Tuesday, July 27, 2010

The Value of Prospects in Trades

As you probably already know, it's trading season in baseball. Yesterday we posted a Trade Deadline Preview, and today we're going to focus specifically on minor league prospects and the value they have in trades.

When teams are trading away their proven major league hitters, what do they normally want in return? Prospects. Everybody loves prospects. They are young, cheap, and have the potential to be great someday. Prospects are the most valuable commodities in a trade in baseball. Teams want them and teams don't want to give them up. But to get something good, you have to give up something good, and many times there is a reluctance to trade prospects because of the potential they have.

I understand the reluctance. Even I am fascinated by the draft and the potential of minor league players and I think developing a deep farm system should be a top priority for teams. I understand how exciting it can be to think about how a prospect will impact your team in a few years. But one of the benefits of having a deep farm system is that it also gives you so much more ammo to improve your big league team through trades. The key word with prospects is potential. It's important to realize that prospects are unproven players at the major league level. No matter how good their numbers in the minors are, they are no guarantee. They do have value, but they shouldn't be a deal breaker if it means acquiring a proven, game-changing major league player.

It was amazing to me that about a month ago over at McCovey Chronicles, there was a thread on the topic of trading Prince Fielder for Jonathan Sanchez and Thomas Neal, and the overwhelming majority did NOT want to do that trade for the Giants. Now, there are other concerns about acquiring Prince Fielder, mostly his weight and contract status, but it seemed that most people would trade him for Sanchez, they just didn't want to include Thomas Neal. Neal is probably one of the Giants top 3 prospects along with Brandon Belt and Zack Wheeler, but he's struggled so far in Double-A and is high prospect status is mostly based on the HUGE numbers he put up in single-A. Last year he hit 22 home runs with a 1.010 OPS, but this year he has a .779 OPS. Double-A is a much tougher league and maybe he needs another year to adjust, but he was also a 36th round draft pick. I don't know the success rate of 36th round draft picks, but I can tell you it's not good. So, it seemed like Giants fans didn't want to trade for one of the Top 15 hitters in baseball who has proven himself because they wanted to hold onto a prospect struggling in Double-A. I do really like Neal, but this is a case of overvaluing prospects based on what they MIGHT do in the future.

To show how much of a non-guarantee prospects are, we can look at some trades that involved "top prospects" at the time. You know who the Mets had to trade to get Johan Santana? Top prospect Carlos Gomez, Philip Humber, Deolis Guerra, and Kevin Mulvey were traded to the Twins. Gomez is now a terrible No. 8 hitter for the Brewers, Philip Humber is a 27 year old pitcher struggling in AAA, Guerra is also struggling in AAA, and so is Mulvey. So, the best player out of that group is probably Gomez because he at least plays good defense, and the Mets got one of the top pitchers in baseball. All of those prospects were considered to be pretty good, but none of them ever worked out. In the same year, we can look at the deal that sent Miguel Cabrera and Dontrelle Willis to the Tigers for a package of 6 prospects, the main ones being "top prospects" Cameron Maybin and Andrew Miller. Maybin has bounced between AAA and the big leagues for a couple of years now and hasn't really shown anything in the big leagues. Miller is a 25 year old pitcher struggling in AAA. None of the other prospects worked out either. Both of these trades show you how prospects are never a sure thing and there shouldn't be such an unwillingness to trade them for good, proven major league players that can help a team win a World Series now.

Obviously, different prospects have different values. If you're going to trade your No. 1 prospect and one of the best prospects in baseball, you need to be getting something really, really good back in return. Guys like Buster Posey and Madison Bumgarner were pretty much untouchable to me, but Thomas Neal is not nearly the prospect that those guys were. It's all about maximizing the value of prospects. I might be reluctant to trade Brandon Belt because he's dominated minor league pitching in just his first year of professional baseball. But I'd trade him for one of the top hitters in baseball. I would include Thomas Neal in a trade for Fielder but I wouldn't necessarily want to trade him for 2 months of Jayson Werth. I wouldn't want to trade a top 5 prospect in our system like Tim Alderson for Freddy Sanch...oh, wait that already happened. We now know that Alderson is no good, as he's struggling in A ball, but he had value that probably could've gotten something better than Freddy Sanchez in return and the Giants didn't maximize that value.

The point is, the art of evaluating prospects is tricky. They are completely unknown, unreliable, unproven, uncertain, whatever you want to call it. More often than not, prospects won't pan out. Some prospects you trade might go on to have great careers with other teams, but if it means that you acquire a proven hitter that could help you win just 1 World Series, it should all be worth it. Being reluctant to trade unproven players with potential for proven, game changing hitters in the major leagues just doesn't make a lot of sense.

4 comments:

  1. I think that you bring up some very good points.

    Determinning the value of prospects is very difficult. They have much less of a track record to judge from but you can make some ok guesses about players but it is certainly not a perfect science. More of an educated dart throwing experience. You have a general idea of where a dart is flying but no idea if you will hit the bullzeye or not.

    I do have to say one other thing is that trading for established guys is not without risk as well. I think that you have better idea of what to expect but as any investment advisor will tell you past performance is no gurantee of future results.

    It is a very delicate balancing act that the results of will not be fully felt until years down the road.

    Prospects are high upside high risk propositions, while guys in the majors are much lower upside but also much lower risk. You've got to find your balancing act in there.

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  2. One more thought, on the Sanchez + Neal for Fielder trade lets do a little though excersise to see if it works out.

    These are just my thoughts and how you figure these things out will change the analysis.

    Just doing some quick calculations on the expected WAR values over the next 10 years for all the players and I get something like a Prince Fielder worth 44 wins, Sanchez worth 23 wins and Neal worth 12 wins.

    Under these assumptions it makes perfect sense to trade away these guys from a long term perspective. As Fielder is worth more. There is the chance that Neal would strike it rich and become another MVP type player but the odds are against it and the wins would be in the Giants favor if things worked out as modeled.

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  3. An old GM once said: "Prospects will get you fired."

    Also, on the Alderson trade.

    Sabean has a history of trading away pitchers that don't amount to much but were highly touted at the time of the trade. Ryan Vogelsong, Kurt Ainsworth, Jesse Foppert all come to mind. Sure he traded Joe Nathan away but he was right on Liriano who other than that intital hot streak hasn't amounted to a whole lot.

    As for Alderson, he was projected as a middle of the rotation starter at best. Just because he was one of the top 5 prospects in our system at the time, I'm not sure he could have brought much more that Franchez. There were reports of a drop in velocity and since he projected to middle of the rotation at best I think Sabean did get what he could for Alderson.

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  4. Scott, you definitely make some great points. I agree that established major leaguers have low upside but that's mostly because they've already reached their potential. They were once prospects with high upside, but now they have proven themselves by reaching their full potential. Just because of that, there shouldn't be so much reluctance to trade prospects for established players.

    As for the Alderson trade, Greg, yeah Alderson didn;t have great stuff but he still seemed to be highly regarded in scouting circles for his command. I believe his was even included in Baseball America's top 100 prospects list and maybe even Keith Law's.

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