We recently updated the values on our site, which is normal for us around this time of year. The purpose is to correlate to the market, using free agent contracts as a kind of going rate for our dollars-per-projected-WAR calculations. If the first batch of free agents is skewing high, it may be an indication that our initial assumptions were low on that basis.

Why is that? Most of it is inflation. We assume a 3% inflation rate, which is the long-term average. However, as you probably know, that can vary from year to year. A few years ago it was totally flat. This year it’s running a bit hotter than average. That’s reflective of the general economy, but it’s starting to manifest in the domain of MLB free agent contracts. So we’ve increased our inflation adjuster a bit to match what we’re seeing.

 

A note of caution

That said, we have to be very careful with our assumptions. 

For one, these may be small sample sizes. We typically have to wait until there are enough data points to show a clear trend.

Second, you can’t assume linearity. That is, if the first few pitchers off the market are averaging 10% above initial projections, it doesn’t necessarily mean that all pitchers will. The ones in the first batch are usually top-tier, and quite often the demand for those frontline starters exceeds the supply, which skews the numbers a bit. 

When you get down to the middle and lower tiers, they may be right in line, and even a bit under the line with the bottom tier, as supply sometimes exceeds demand for those types. In this case, the slope is not linear, but curved.

 

The middle tier

But this year, interestingly, we’re seeing middle-tier pitchers get more than initially expected – and not just in our model, but across the industry. We track how other sites’ predictions are doing as well – typically, MLB Trade Rumors, Fangraphs, and Tim Britton of the Athletic. And the trendline is clear this year – so far, players across tiers are getting a bit more than expected.

Pitchers like Yusei Kikuchi, Matthew Boyd, and Luis Severino all received contracts well above initial expectations – and not just on our site. These guys are not necessarily aces – some are coming off of good years, and even smaller sample sizes, like Kikuchi and Boyd, where they either made an adjustment to their stuff and/or pitched well in the playoffs. That helped their cases.

So that suggests it’s a more widespread pattern, which in turn suggests that our initial inflation assumptions were too low. They're coming in hot.

 

Position players, too

Will this apply to position players as well? We’re not sure yet, because there hasn’t been as much activity with those. Once the Juan Soto dam breaks, we should get a lot more information. That said, if our general assumptions about inflation were initially low, that rising tide should lift these boats as well. Our latest update, therefore, shows an uptick across the board for all types of players. Initial contracts for some position players – e.g., backup catchers like Kyle Higashioka and Gary Sanchez, also fit this pattern.

 

Trade values change acccordingly

All of the above has an effect on surplus value calculations, because it raises the players' field values, which in turn raises their surplus values. That's why you may have noticed an uptick for, say, Garrett Crochet.

 

About that Soto contract

 We have found that there’s an upper limit to how much any team (even the big spenders) will pay for any one player. Of course, the main reason for that is that baseball is a team sport, so you need to accommodate room in the budget for 25 other guys on the active roster. But there’s also a pattern, historically, that shows that even superstars in their prime will hit this imaginary limit. 

The Mike Trout contract extension in the spring of 2019 was a bellwether for this. On paper, at the time, he was worth much more than the roughly $36M AAV he was getting. In his prime, he was worth at least $80M per year.

But of course, no team could realistically pay him that much. One way around that was to stretch the contract out. So they extended it for 12 years, such that it dampened down the AAV to include what figured, at the time, to be the less-productive years as Trout aged into his late 30s. 

Funny how that worked out. Trout, despite all his talent, fell off a cliff much earlier than expected, due to nagging injuries, and now the contract is severely underwater.

Will the same thing happen with Soto? No one knows, but it’s a big risk for any team forking over a truckload of money. They know the later years will be less productive, but they don’t know if Soto will decline any faster or slower than others, or if his health will hold up. The more money you commit to him, the less margin there is for error there, and that’s a risk all these teams acknowledge.

One last note: The 15-year Soto contract guarantee exceeds the maximum amount of years we’ve built into our Player Value Timelines, which have a limit of 12. That’s because we almost never see a situation like this, where a contract goes beyond 12 years. 

At the time we built this feature of the site, we figured 12 would be fine. So this is an exception in that respect as well. On the other hand, we have no such limitations in our model behind the scenes, so we’ll tweet out what the number looks like on that end of things.

 

Prospect updates

The major public sources for prospect evaluations tend to roll out their updates in a slow trickle, rather than in one fell swoop. As such, we update our numbers in a slow trickle as well, as the new data becomes public, often team by team. So you’ll see those updates reflected throughout the offseason. 

(As a reminder: we are not prospect evaluators ourselves. That is a specialized field, and we rely on the experts for those evaluations. We just crunch the numbers associated with them.)

You might wonder: Can we get those updates sooner than the rest of the public? So far, despite requests, that has yet to happen, and we’ve concluded that it’s unlikely to change. That’s because there are legitimate business reasons why sites and publications roll out when they do – they’re driving traffic, and/or they’re driving subscriptions. We have to respect that. They also just may not have written them up yet. Their timelines are their timelines.

But that means sometimes there’s a lag between what the numbers are and what they should be, had they been updated sooner. A young prospect with helium may be traded in December, let’s say, and the trade might look a little off because our numbers are still reflecting the previous update on a prospect (or two) that was involved in it. But then, the new numbers might come out in January, and at that point the trade looks a lot closer. In other words, the gap was caused by a time lag, not an issue with our model.

This happened last offseason with the Michael Busch trade. At the time, it looked lopsided:

 

 

But now, both prospects in the return to the Dodgers have seen their values rise. If the trade were to happen today, it would look like this:

 

 

Ferris and Hope were both undervalued on our site due to this lag time of information. (Note: Almonte is now a free agent.)

The same effect happens sometimes with prospects who have fallen out of favor, and we see their values decline later. 

Could we get updated valuations from each team? Haha. That’s proprietary data, and they guard it with their lives. After all, that’s one of their only competitive advantages, especially in trade scenarios: they know their prospects better than anyone else – and vice-versa. 

The closest we’ve come is when some teams reach out to us to suggest that their proprietary numbers on some prospects are different from ours (which is better than nothing, mind you) but not super helpful, because that’s as far as they’ll go – no names, no data beyond that.

So we stick to our model, which works well enough most of the time.

 

Competitive Balance Picks

 We have also added competitive balance draft picks to the site for each relevant team. These are the only draft picks that can be traded in baseball, for reasons that are clear to no one. This year, there were 15 comp picks awarded – 8 in Round A, and 7 in Round B. 

The Round A picks come after the regular first round of the draft, and are generally valued in the low $4M-ish range. The Round B picks come after the second round, and are generally valued in the low $2M-ish range. 

You might think those numbers are low, but they are based on multiple years of research. That’s because there’s a much lower success rate for prospects at that level. Prospect valuations (which include draft picks) follow a long-tail model: the ones at the top are far more likely to succeed at the MLB level; there’s a steep curve from there, such that once you get past the end of the first round, the numbers start to bunch together more, and the curve flattens. In other words, there’s not much difference in the probability of success between a Comp A pick and a true 2nd round pick, or a Comp B pick and a 3rd round pick.