The theme of this offseason has shifted towards a rebuild, and when that happens, that means the team is going to slow down its building at the MLB level and start accumulated assets that can help the team a few years down the line. Those assets come mainly in the form of prospects–players who are signed from foreign lands like Latin America and Japan, or players who are drafted out of high school and college (or maybe soon, an international draft). Prospects are what baseball teams use to replenish their supply of MLB roster players, and as bargaining chips for new MLB roster players.
When a prospect first comes up for his cup of coffee, he is of course unproven at the MLB level. Most prospects are likely to fail as the numbers are against them. With 30 teams, each with only 25 roster spots, there are only 750 total MLB jobs. Each of the 30 teams has at least four or five affiliates, each with 25 or so spots. That’s another 3500 or so jobs at various minor league levels that a prospect has to compete through. Then you look at the draft and pool of available foreign amateur/free agent talent. The draft is now at 40 rounds, with each round having at least 30 picks, so that’s 1200 new guys coming into the minors system each year, forcing guys out if they sign and are able to stick on the rosters. That’s picking out of hundreds of thousands of high school and college kids who hail from all of North America and Puerto Rico. The foreign pool is probably even larger. When you look at it that way, of course most prospects will fail. The prospects who do not fail become the solid role players, the starters, the Hall of Famers like Ryne Sandberg and Ron Santo. You absolutely have to sift through the numbers to get through all the muck and find those few gems that will be the core of your team for years to come. People liken it to a lottery, and that’s exactly what it is. You have to play the lottery right in order to maximize your chances of getting those gems.
But all our prospects suck!
Because of how difficult it is to project baseball players, you absolutely have to do your homework to ensure that you are not wasting draft picks and roster spots on the wrong personnel. That has been the Cubs’ problem for a very long time, as well as player development. Anno already blogged a bit about prospects earlier and mentioned several hyped prospects like Corey Patterson and Felix Pie. Those guys had tons of potential, but also had flaws in their game that either were not identified by the Cubs or were not properly fixed before they made the big show. The player evaluation problem persisted until (hopefully) recently, with guys like Tyler Colvin and Hayden Simpson being taken in the first round. As you will see later on, first round picks have a higher success rate, but it also helps if you actually take a first-round talent in that round or else you’ve just wasted a pick and money. Unfortunately that has happened to the Cubs more often than not. And I understand that is why Cubs fans are jaded about prospects. But you have to figure that other teams are able to develop prospects fine, so obviously they’re doing something right and the Cubs are not.
The other problem is luck and timing. You can have the best scouting department, but even they cannot predict when a prospect is going to get a serious career-threatening injury, or at least an injury that will sap their future performance. Stuff like this happened to great prospects such as Mark Prior and Kerry Wood. They weren’t terrible prospects by any stretch of the imagination; they just got smacked with bad fortune.
The things that can be controlled are the scouting, evaluation, and ensuring that the best possible prospects are the ones being invested in. You can’t control fate and fortune, but you can try to swing the percentages to your favor.
Why care about draft picks? We should be signing free agents up the yin yang!
One of the problems with free agents is that they can get expensive. The other issue is that if you sign the elite free agents, and they have been offered a compensation-eligible contract by their present team under the new collective bargaining agreement, they will cost you a high draft pick. Even if the first round pick is protected (if the team sucks), you’d still lose out on second-, third- and even fourth-round picks depending on how many of the elite are signed. So unless the plan is to contend within that window, the incentive to give up high draft picks just isn’t there.
Check out this article from MLB.com where they look at the success of first-round draft picks. There are many teams that have former first-rounders lining their rosters, and a lot of those teams have homegrown players, which means they picked those players to fit into their organization long-term. While many of those teams are perennial cellar dwellers who will amass draft picks because they suck and thus get the pick of the elite prospects, you see teams like the Phillies, Brewers and Cardinals who are contenders who have a good portion of their team composed of early picks. So you see how important it is to spend the first rounders on an Evan Longoria or a Chase Utley and not throw it away on a Hayden Simpson.
