Four More Orioles' Prospects with the 2016 Tides

Joe Reisel's Archives

In a previous article, I summarized my impressions of the five best prospects (according to Baseball America's pre-season rankings) to play at AAA Norfolk in 2016. Five more of BA's top thirty Orioles' prospects played at Norfolk in 2016, and in this article I will cover them.

Tyler Wilson, pitcher (#19)

Could he become the next Kyle Hendricks or Josh Tomlin?

One of the more notable facets of the 2016 World Series is that both teams - the Chicago Cubs and the Cleveland Indians - got surprising performances out of starting pitchers with subpar "stuff" but very good-to-great command and control. One of the Orioles' better pitching prospects over the past few years has been Tyler Wilson, a pitcher with fringy stuff and very good command and control. Given the success of Kyle Hendricks (with the Cubs) and Josh Tomlin (with the Indians), it's natural to wonder if Wilson will develop into a pitcher with that level of success.

It's very unlikely that Wilson will ever have the level of success Hendricks had this season. (Of course, it's doubtful that Hendricks will ever again have the level of success he had this season.) I was surprised to discover that Tyler Wilson is actually 2 1/2 months older than Kyle Hendricks, which may not mean a whole lot but does tend to demolish the idea that Wilson is a hot young prospect. More to the point, in his minor-league time Wilson has walked 2.15 batters per nine innings, but Hendricks walked 1.61. In the major leagues in 2016, Wilson struck out 5.27 batters per nine innings (94 innings total), exactly the same as Hendricks did in 80 big-league innings in 2014 (80 innings total) - but Hendricks walked 1.68 per nine innings as opposed to Wilson's 2.30. Hendricks has been an exceptional pitcher and it's very unlikely Wilson will become that good.

Josh Tomlin's a similar story. Tomlin came to the majors at age 25 - just as Wilson did - and in his age 26 season struck out even fewer batters per nine innings than Wilson - 4.98 vs. 5.27. But Tomlin, like Hendricks, walked fewer batters than Tomlin did - 1.14 vs 2.30. The next season, Tomlin's walk rate nearly doubled (to a still-outstanding 2.18) while his strikeout rate stayed the same - and Tomlin was ineffective. He spent the next couple of seasons re-establishing himself, and now is an effective fifth starter-type with a walk rate around 1.00 and a strikeout rate around 7.00.

So, Wilson has to improve both his control and his strikeout rate to be an effective pitcher. It's not that there aren't effective pitchers with his profile - it's a question of whether Wilson is good enough.

One other issue is that both Hendricks and Tomlin got their starts with bad teams and patient managers, so they were able to stay in the rotation for a full year and learn to pitch in the major leagues. The Orioles are a contender and Buck Showalter hasn't shown much patience with young starters, so if Wilson has four bad starts in a row he'll likely be pulled from the rotation. A pitcher like Wilson, who has to rely on command and control, needs consistent work. He won't get that with these Orioles. 

Should he be in the Orioles' 2017 rotation?

It may sound heretical to say so, but the Orioles should probably plan on using Ubaldo Jimenez, Yovanni Gallardo, and/or Wade Miley as their fourth and fifth starters behind Kevin Gausman, Chris Tillman, and Dylan Bundy. The Orioles have invested so much money in those contracts that they should give them a chance, see if they have anything left. I believe Wilson has one option year left, so it would make sense to have him start the year in Norfolk as a starting pitcher, waiting to be promoted if the three veterans flame out.

Oliver Drake, relief pitcher (#21)

Could he handle a role in the Orioles' bullpen?

For some reason, it's been believed that Drake hasn't been successful in the major leagues - but he has been. He's pitched 33 2/3 innings, with a 3.48 ERA, 10.2 strikeout / 9 innings pitched, and even a 1.277 WHIP. His control hasn't been great, and that's probably why he's not being perceived as a success.

