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Tuesday, December 20, 2011

Grantland (Rany J): The MLB Prospect Bubble

In 21st-century baseball, when teams do overpay in prospects, it’s usually for stars. Most famously, in 2007 the Braves gave up Elvis Andrus, Neftali Feliz, Matt Harrison, and Jarrod Saltalamacchia (who started to find himself this season after a trade to Boston) — but at least they traded for Mark Teixeira, an acknowledged superstar.

The blowback from the Teixeira trade seems to have made teams even more conservative about trading prospects, even for elite major league talent. As a result, for perhaps the first time in baseball history, minor league prospects seem to be overvalued by MLB front offices. ...

To put this in terms that Billy Beane can understand: We’ve reached a point where trading away prospects is the new market inefficiency. ...

For that reason, an ambitious team with a deep farm system — the Royals, for instance, or the Nationals — should take advantage of MLB general managers’ prospect fetish to cash in some of their lottery tickets for established players who might help them win in 2012.

Rany makes some excellent points here. Prospects can serve two purposes for an organization - building blocks on the parent club or trade chits for the pieces that will get you over the hump - and teams seem to be more inclined these days to use them for the first purpose without giving enough thought to using them for the second purpose.

Mike Emeigh Posted: December 20, 2011 at 08:30 PM | 27 comment(s) Login to Bookmark
  Tags: minor leagues, nationals, prospect reports, royals

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   1. JJ1986 Posted: December 20, 2011 at 08:54 PM (#4020465)
Odd time to come out with this column after the haul SD got for Latos. Seems to be a reaction about 3 years late to things.
   2. Mike Emeigh Posted: December 20, 2011 at 09:14 PM (#4020487)
Rany mentions the Latos deal in the article:

That's a lot of talent to give up, but frankly, Latos is worth it. Latos has ranked in the top 20 in the majors in both ERA and strikeouts over the past two years, and he just turned 24. The Reds have him under control for the next four years. Potential no. 1 starters don't hit the trade market very often, and when they do, this is the kind of return they ought to bring.

In recent years, however, they usually haven't.


And he's right, the Latos deal is an exception.

-- MWE
   3. Johnny Sycophant-Laden Fora Posted: December 20, 2011 at 09:26 PM (#4020502)
In recent years, however, they usually haven't.

And he's right, the Latos deal is an exception.


I don't think they usually get traded while they still ave as many controlled years left as Latos
   4. Danny Posted: December 20, 2011 at 09:27 PM (#4020504)
How is it, then, that the A's were willing to trade six years of Trevor Cahill for six years of Jarrod Parker?

Because 6 years of Cahill will cost $55 million, and he'll probably be making near market value in years 4-6 when the A's will (hopefully) be looking to contend. Six years of Parker will likely cost less than half of that.

That doesn't necessarily make it a good deal, but Rany isn't asking the right question.
These two trades are hardly an isolated trend. Consider:

February 2, 2008: The Minnesota Twins trade Johan Santana, perhaps the best pitcher in baseball, to the New York Mets.

December 16, 2009: The Philadelphia Phillies, who had traded for Cliff Lee during the previous season and were rewarded with five fantastic starts during that year's playoffs, were nonetheless so worried about losing Lee to free agency the following year that they traded him to Seattle for J.C. Ramirez, Phillippe Aumont, and Tyson Gillies.

July 25, 2010: Dan Haren had made the All-Star team in 2007, 2008, and 2009, and he was known as one of the best starting pitchers in baseball. But he was having an off year in 2010 (although his Fielding Independent Pitching stats were as good as ever, including a strikeout-to-walk ratio of nearly five), so the rebuilding Diamondbacks decided to sell him off.

Funny how he doesn't mention the Dan Haren trade from the same offseason as the Johan trade.
   5. Mark Edward Posted: December 20, 2011 at 09:49 PM (#4020525)
The blowback from the Teixeira trade seems to have made teams even more conservative about trading prospects, even for elite major league talent. As a result, for perhaps the first time in baseball history, minor league prospects seem to be overvalued by MLB front offices. ...


