Valuing Prospects: The Pros and Cons of a Single Number

Over the next several months, I’ll be releasing comprehensive reports on each major-league club’s farm system and the prospects therein. Implicit in this is that I will be ranking the prospects – both within each farm system and across baseball – based on my own evaluation of the players as well as that of industry sources. The players will be ordered by their “Future Value” grade. This Future Value methodology was brought to FanGraphs in 2014 by former Lead Prospect Analyst, Kiley McDaniel (reggaeton horn).

If you’d like to read what is essentially the Book of Genesis on Future Value, then I’ll direct you here for McDaniel’s (reggaeton horn) 2015 top-prospects list for an explanation of FV and its merits, as well as here for discussion about the 20-80 scouting scale.

In short, Future Value attempts to combine a prospect’s potential (reasonable ceiling and floor) as well as his chance of realizing it (including injury-related risks or proximity to the majors) into one tidy, value-based number.

There are some pretty obvious issues with this system, some of which are practical, others more personal, and I’ll touch on those briefly before explaining why I’m retaining the system.

My own issue with FV is that it can hamstring the evaluator’s conviction about low-level prospects. Because risk and proximity to the majors have to factor into FV’s abstract composition for the system of measure to work, players at the lowest levels of the minor leagues are penalized for being there. I might think a player in the GCL is going to be a Role 6 player (aka a 60, first-division regular, No. 3 starter, someone worth 3 WAR annually, etc.) but will only assign a 50 FV or so, because proximity to the majors factors into the FV grade and the prospect in question is likely a riskier one than a player with the same amount of potential who is playing at Triple-A and has experienced success there. It’s a logical way of tiering players who, all else being equal, are at vastly different stages in their development. It also helps smooth out the distribution of our FV grades into a nice, natural curve. But it makes it more difficult for the evaluator to stick his or her neck out for a low-level prospect while still holding true to the spirit of the system.

I think the Future Value system and the 20-80 scouting scale itself are often regarded as more scientific than they actually are. They primarily function as a means of communicating information about players with others who already know the language. Prospect publications use a variety of terms to quickly characterize a player’s overall profile. Baseball America uses a 20-80 number to describe ceiling and then a word to describe risk (i.e. 60 Extreme or 45 Safe) while Baseball Prospectus (and a lot of major-league teams) put a grade on the ceiling (50, #4 starter) as well as the most realistic role (40, Middle Relief). While Future Value is just one number — and inarguably communicates less to the reader than those other two systems — I do kind of enjoy that it requires readers to dive into the reports to see why a prospect is graded as he is, instead of just looking at the grade and moving on. It makes it harder for the work to be misinterpreted and ultimately allows the reader to learn more.

Perhaps most importantly, the FV scale provides my fellow writers here at FanGraphs a jumping off point for their own analysis. Since much of the content at this site has been built upon player valuation, it makes sense to use an easily compatible currency for prospect evaluation. Lining up the FV 20-80 scale with WAR also allows for all kinds of cool research on these lists after a few years.

I’m not so closed-minded as to commit to this system forever, but I’m comfortable using it for now and know of one major-league team that has implemented it successfully. As org lists begin to roll out this week, links to this article and any applicable articles about Future Value will be at the head of each post to avoid a giant wall of text ahead of the meat of each ranking. Players with 40 or better FV grades will each have scouting reports of varying length while lesser but notable prospects will receive more abbreviated mentions. The goal is to crank out a couple of lists each week — with frequency increasing as the playoffs and Fall League end — before a top-100 overall prospects list is published in time for your blasted fantasy drafts. I hope you all enjoy.