As I wrote earlier this year, I think one reason Drake is viewed skeptically is because he relies on a trick pitch, his splitter/forkball. I think Buck Showalter might believe that major-league hitters will lay off that pitch and force Drake to throw more and more hittable strikes. But my earlier investigation suggested that minor-league hitters weren't swinging at non-strikes, so in my opinion there's no justification for thinking he can't get major-league hitters out.

Drake isn't a long reliever, so it's hard to see exactly where he would fit in a bullpen already featuring Brad Brach, Mychal Givens, and an expensive Darren O'Day. Buck has amply demonstrated that he doesn't manage his bullpen creatively - he assigns typical roles to each pitcher and keeps the pitcher rigidly in his role - so Drake may have to hope to go to another organization. As a 30-year-old relief pitcher who has yet to establish himself in the major leagues, he doesn't have a lot of trade value.

Parker Bridwell, pitcher (#22)

I only saw Bridwell pitch once, the last two innings of a blowout Tides' win. In his two innings, he struck out five while walking one, allowing him to score on a single (after defensive indifference and a wild pitch.)

Ariel Miranda, starting pitcher (#23)

Will trading him for Wade Miley come back to haunt the Orioles?

I wrote shortly after the trade that Ariel Miranda, a fly-ball pitcher, was unlikely to help the Orioles much and it was reasonable to trade him for Wade Miley. Over the rest of the season, Miranda pitched effectively for Seattle while Miley pitched ineffectively for the Orioles.

Obviously, if Miranda continues to pitch as well as he did with the Mariners, and Wade Miley continues to pitch poorly, then the trade will come back to haunt the Orioles. There are several questions about Miranda - (1) can he continue to pitch at that level; (2) can he pitch at that level for a full season; (3) how would he have pitched at Camden Yards (which is a much worse park for pitchers.) The third question is unanswerable, but we could look at 27-year-old pitchers who had a 115 ERA+ in 56 innings and see if they could sustain that level.

Actually, though, we can't, because all the recent pitchers who pitched that well at that age were relievers. So Miranda 2016 season was unique and we'll just have to wait and see how he does.

Mike Yastrzemski, outfielder (#25)

Is he a real prospect?

"Yaz" is a "hustle" player, a guy who isn't very good but impresses everyone - especially impressionable fans - with his all-out play. These guys are usually good defensive players with good-but-not-great speed, who run out every ground ball and go first-to-third whenever they can. Fans who complain about the money paid to baseball players make rave about these guys, saying that they play the game "the way it should be played." That's Mike Yastrzemski.

The problem with Yaz is that he doesn't do much besides hustle. He gets good reads on fly balls and throws to the right base most of the time, and he has a little speed. But he doesn't have power; he doesn't draw walks; and he doesn't hit for a high average, so he's a black hole in the lineup.

I can't see any circumstances - even desperation - in which he'd be a regular outfielder. I can see him making a team as a fourth outfielder type, and even keeping that job if he hits .250. But there's going to be a season in which he hits .205 or .165, and that will be the end of his career.

Say Goodbye To The 40-60-80 Rule

Update: I originally included DFA'd players with players that signed extensions because neither set of players went through arbitration. This was poor logic on my part and therefore I'm editing this post to take into account players that were DFA'd and players that signed extensions.

Most baseball fans with an interest in baseball arbitration are familiar with the 40-60-80 rule. The argument is that on average, a player with between 3 and 4 years’ service time will receive 40% of his value, between 4 and 5 years will receive 60% and between 5 and 6 years will receive roughly 80% of his value. The problem is that this rule was actually created in 2007 and therefore is nearly a decade old. Does it still have any validity?

Cot’s Baseball Contracts has developed a spreadsheet with the service time for all players from 2007-2015. By combining that spreadsheet with salary information from the Lehman Database, free agent win costs via Lewie Pollis and RA9_WAR values from Fangraphs, it is possible to determine the cost per win for the categories of players listed above. MLBTR has an arbitration tracker for 2011-2015 that indicates which players went through arbitration/settled on a one year deal in those years and thereby implying which players agreed to long term extensions. This information can be used to determine the cost per win for each of the above categories for both arbitration and extension players during those years.