Prior to this off-season, Kenny Williams was a big proponent of dealing his prospects for established major leaguers. This occasionally works:
- Acquired Freddy Garcia (& Ben Davis!) for Jeremy Reed, Miguel Olivo, and Mike Morse.
- Acquired Matt Thornton for Joe Borchard.
- Acquired Carl Everett for Jon Rauch & Gary Majewski.
- Acquired Carl Everett for Frank Francisco, Anthony Webster, & Josh Rupe.

Sometimes this doesn't work:
- Acquired Edwin Jackson for Daniel Hudson and David Holmberg.
- Acquired Tony Pena for Brandon Allen (though Allen is looking less & less like a useful player. Pena wasn't very good at all).
- Acquired Nick Swisher for Fautino De Los Santos, Gio Gonzalez, & Ryan Sweeney.
   6. snapper (history's 42nd greatest monster) Posted: December 20, 2011 at 09:59 PM (#4020532)
- Acquired Nick Swisher for Fautino De Los Santos, Gio Gonzalez, & Ryan Sweeney.

That would have worked out fine if they hadn't jerked Swisher around (CF, lead-off) and then gave up on him for Wilson Betemit.
   7. Crispix Attacksel Rios Posted: December 20, 2011 at 10:01 PM (#4020535)
Because 6 years of Cahill will cost $55 million, and he'll probably be making near market value in years 4-6 when the A's will (hopefully) be looking to contend. Six years of Parker will likely cost less than half of that.


How did the A's make such a huge mistake as to sign Cahill to a $55 million contract instead of one for less than half of that?
   8. Danny Posted: December 20, 2011 at 11:45 PM (#4020660)
Service years 7-9 tend to cost more than years 1-3.
   9. this is normal 57i66135. move on, find a new slant Posted: December 21, 2011 at 12:08 AM (#4020690)
For that reason, an ambitious team with a deep farm system — the Royals, for instance, or the Nationals — should take advantage of MLB general managers’ prospect fetish to cash in some of their lottery tickets for established players who might help them win in 2012.

roy halladay, cliff lee, roy oswalt, hunter pence.


i guess the phillies are moneyball after all.
   10. TDF didn't lie, he just didn't remember Posted: December 21, 2011 at 01:04 AM (#4020731)
Lots of people in Cinci are upset about the Latos deal; they think the Reds gave up way too much.

The thing is,
1. Alonzo is already 25. The Reds already threw away all of the value of Todd Frazier by waiting too long to do something with him; he isn't nearly as attractive for trading, and like most prospects he was just never good enough to unseat anyone in Cinci.
2. Grandal is blocked by Mesoraco. Mesoraco at this point is still a prospect also, but one that "looks" more certain. One of the two had to be traded (to avoid yet another Frazier), and the Reds decided to keep Mesoraco.

To me, I think too many GMs (and fans) now think that a team like Cinci can only be successful like Tampa - draft well, trade veterans for prospects when the vets get expensive, rinse, repeat. I think it's equally valid for a low budget team to trade many "good" parts for one "excellent" part (and considering his age/contract status, I think Latos is an "excellent" part) because the odds of drafting that guy are so tiny.
   11. valuearbitrageur Posted: December 21, 2011 at 01:24 AM (#4020738)
Is this why someone on Fangraphs wants to trade Parra for a grade B prospect?

What is a grade B prospect anyways and how can you reasonably expect one to produce more than Parra?
   12. Squash Posted: December 21, 2011 at 01:56 AM (#4020757)
I think the article would do better to examine the difference between on-the-field value and financial value - it seems it's coming from a fairly strict on-the-field perspective. The Padres, for instance, are operating under strict a budget and aren't going to win anything this year. Same with the A's. Both teams can finish 3rd or 4th or last without Latos or Cahill, and save themselves 10 or 15 or whatever million dollars over the next year or two trading them, and kick the farm-system can further down the road to the theoretical day when they are ready to contend again. The Phillies traded Lee b/c they were trading for Halladay who is better, had just reached the World Series with only a half-season of Lee, and at the time it was considered a lock that Lee was going to sign with the Yankees the next year for $150 million or more. I think in the end pretty much all of these examples of prospect overvaluing really come down to finances more than anything.
   13. Zonk is a Doorknob Whisperer Posted: December 21, 2011 at 02:31 AM (#4020782)
To me, I think too many GMs (and fans) now think that a team like Cinci can only be successful like Tampa - draft well, trade veterans for prospects when the vets get expensive, rinse, repeat. I think it's equally valid for a low budget team to trade many "good" parts for one "excellent" part (and considering his age/contract status, I think Latos is an "excellent" part) because the odds of drafting that guy are so tiny.


