Taking A Stab at Valuing the Farm Systems by Dave Cameron February 17, 2015 This morning, Kiley McDaniel released the FanGraphs Top 200 Prospects list, providing a remarkable source of information. We’re obviously biased, but Kiley’s doing great work with the prospect information provided here on the site. One of my favorite things he’s doing is working to break down the barriers of the ordinal ranked list, providing Future Value grades that allow for more reasonable tiers of prospects, so that less time is spent arguing over whether a particular player should be #23 or #28 on a particular list. So, I wanted to see if I could come up with a piece that would complement the information he’s presenting, using the value of having additional information beyond just ordinal ranking. To that end, I took latest prospect valuation estimates from Kevin Creagh and Steve DiMiceli, and attempted to convert their tiered valuation estimations into numbers based on the Future Value calculations Kiley attached to each prospect on his list. As I noted when we discussed the prospect valuation work a few months ago, the data is fascinating, but also slightly problematic for this purpose. For instance, here’s the table of values for prospect tiers according to Creagh and DiMiceli. Tier Number of Players Avg. WAR Surplus Value % Less than 3 WAR % Zero WAR or less Hitters #1-10 53 15.6 $48.4M 13% 9% Hitters #11-25 34 12.5 $38.3M 32% 9% Hitters #26-50 86 6.8 $20.3M 50% 31% Hitters #51-75 97 5 $14.5M 57% 44% Hitters #76-100 96 4.1 $11.6M 65% 42% Pitchers #1-10 18 13.1 $40.4M 6% 0% Pitchers #11-25 47 8.1 $24.5M 45% 28% Pitchers #26-50 77 6.3 $18.7M 42% 25% Pitchers #51-75 94 3.4 $9.4M 70% 48% Pitchers #76-100 105 3.5 $9.6M 67% 45% While there’s no clear right way to break prospects into larger groups, the #1-#10, #11-#25, #26-#50, #51-#75, and #76-#100 tiers don’t quite match Kiley’s FV tiers from his list. So, with the caveat that all of these are estimates based on estimates, I attempted to align the surplus value allocations from their research to Kiley’s FV tiers. This is what that matching produced. Position Players 70 FV: $55M 65 FV: $45M 60 FV: $40M 55 FV: $20M 50 FV: $10M 45+ FV: $5M Pitchers 70 FV: $50M 65 FV: $45M 60 FV: $25M 55 FV: $15M 50 FV: $10M 45+ FV: $5M The counts don’t line up exactly with the tiers produced by Creagh and DiMiceli, but they are close, and this does seem to be somewhat of a weaker prospect class than usual, with a lot of high-risk guys ranking quite highly. As has been supported by essentially every analysis of prospect performance, the players at the high end are worth far more than the guys towards the bottom of the list, as one great prospect is likely to outperform even a half dozen lower level guys. With these estimated values applied to each member of the Top 200, I then summed the data at the team level in order to give ourselves something like a overall valuation of for each team’s prospects who appeared on the Top 200. Again, these are estimates based on estimates, so none of this is intended to be precise to the dollar; it is simply an effort to expand a bit on Kiley’s information and give us an idea of the overall value of each team’s placement on his list. Anyway, caveats aside, here is how each team’s farm systems stack up based on applying the valuation model to Kiley’s Future Value grades. And a table for those who prefer such things. Team Surplus Value CHC $225,000,000 MIN $180,000,000 TEX $170,000,000 LAD $135,000,000 BOS $130,000,000 NYM $130,000,000 ATL $120,000,000 HOU $115,000,000 COL $110,000,000 CIN $100,000,000 CHW $90,000,000 NYY $85,000,000 TOR $85,000,000 WSH $85,000,000 KC $80,000,000 PIT $80,000,000 PHI $75,000,000 ARZ $65,000,000 BAL $60,000,000 CLE $60,000,000 SEA $60,000,000 STL $55,000,000 TB $50,000,000 SD $45,000,000 LAA $30,000,000 SF $30,000,000 MIL $20,000,000 OAK $20,000,000 MIA $15,000,000 DET $10,000,000 As you’d expect, the Cubs come out on top, with their collection of talent estimated to save them a little over $200 million over the team-controlled years of guys like Kris Bryant, Addison Russell, and Jorge Soler. They have both premium talent and depth, and will probably grade out as the best farm system in baseball any almost any kind of measure you’d want to use. Interestingly, however, the Twins jump to #2 on overall value by this method, as having Byron Buxton makes up for not having as much prospect depth as some other teams. For instance, the Braves placed three more players on the Top 200 than the Twins did, but this methodology values the Twins system at $60 million more in future savings, because Buxton, Miguel Sano, and Jose Berrios provide significant expected value to the organization. While the Braves have more players on the Top 200 than any other organization, they’re all in that 45+ to 55 FV range, where the long-term values just aren’t as high as they are with more premium talent. There’s certainly value in having a large quantity of prospect depth, but history has shown that you’re probably better off with a few high-end guys rather than multiple mid-tier prospects. The Braves farm system still comes out looking quite strong relative to the rest of the league, but this knocks them down a few pegs for lacking a true standout talent. When he finishes his team write-ups, Kiley will have his own farm system rankings, and they may or may not look anything like these. There are enough assumptions made in this attempt to not take these literally, or to say that these are the final word on farm system valuations. But as you look at the list, I think this serves as a useful reminder of how much more the guys at the top matter than the guys in the middle and at the end. Quantity is great, but when it to prospects, quality comes at a premium.