The chart below shows the amount players from 2007-2015 in each category earned as a function of the cost of a free agent win regardless of whether a given player went through arbitration or signed an extension for either one or multiple years. On average, first year players just earned 25% of their value, second year players earned 38% of their value and third year players earned 54% of their value.

This graph shows how this has changed over time. The amount that second and third year players earn seems to be increasing. It is difficult to tell whether this is a real trend or merely normal variance.

The next chart shows how much a team ultimately paid for players in each category from 2011-2015 as a function of the cost of a free agent win grouped by whether the player signed a multi-year extension or went through arbitration or agreed to a one year deal. The numbers are slightly different as overall players earned slightly more from 2011-2015 then they did from 2007-2015.

Arbitration players earned 29% in their first year, 41% in their second year and 59% in their third year, while Super Two players earned 23% indicating that the rule now is 25-30-40-60. Players that went through arbitration also earned more than players that didn’t. First year players saw a 50% increase, while second and third year players had a 20% increase. Given that this ignores the benefits of controlling a player for a longer time period, this indicates that signing quality team-controlled players to extensions is a good way of saving money.

In general, hitters were cheaper than pitchers regardless of whether they signed extensions or went through arbitration as well as service time. This could possibly be because teams are worried about signing veteran arms due to attrition. It’s almost certainly due in part to the fact that the arbitration process overvalues relievers. In any event, teams pay only a fraction of the cost for a team-controlled position player whether or not they sign an extension or go through arbitration. It isn’t the case for pitchers though. Once pitchers go through arbitration for their third season, they’re roughly earning market value.

This next table shows the cost of relievers and starters. There aren’t many relievers that sign an extension in their first year of arbitration and therefore that number has little meaning. But relievers start getting extremely expensive by their second year and starters get expensive by their third year. In fact, teams actually pay a premium to keep a reliever in arbitration by the time he has five years or more of service time. This sounds weird but makes sense because it allows teams to commit only one year to a questionable asset rather than being forced to give a multi-year contract. It also in part explains why the Orioles were willing to offer Matusz a contract for $3.9M this offseason. It is hard to find deals for relievers once they have been in the league for more than four years and therefore it is cost effective to maintain a minor league pipeline of potential quality relievers.

Likewise, teams pay close to market value for starting pitchers once they are in their third year of arbitration. For example, Bud Norris isn’t a particularly good starter, but earned $8.8M in his last year of arbitration. The value of tendering a starting pitcher in that third year isn’t due to the cost savings, but the fact that he only needs to be signed for one year. The difference between Jimenez and Norris is that Jimenez was signed as a free agent and therefore the Orioles needed to offer him four years (and still have him on their payroll) while the Orioles could offer Norris a one year term and cut him when he failed to produce.

There is only a minimal premium for going to arbitration with a starting pitcher rather than signing him to an extension before the third year. This indicates that the benefit that a team receives from signing a pitcher to an extension comes solely from the last year of arbitration and any discounts they receive on future free agent years. If a starting pitcher is unwilling to trade away free agent years in return for an extension, then it may make sense to just go to arbitration.

Players earn considerably less in arbitration than the 40-60-80 rule suggests they should. This shows that they’re an even bigger bargain than originally considered and further shows the value of team controlled players. It also indicates that teams don’t save a large amount of money from extensions, but primarily benefit from having players under control for larger periods of time. It is also interesting that position players are better deals than both starting and relieving pitchers, perhaps indicating that it makes more sense to grow the bats and buy the arms.

Expensive Central And South American Prospects Are Overrated

The Orioles are well known for their complete and utter disinterest in using their international signing bonus pool to sign prospects from Central and South America. Baseball America claims that the Orioles spent the least of all teams in 2013 and second lowest in 2014.  Orioles’ fans are concerned by this because about one-sixth of all top 100 prospects as ranked by Baseball America from 2010-2015 fell into this category and therefore the Orioles not taking full advantage of their bonus pool would seem to hurt their efforts to build a top farm system. This begs the question of how the most expensive, and therefore highest ranked Central and South American prospects, perform when compared to prospects drafted in the normal draft.