It's not just teams -- or fans of teams, I guess -- like Cinci, though.

I remember that I was very much among the Cubs fans who were puzzled to pissed about trading Choi for Derek Lee and I'm probably the only one who will admit this, but I was unhappy when Bobby Hill and Matt Bruback were dealt for A-Ram and Lofton.

I think sometimes as a fan - you get wrapped up in the future and almost forget the here-and-now. In 2003, I figured the Cubs had a young -- but potentially dominant in a Glavine-Smoltz-Maddux sense, rotation and a raft of kids (Patterson, Hill, Kelton/Gripp/Hinske, etc) ready to back them up on the diamond.

I had visions of a 2005 Cubs team winning 105 games with a nearly all homegrown lineup -- Hill as the next Joe Morgan, Patterson finally becoming Griffey, Choi hitting 280/380/580...

It's easy for a fan to fall in love with that fantasy.

That said - I completely agree regarding the Reds... Alonso is overrated and "too late" is fast approaching, considering the Reds already have a good, young 1B that they control for at least a couple more seasons. They also have a good - if not better, and more advanced catching prospect on the way.

I guess there's a difference between trading prospect depth and prospect in general.
   14. cardsfanboy Posted: December 21, 2011 at 02:57 AM (#4020800)
I remember that I was very much among the Cubs fans who were puzzled to pissed about trading Choi for Derek Lee and I'm probably the only one who will admit this, but I was unhappy when Bobby Hill and Matt Bruback were dealt for A-Ram and Lofton.


Meanwhile Jocketty was getting hammered by the stat geeks for having a crappy minor league system, that he used to constantly trade out for quality players. Sure a Haren happens once in a while, but a McGwire for a Eric Ludwick, T.J. Mathews and Blake Stein. or an Edmonds for Kent Bottenfield and Adam Kennedy. or a Renteria for Armando Almanza, Braden Looper and Pablo Ozuna, does take the sting away for the one that got away. (not that Kennedy or Looper had completely useless careers)
   15. hokieneer Posted: December 21, 2011 at 03:56 AM (#4020817)
Lots of people in Cinci are upset about the Latos deal; they think the Reds gave up way too much.


I don't live in Cincinnati, but all the Reds' fans I know here in WV range from cautiously excited to extremely excited about the move. Maybe it's just my circle of friends and people I work with.


To me, I think too many GMs (and fans) now think that a team like Cinci can only be successful like Tampa - draft well, trade veterans for prospects when the vets get expensive, rinse, repeat. I think it's equally valid for a low budget team to trade many "good" parts for one "excellent" part (and considering his age/contract status, I think Latos is an "excellent" part) because the odds of drafting that guy are so tiny.


Well the Reds have drafted & signed very well over the last 5-6 years to where the organization is at a high point and ready to contend. The Latos move is all about window of opportunity. The young core of good players for the Reds will be around several years in the future, but the superstar is only guaranteed to be around 2 more years. As difficult as it is to draft and develop a Latos-type player, it's extremely rare to have a Votto-type player on your roster. He's a 7/140 player on the open market. A smart small market team has to capitalize on the potential closing window of having an MVP caliber player on the roster.
   16. valuearbitrageur Posted: December 21, 2011 at 03:58 PM (#4021026)
I think the center point of the article is off base.

Thanks to some good luck on balls in play, in 2010 Cahill finished with a 2.97 ERA and made the All-Star team. So, superficially, his 2011 performance looks like a step back — his ERA jumped to 4.16, which is slightly below league average when you factor in that Oakland plays in a pitchers' park. But in reality, Cahill took a step forward — for the second straight season, his strikeout rate jumped a full point, from 4.5 K's per 9 innings as a rookie to 5.4 K's in his second season, to 6.4 K's this season. The combination of an escalating strikeout rate from an established ground-ball pitcher is highly unusual, and it suggests that Cahill's best seasons are ahead of him.

