects, consider a potential trade involving Ryan Braun, a proven elite MLB left fielder. Even with his guaranteed four-year contract, Braun’s track record (improving into his 30s, no less!) shows a total surplus of $45.8M, meaning that the opportunity cost for trading Braun is at least six wins. Following my investigation of the Astros’ trade for Brian McCann, I suspected that MLB teams do not necessarily consider a player’s depreciated performance when trading for an MLB player; in this case, Braun’s three-year production value is $58.8M, and his total surplus value (including his contract!) is worth $96.8 million.

Depending on how one reads it:

• Braun’s total surplus is hardly worth the total, full contract reserve of any average-or-better prospect (leading me to conclude that this method is problematic).

• Depreciated Braun may be worth the basic value of one 60 OFP prospect and a bench-profile throw-in.

• Non-depreciated Braun may be worth the basic value of at least two 60 OFP prospects (although this seems high).

• Braun-plus-cash is legitimately the best way to improve the prospect return for the veteran.

• Using contract surplus for a prospect, instead of total surplus, Braun is worth approximately one 60 OFP and 50 OFP prospect package.

• Of course, given the individual prospects involved, even these figures may not be helpful. A 45-50 OFP prospect that makes an adjustment to maximize a particular approach or tool could become a 55 OFP prospect. A 60 OFP prospect like Isan Diaz may appear out of thin air. Risky, low-minors plays (like Freddy Peralta, Carlos Herrera, and Daniel Missaki in the Adam Lind trade) may help to maximize the value of a potentially risky veteran trade.

Ultimately, the prospect valuation issue shows the difficulty of Cost-Benefit Analysis, where disparate elements of a transaction must be assessed on the same terms. Obviously, there is no real comparison between an MLB player and a prospect; “prospects are prospects” for a reason. Even the Brett Phillips of the world — legitimately good prospects that provide solid trade return for MLB veterans (like Carlos Gomez and Mike Fiers) — could become bench / platoon options that do not deliver on their full promise. For this reason, prospect monetization assessments based on WARP or projected WARP may always look a little funky, as there is such a harsh range of realities to consider. By slogging through the comparisons, however, one can begin to appreciate that there can indeed be value in swapping such divergent assets as MLB players for prospects.