For clarification, Cuban players and Asian foreign professionals are exempt from the international signing bonus pool and therefore aren’t considered in this analysis because there’s a major difference between signing a 25 year old veteran and a 16 year old prospect.

Historically, there is no question that top international prospects have been akin to penny stocks. Beyond the Box Score has a list of the thirty-one largest Latin American signings prior to 2010. The list consists of two major successes in Miguel Sano and Miguel Cabrera with a few still interesting players such as Gary Sanchez, Jurickson Profar and Luis Sardinas as well as twenty-six busts. Teams were highly rewarded if they chose one of the successes (which were selected more than ten years apart) but mostly received zero or minimal production in return for their investment. In 2011, Jon Shepherd concluded that Latin talent is overpriced.

In 2007 and 2008, Baseball America compiled lists of players that received one of the top twenty international bonuses and the amount each received. Comparing these players to second and third round players drafted during these two years can determine a historical baseline to compare drafted players to international signings.

In the class of 2007, two of these twenty players had their bonus vacated due to fraud and therefore aren’t included in the sample. Of the eighteen remaining players, seven were ranked by Baseball America of which three; Julio Teheran (#5), Martin Perez (#17) and Arodys Vizcaino (#40) were ranked in the top 50 at least once. The three players mentioned above plus Wilmer Flores and Jefry Marte eventually made it to the majors for at least a cup of coffee. Teheran and Perez appear to be decent starters, while Flores has been a regular and fan favorite in New York. These eighteen players were a bargain as they cost only $12.59 million or about $700k per prospect.

The class of 2008 wasn’t as fortunate. Two of these twenty players also had their bonus vacated due to fraud and aren’t included in the sample. Only two of the remaining eighteen players were ranked by Baseball America. These players were Michael Ynoa (#20) and Adys Portillio (#100) but neither of these players made it to the majors. The only three members of this class that did were Rafael Rodriguez, Yorman Rodriguez and Ramon Flores and none had an impact. This class was a complete bust and cost $22.42 million or about $1.25M per prospect.

In comparison, there were 57 players drafted and signed from the second round of the 2007 and 2008 drafts combined.  Nine of these players were ultimately ranked as top 100 prospects by Baseball America at least once and four prospects, Giancarlo Stanton (#3), Freddie Freeman (#17), Anthony Gose (#39) and Jordan Zimmermann (#41) were ranked in the top 50. 27 of these 57 players played in the majors and a number turned into good players such as Stanton, Zimmermann, Freeman, Tyson Ross and Zack Cozart. These 57 players cost $34.2M or about $600k per prospect. This is slightly less expensive than the international prospects listed above and consists of considerably more talent, albeit with a sample size that’s 21 players larger.

There were 59 players drafted and signed from the third round of the 2007 and 2008 drafts combined of which five were ranked in the top 100 by Baseball America and one, Mr. Steven Souza was ranked in the top 50 at #37. 30 of these 59 players ultimately made it to the majors and some like Jonathan Lucroy, Craig Kimbrel, Steve Souza, Danny Espinosa, Danny Duffy, Jordy Mercer and Vance Worley became regular players. These 59 players cost $21.3M or roughly $360k per prospect. This is considerably less expensive than the international prospects listed above and also consists of more talent.

It’s very easy to make the argument that there was more talent developed in the fourth round (Darwin Barney, Corey Kulber, Derek Norris, Dee Gordon and Brandon Crawford), the fifth round (Jake Arrieta, Alex Avila, Steve Cishek, Daniel Hudson, Adrian Nieto) and sixth round (Anthony Rizzo, Josh Harrison and J.B Shuck) in these rounds than in the international prospects listed above at a considerably lower cost.

It seems clear that based on the data available that expensive international signings have historically been less productive than national draft choices. In addition, it seems questionable whether the 2007 and 2008 classes combined as defined above were worth the money spent.