And, like Santos, Cahill has already signed a long-term contract. His deal guarantees him $29 million over the next four seasons, which is good for a starter who can give you 200 innings a season. His contract includes a pair of club options for a fifth and sixth season, both at $13 million a year — if Cahill continues to improve and becomes a dependable no. 2 starter, by 2016 that price should be a bargain.


Cahill is going to get increasingly expensive.

Cahill hasn't been that good.

Cahill has been the beneficiary of a lot of luck on balls in play.

His career ERA+ is only 107, good, but not studly.

His K rate has increased from awful to poor (league average among starters was about 7), and could just be statistical variation.

He still walks a lot of batters. 3.6/9 is well over league average for starters.

He's not an innings eater yet, just over 6 innings per start last year, though 207 total innings was in the top 25 of starters so this is probably his best attribute.

I think this is a case of Beane selling high on a guy he perceives as over-valued to an organization that doesn't believe in FIP type pitching valuations.
   17. TDF didn't lie, he just didn't remember Posted: December 21, 2011 at 07:46 PM (#4021302)
I completely agree regarding the Reds... Alonso is overrated and "too late" is fast approaching,
Um, I only said one of those two things. Given an everyday job, Alonso could be every bit as good as people think he could be; it's just that he isn't going to play ahead of Votto (duh!) and may not be able to play another position for the Reds. Of course the obvious "Then trade Votto, keep Alonzo, and acquire a topper-flight starter" is just playing with fire, hoping Alonzo is in fact MLB ready.
The Latos move is all about window of opportunity. The young core of good players for the Reds will be around several years in the future, but the superstar is only guaranteed to be around 2 more years. As difficult as it is to draft and develop a Latos-type player, it's extremely rare to have a Votto-type player on your roster. He's a 7/140 player on the open market. A smart small market team has to capitalize on the potential closing window of having an MVP caliber player on the roster.
I don't generally like this way of thinking. I think a well-run team can have a Votto-type salary on a reasonable team payroll - the Reds only have 3 guys (Bruce, Cueto, and Chapman) signed for '14, and all at what right now look to be team-friendly salaries ($25M total in '14). Other than Phillips, Rolen and Latos, they don't even have anyone who's going to be FA eligible in '14 (and I'd expect Rolen to retire or be paid significantly less than he is now, while they try to work out a long-term contract for Latos). And really, by '15, who knows what prospects they may have who are ready?
   18. RoyalsRetro (AG#1F) Posted: December 21, 2011 at 08:00 PM (#4021320)
Cahill is going to get increasingly expensive.

Cahill hasn't been that good.

Cahill has been the beneficiary of a lot of luck on balls in play.

His career ERA+ is only 107, good, but not studly.

His K rate has increased from awful to poor (league average among starters was about 7), and could just be statistical variation.

He still walks a lot of batters. 3.6/9 is well over league average for starters.

He's not an innings eater yet, just over 6 innings per start last year, though 207 total innings was in the top 25 of starters so this is probably his best attribute.

I think this is a case of Beane selling high on a guy he perceives as over-valued to an organization that doesn't believe in FIP type pitching valuations.


Cahill is probably a bit above average, but the package the D-Backs made wasn't a great bounty either. Cowgill is a 4th OF, Cook is a meh reliever so the deal pretty much falls on whether Jarrod Parker can become as good as a 107 ERA+ pitcher. And of course TINSTAAP.

I don't generally like this way of thinking. I think a well-run team can have a Votto-type salary on a reasonable team payroll - the Reds only have 3 guys (Bruce, Cueto, and Chapman) signed for '14, and all at what right now look to be team-friendly salaries ($25M total in '14). Other than Phillips, Rolen and Latos, they don't even have anyone who's going to be FA eligible in '14 (and I'd expect Rolen to retire or be paid significantly less than he is now, while they try to work out a long-term contract for Latos). And really, by '15, who knows what prospects they may have who are ready?


Sure they could afford him, but there is no guarantee that Votto wants to stay even at the right money, or someone else blows the Reds out of the water with a silly offer. The Reds should plan on having a two year window here, there are no guarantees once Votto files for FA.

