Introducing an Updated Method for Prospect Valuation

Seven years ago, Craig Edwards published a landmark study on prospect valuation. Craig’s work built on previous studies by Victor Wang, Scott McKinney, Kevin Creagh, Steve DiMiceli, and our own Jeff Zimmerman, as well as a few prior ad hoc attempts here at FanGraphs; subsequent work on the subject was done by the team at Driveline Baseball. These studies have been hugely important both for FanGraphs’ own evaluation of prospects — among other things, Craig’s work has helped to feed the Farm System Rankings over on The Board — and for the broader public study of the minor leagues.
The reasoning behind these studies is clear and simple. If you want to evaluate a prospect-for-big-leaguer trade, you’ll need to know the expected value of the prospect in the trade. If you want to evaluate how much help is waiting in a given team’s farm system, a quantitative assessment of the talent there is necessary. Even if you’re just wondering how likely your team is to find the next big thing, again, you’ll need some type of framework to understand how often that’s happened in the past.
The previous studies of prospect valuation are still excellent, but they’re all very much of their time. Since Craig published his study in November 2018, the league has changed significantly. The COVID-abbreviated 2020 season changed minor league timelines across the board. The league contracted the number of minor league franchises significantly in 2021. A new CBA, signed before the 2022 season, changed compensation structures and competitive balance tax levels, and introduced the Prospect Promotion Incentive. The cost of a win in free agency has skyrocketed; league-wide payrolls are up more than 30%, and free agent salaries are up by more than that. Read the rest of this entry »