I was unable to find a list of the most expensive international signings for 2009 but Baseball America did compile a list of the projected top 25 bonuses for 2009. It doesn't look very exciting as Miguel Sano is looking like a star, but the best remaining players are probably Profar and Sardinas, neither of whom have done much in the majors.

In 2010, Baseball America started keeping lists of players that earned one of the top 30 international bonuses as well as the amount. It is possible to do the same thing for 2010, 2011 and 2012 as was done in 2007 and 2008 to determine the current value of expensive international prospects.

Andres Serrano, one of the ninety players listed in these three lists had his contract voided by MLB during that time period due to unverified age and identification claims and therefore isn’t included in this study.

Of these prospects, so far nine have been ranked by Baseball America of which two, Raul Mondesi and Carlos Martinez, were ranked in the top 50 at least once. Baseball America was bullish on this set of nine prospects in their midseason rankings as they ranked Alex Reyes at #10, Franklin Barreto at #22, Manuel Margot at #24, Raul Mondesi at #25, and Nomar Mazara at #34 indicating that this group may have a strong showing in Baseball America’s 2016 rankings. Three of the eighty-nine prospects in the entire sample, Roberto Osuna, Orlando Calixte and Carlos Martinez have played in the majors.

A number of these prospects are atypical. Alexander Reyes grew up in New Jersey. When it became clear that he was a baseball star, his family decided to move to the Dominican Republic where they have citizenship so that he could practice all year round to become a professional baseball player. Raul Mondesi Jr., is the son of former all-star baseball player Raul Mondesi. While he did grow up in the Dominican Republic, it is possible that being the son of a former all-star gave him an atypical competitive advantage. Carlos Martinez was originally signed by the Boston Red Sox for just $140,000 but his contract was voided by MLB and he was suspended for a year after failing a background investigation. During that year, Martinez blossomed into a star and was eventually signed by the Cardinals for $1.5 million in 2010. If it wasn’t for an absolutely outrageous set of events that worked out to his benefit, he wouldn’t have received such a lucrative contract.

These prospects signed for bonuses of $32,727,500 in 2010, $39,524,000 in 2011 and $33,015,000 in 2012. This is equal to $105,266,500 for the entire set of 89 prospects or $1.18 million per prospect.

There were 97 players selected in the second round of the draft from 2010 to 2012 of which 3 did not sign with their clubs. Of the 94 players that did sign, 15 have been ranked by Baseball America.Daniel Norris was ranked #18th by Baseball America while Austin Hedges was ranked #27th and Jake Thompson was ranked #43rd. In addition, Josh Bell was ranked # 45th at midseason while Daniel Norris was at 18th and Jake Thompson was 49th. 26 of these 94 players have played in the majors, including Andrelton Simmons, Drew Smyly, Alex Wood, Brad Miller, Jedd Gyorko, Jimmy Nelson, James McCann and Daniel Norris.

These prospects signed for bonuses of $23,839,830 in 2010, $27,655,900 in 2011 and $23,014,500 in 2012. This is equal to $74.5 million for the entire set or about $792k per prospect.

There were 97 players selected in the third round of the draft from 2010 to 2012 of which 5 did not sign with their clubs. Of the 92 players that did, only three have been ranked by Baseball America. Addison Reed was the highest ranked of them all at 66th, while J.T Realmuto was ranked 76th and Tony Cingrani was ranked 82nd. 20 of these 92 players have played in the majors, including the three players listed above, Tyler Thornburg, Carter Capps, Matt Andriese, Mike Wright and Logan Verrett.

These prospects signed for bonuses of $13 million in 2010, $11.1 million in 2011 and $14.1 million in 2012. This comes out to roughly $38.2 million for the entire set or about $415k per prospect.
This three year sample indicates that teams are doing a better job investing in international prospects than they were previously. Then again, a number of highly ranked and expensive international prospects ultimately busted in the previous sample so perhaps this is premature.