But I do agree with your overall point that "windows" of opportunity are hard to predict and we don't know how players will progress - maybe the Reds draft or trade for a guy that becomes a stud 1B, so its silly to say for sure the window will close in 2014. I'm just saying the Reds should proceed like they need to go for it now.
   19. TDF didn't lie, he just didn't remember Posted: December 21, 2011 at 08:31 PM (#4021356)
I'm just saying the Reds should proceed like they need to go for it now.
As opposed to the "generally" I used above, I'll say "specifically" I don't think this is true of the Reds.

Again, unless they make a big FA splash before then, they will have a very inexpensive, cost-controlled roster in '15. Even if Votto leaves (and all he's ever said he said last year, which essentially was "I don't know what I'll want to do in 3 years"), they should have the resources to replace at least most of his production at 1B and cover the rest with an upgrade somewhere else.

They could say "2015 is a long way away, and all of our good 1st/2nd year players and high-level prospects might turn into newts", but I think they have to have at least some faith that many/most will progress like they expect. Taking the "win while Votto's here" approach will make it likely they'll be bad in '15 even if he stays.
   20. puck Posted: December 21, 2011 at 08:38 PM (#4021364)
What other bubbles are out there? Many have suggested there's a higher ed bubble. I think there is a Keurig coffee maker bubble.
   21. hokieneer Posted: December 21, 2011 at 09:14 PM (#4021407)
Again, unless they make a big FA splash before then, they will have a very inexpensive, cost-controlled roster in '15. Even if Votto leaves (and all he's ever said he said last year, which essentially was "I don't know what I'll want to do in 3 years"), they should have the resources to replace at least most of his production at 1B and cover the rest with an upgrade somewhere else.

They could say "2015 is a long way away, and all of our good 1st/2nd year players and high-level prospects might turn into newts", but I think they have to have at least some faith that many/most will progress like they expect. Taking the "win while Votto's here" approach will make it likely they'll be bad in '15 even if he stays.


The Reds gave up nothing that would add value to the '12/'13 team (sans a turnaround by Voquez, or Alonso learning to fake it in LF). The only real value they gave up off of the post-votto team is Alonso.

The Reds currently have a top 5-10 player signed for just 2 years. The team is young but talented, and was probably right on the fringe of being a serious contender before the trade. The team saw a great opportunity to win the NL central, and greatly improved the team in '12/'13 without sacrificing too much for the '14+ years. I don't understand why you're opposed to this line of thinking?
   22. LionoftheSenate Posted: December 21, 2011 at 09:28 PM (#4021421)
Reds fan I know is pumped. People on this site overrate building for the unknown future over winning when you can win. The Reds can win now.
   23. TDF didn't lie, he just didn't remember Posted: December 21, 2011 at 10:52 PM (#4021488)
I don't understand why you're opposed to this line of thinking?
I'm not. I'm opposed to this line of thinking
I'm just saying the Reds should proceed like they need to go for it now.
because they don't "need" to mortgage the future ("go for it now") when they're likely to be a pretty good team in 2 years with or without Votto.

I said upthread I'm in favor of the trade for exactly your reasons. I like the trade. I don't like the line of thinking that (1) a team "like the Reds" (outside the major media markets) can't afford their MVP when he becomes a free agent, so they should mortgage the future for one possible run (I think the Brewers did this), or (2) the Reds need to "go for it now" because without Votto, they're going to be an average team because they'll never outbid the big teams for free agents.
   24. hokieneer Posted: December 21, 2011 at 11:31 PM (#4021509)
#23 I see, sorry for the confusion.
   25. LionoftheSenate Posted: December 22, 2011 at 12:34 AM (#4021532)
(1) a team "like the Reds" (outside the major media markets) can't afford their MVP when he becomes a free agent, so they should mortgage the future for one possible run (I think the Brewers did this),


The Brewers signed their MVP.

The Brewers mortgaged "the future" back in 2008, allegedly. Yet the Brewers did just fine in 2011 and will be fine again in 2012.
   26. hokieneer Posted: December 22, 2011 at 04:53 AM (#4021630)
Well I certainly don't like the Travis Wood + 2 "prospects" for 1 year of Sean Marshall. I admit, as a Reds' fan I'm probably a little too bias to objectively evaluate Travis Wood, but this seems like an overpay.
   27. JJ1986 Posted: December 22, 2011 at 09:40 PM (#4022235)
I think the bubble just burst.

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