You can hope for the rare late-round gem, but there’s a reason so much is invested at the beginning of the draft and the later round guys get paid peanuts in comparison. Ryne Sandberg, for example, was drafted in the 20th round. Albert Pujols was a 13th rounder. Some of that is because scouts and teams didn’t evaluate the players properly, and sometimes it’s because the team paid overslot to get the player to skip college (which is no longer as feasible under the new CBA). If you look at various studies like this one, you see that you’re more likely to get a star player or at least one who doesn’t consistently ride the bench if you invest your time and energy into proper evaluation in the early rounds of the draft. You have a better chance, with a better evaluation system and philosophy, to get a top 100 prospect that way. And if you get that kind of prospect, there’s a better chance that he contributes well once he makes it to the big club.
But why waste money on unproven talent when you can just buy proven talent from elsewhere?
The way baseball salary systems are set up allows teams to control their costs, especially when the player is just entering MLB. In most cases the player has to go through three years of service at minimum salary (less than $500K) before they are eligible for arbitration. Arbitration can control costs for an addition three to four years, and generally keeps costs below what that player would be worth on the free agent market.
When you look at aging curves and what not, these cost-controlled years usually occur as the player is entering and in his prime. Getting maximum production out of that player while paying less than full price is much more efficient than trying to get that same production on the free agent market. A team still has to plug various holes through free agency, but an efficient team (see: Boston Red Sox) will grow most of their players in house before filling in the blanks.
Check out three players:
While with the Cardinals, Pujols got paid more than $100MM. He has provided about $300MM worth of value, or around 88 WAR, over 11 full seasons. He was cost-controlled over the first four seasons before getting a below-market extension. Recently the Angels threw $254MM at him over 10 years. If you consider a win to be worth about $5MM, he’s got to provide about 50 wins over his age 32 to 41 seasons to be worth his contract. He’ll sell tickets and what not, but the odds are against him being very good past about the age of 36 or so. Which team do you think was more efficient?
Looking at Longoria, he’s only made $3.5MM so far in his career but has provided about $117MM of value. That is incredibly efficient and a reason why many people admire the Rays, and some people despise them because they screwed Longoria out of millions of dollars even though he’ll be set for life.
Now you have Dustin Pedroia, who is the Red Sox’s star second baseman. So far he’s been paid about $12MM but has provided $113MM of value. Not as efficient as Longoria, but still pretty awesome if you think about it.
As you can see, if you can have a team that can scout and develop the right prospects, you can save a ton of money. Then you might have a chance to keep that player for life, like the Yankees did with Derek Jeter and Mariano Rivera.
That kind of thinking is why the Cubs flipped Sean Marshall for Travis Wood. Wood still has five full seasons of club control and has the potential to produce much better than what the Cubs will pay him. Not a bad gamble for a non-contending team. And it doesn’t really matter that they’re in the same division. Marshall’s going to throw just an inning or two per game, and if the Cubs are in a position where they’re not in the lead when they get to Marshall, well, they probably weren’t playing all that well to begin with. Also, it never makes sense to avoid a trade if you can improve your club within the context of your grand plan (whatever the hell that is).
So what would you rather have?
Not every team can afford a $150MM payroll all the time. The Cubs can, but there’s a more efficient way to do business and baseball. If you can save money by growing the team in-house, you should do it. In the above example, would you rather pay Dustin Pedroia $113MM for his $113MM of value, or just $12MM? When you look at the money spent in the draft, most teams spend about $10-$15MM and rarely more than that to get 40 or so players to sign. If even one of them can give you a solid future, that is a great investment. In contrast, it’ll cost more than $20MM a year to get Prince Fielder. Ignoring situation and circumstance and just looking at value, would you rather spend that $20MM getting 40 guys, 2-5 of whom will provide much more value over their cost-controlled years than Fielder; or would you just say “screw it” and give that money to Prince Fielder anyway?
The goal here is to set up a system where the Cubs can do both. They can spend $20MM in the draft (probably less with the new CBA, but still not bad) to get a shot at good prospects, and then with the knowledge that they have cost-controlled production in the pipeline, go after free agents like Fielder (or equivalent in the future) to fill in the gaps. It makes sense to me. It at least gives you hope that guys like Brett Jackson will pan out and save the Cubs some money in the next few years, right?