These international prospects have a similar but worse success rate than second round picks and a similar value to third round picks albeit slightly higher when taking into account recent changes to the CBA that limit the national draft bonus size, but do not effectively limit the international draft bonus size as well as international prospects that have significant American connections. International prospects take longer to develop than second or third round picks and therefore require a longer wait for a return. Miguel Sano is looking like a star in 2015 but he was signed in 2009 which means the Twins had to wait five and a half years before receiving major league production.

It appears that spending money on improved scouting in South America may be more effective than spending money on top prospects. It isn’t clear whether teams are in fact receiving a viable return as a result of their investing and that it definitely isn’t worthwhile to face huge taxes as a result of international spending. Improved scouting and development has been a huge factor as to why prospects have become more valuable than they once were and why Baseball America Top 100 Prospects have been more successful recently than ever before. The fact that top international prospects haven't also benefited from this is a red flag.

When I started this analysis, I thought it would indicate that Central and South American prospects are a tremendous bargain and that spending in this area would give clubs a huge advantage. Instead, it appears that breaking their budgets has resulted in them receiving the equivalent of a few extra second or third round picks --- not good for competitive balance but hardly devastating.

Going forward, MLB should consider new rules making it illegal to draft players younger than 18 to ensure more predictable results. Until this occurs, the Orioles and other clubs should realize that the international market as it currently is formulated isn’t efficient and therefore should make their biggest investments on coaching, scouting and data while spending less money on actual players. It would appear that the most expensive prospects have a minimal return and therefore teams should focus on second-tier international prospects that have less hype and will be considerably less expensive.

Free Agents Will Break Your Heart

Everyone knows that prospects will break your heart. Many prospects touted as the next big thing have ultimately failed. But top free agents that are unsuccessful with their new team don’t seem to have the same stigma attached to them. It seems the common perception is that top free agents are more likely to be productive than the top prospects. Certainly, casual fans get excited when they see their team sign a top free agent and usually are willing to trade prospects for top players.

I wanted to see whether this perception is accurate so I looked at all prospects ranked in Baseball America’s Top Hundred list from 1998-2007 and all free agents that earned an annual salary of at least five million, have completed their contract, and whose contract information was either in MLBTR or ESPN’s transaction tracker. These free agents were primarily players that signed a contract starting from 2007 to 2014. A more detailed description of my methodology can be found here.

Position prospects ranked 1-10 produced an annual average of 2.08 fWAR while free agent position players earning $15 million annually produced 2.09 fWAR per year. In addition, 56% of the prospects and 60% of the free agents produced more than 1.5 fWAR per year. This indicates that these position prospects were about as successful as the top free agents.

Free agent position players that earned between ten and fifteen million and those that earned between five and ten million performed similarly. Position players earning between ten to fifteen million produced on average 1.24 fWAR per season while those earning between five to ten million produced 1.13 fWAR. The position players that earned between ten to fifteen million did have slightly higher success rates as 41% were successful and 22% were stars. In contrast, 34% of the position players that earned between five to million were successful and 19% were stars. But in general, there’s little difference between position players that earned ten to fifteen million and those that earned five to ten million. This suggests that the best strategy for teams is to go after top position free agents or to stick with the ones that are affordable.  

Free agent position players that earned between $5 and $15 million annually performed similarly to position prospects ranked 51-100. The prospects produced an annual average of 1.06 fWAR while the free agents produced an average of 1.17 fWAR. 32% of the prospects and 36% of the free agents produced at least 1.5 fWAR per year. They also performed similarly to position prospects ranked between 26 and 50. Position prospects ranked 26-50 produced 1.34 fWAR per year while 35% produced at least 1.5 fWAR per year. It is worth noting that position prospects ranked 26-50 from 2003 to 2007 averaged 1.5 fWAR per year while 46% produced at least 1.5 fWAR per year.

Position prospects ranked 11-25 produced 1.63 fWAR per year while nearly 47% produced at least 1.5 fWAR per year. These prospects are easily better than free agents earning between $5 and $15 million annually but not as good as the top position free agents.

The chart below shows position category results.

Pitching prospects ranked 1-10 weren’t as successful as the top free agent starting pitchers. These prospects produced 1.98 fWAR on average per year while the top free agent starters produced 2.74 fWAR per year. 61.11% of the prospects and 70% of the free agents produced at least 1.5 fWAR per year. However, pitching prospects ranked 1-10 from 2003-2007 performed similarly to the top free agent starting pitchers. These prospects produced 2.36 fWAR on average per year while 81% of these prospects ultimately produced at least 1.5 fWAR per year. Pitching prospects ranked between 1 and 10 from 2003 and 2007 may not have had the same ceiling as the top starters but they arguably had a higher floor. Still, it appears that the top free agent starters are better than the top pitching prospects.

Pitching prospects ranked 11-25 performed similarly to free agents starting pitchers that earned between $10 and $15 million annually. From 1998-2007, the pitching prospects produced an annual average of 1.58 fWAR and 43% produced at least 1.5 fWAR per year. However, from 2003-2007 the prospects produced an annual average of 2.18 fWAR and 58% produced at least 1.5 fWAR per year. Free agent starting pitchers earning between $10 and $15 million annually produced an average of 1.85 fWAR and 53% produced at least 1.5 fWAR per year.

Pitching prospects ranked 26-50 from 1998-2007 produced an annual average of 1.01 fWAR produced an annual average of 1.05 fWAR while 31% produced at least 1.5 fWAR per year. Those ranked between 26 and 50 from 2003 to 2007 produced an annual average of 1.05 fWAR while 35% produced at least 1.5 fWAR. Free agent starting pitchers that earned between $5 and $10 million annually produced an average of 1.04 fWAR while 30% produced at least 1.5 fWAR per year.

Pitching prospects ranked between 51 and 100 from 1998 to 2007 produced an annual average of .73 fWAR while 20% produced at least 1.5 fWAR per year. There was no difference between the 1998 to 2007 and the 2003 to 2007 results.

If one believes that Baseball America is getting better at predicting pitching prospect performance over time then it makes sense to use the 2003-2007 prospect results. In fact, it makes sense to presume that current prospects will be even better than those ranked from 2003-2007. Therefore, it suggests that pitching prospects ranked from 1-10 have similar production to free agent starters earning $15 million or more, pitching prospects ranked from 11-25 have similar production to those free agent starters earning $10 and $15 million and those pitching prospects ranked from 26-50 have similar production to free agent starters earning between $5 and $10 million.

If one believes that Baseball America simply had good luck when selecting top prospects from 2003-2007 then this suggests that pitching prospects ranked from 1-10 are similar but better than those free agents that earn between $10 and $15 million and prospects ranked from 26-50 are similar to free agents that earn between $5 and $10 million.  

The chart below shows pitching category results.

Ultimately, the following groups have similar production:

• Free Agents earning at least $15 million per year = Prospects Ranked 1-10
• Free Agent Starting Pitchers earning between $10 and $15 million annually = Pitching Prospects Ranked from 11-25
• Free Agent Starting Pitchers earning between $5 and $10 million annually = Pitching Prospects Ranked from 26-50
• Free Agent Position Players earning between $5 and $15 annually = Position Prospects Ranked from 51-100

Prospects ranked by Baseball America have become significantly more productive and valuable over the years. Today the best free agents have similar success rates and production to the best prospects. Maybe it is time to start saying that free agents will break your heart.

Team-Controlled Players Have Seen a Pay Cut

I understand that sometimes when I write sabermetric posts that they can be hard to follow. What I'm going to try to do in the future is write a paragraph or two discussing the relevant points at the start of the article.  I'm hoping that doing this will make them easier to follow and make clear what I think are some of the most important points to note.

Abstract: In this post, I intend to show that both the cost of a free agent and team-controlled win (defined as a player with fewer than six years of service time) have increased from 1996 to 2013. The cost of a free agent win is increasing more than 3.9% annually more than a prospect win from 2004 to 2013. This indicates that team-controlled players are being underpaid compared to free agents. It also means that any attempt to determine a discount value for keeping prospects in the minors needs to consider that the value of a prospect win increases over time by 3.9%.

A few months ago, Lew Pollis wrote an article discussing the historical cost of a win in free agency from 1996 to 2013. He determined how much money teams spent on free agents in a given year (regardless of whether they were signed that year or not), used Fangraphs WAR to determine their production, and then divided the two. It is possible to use his method to do the same thing with team-controlled players and see whether their value has changed over that 17-year time frame. This makes it possible to determine whether a team-controlled win has increased in value compared to a free agent win and therefore if prospects are becoming more valuable over time.

The amount of money spent on payrolls has increased significantly from 1996 to 2013. Teams spent $984 million on payroll in 1996 and $3.138 billion on payroll in 2013. Team-controlled players (players with less than six years of service time) earned $357 million in 1996 and $1.323 billion in 2013. Extended players (players with more than six years of service time but did not sign in free agency) earned $420 million in 1996 and just $504 million in 2013 while free agents (players that have more than six years of service time and were signed in free agency) earned $207 million in 1996 and $1.31 billion in 2013. The chart below shows how much money free agents, team-controlled players, and extended players earned from 1996-2013.

The amount of production that each group produces partly explains this trend. Free agents have produced roughly 200 WAR per season from 1996 to 2013. However, extended players produced 324 wins in 1996 but only 110 in 2013 while team-controlled players produced only 478 wins in 1996 but 703 wins in 2013. The chart below shows the number of wins produced by each group annually from 1996 to 2013.

The cost of a win for each group of players has increased over the sample but the cost of a free agent and extended player win is increasing at a considerably larger rate than the cost of a team-controlled player win. The cost of a free agent win has increased from $1.04 million in 1996 to $7.03 million in 2013. The cost of an extended player win increased from $1.3 million in 1996 to $4.55 million in 2013. The cost of a team-controlled player win increased from $750,000 in 1996 to $1.88 million in 2013. The chart below shows how this changed over time.

Not only is the actual amount for a free agent win considerably more than the cost of a team-controlled player win but the annual rate of increase for a free agent win is more than twice that of a team-controlled player win. Over the entire sample, the value of a future team-controlled win increases by 5.6% (1.11/1.05) each year while for the past 10 years it has increased by 3.9% each year. Either way, this indicates that teams would save on player costs by keeping their prospects in the minors for extra time.

It appears that team-controlled players earning under a million dollars and those earning over a million dollars are seeing their cost per win increase at a similar rate. From 2005 to 2013, team-controlled players in each of these categories saw an annual increase of roughly 4%. I used 2005 to 2013 because players earning under $1 million were remarkably ineffective in 2004 while those earning over $1 million were remarkably effective. 2004 appears to be a clear outlier and therefore shouldn’t be used as a baseline.  This chart shows the change over time.

In addition, prospects do not appear to be receiving significantly higher signing bonuses.  According to the Associated Press, teams spent $150 million on the draft in 2004 and $208 million in 2013, meaning that signing bonuses have increased by only 4.3% per year over that period. This is similar to the increase in salaries for team-controlled players during that time period and therefore doesn’t indicate that teams are paying more in signing bonuses while paying less in salaries.

This indicates that both the minimum salary is too low and that team-controlled players don’t receive large enough salary increases in arbitration. In order to keep pace with free agent salaries they should be earning $3.4 million per win instead of $2.2 million per win and therefore their salaries should be roughly 50% higher. This raise in salary should come partially via an increase in the minimum salary and partially via an increase in arbitration.

Over the 17-year period, it is clear that team-controlled players are becoming considerably more valuable compared to free agents. The amount of money that it takes to purchase a win in free agency is growing at a considerably faster rate than the amount it takes to purchase a win with a team-controlled player -- team-controlled players produce nearly 70% of wins while free agents only produce 20%.

This is probably good for the game because it allows for greater parity. As it becomes more and more expensive to get value in the free agent market, then large market teams get less benefit for having a higher payroll. But it also means that prospects and other team-controlled players receive unfair compensation for their efforts.