A quick look at what perhaps has led to the current situation

[CSteinhardt]

It's a simple problem to understand, although the solution is of course quite complicated.
 
A replacement level team gets about 48 wins, depending upon which normalization you prefer.  Another 45 wins or so gets you a contender.  Free agents went for about $7.53M/WAR this offseason from the only site I found on a quick google search, and I suppose that's more like $8.5M when things like benefits are added in (since that all counts towards the tax).  That means a team with a $382M payroll can be a contender every year as long as they have average scouting of free agents, find roster space, etc.  Nobody has that payroll.
 
More realistically, this means that a team like the Sox has to find about $200M of value (or, equivalently, about 25 "extra" wins) through underpaying players in order to be a contender, which is an easier task than, say, the $300M a low-budget team has to find but is still difficult.  For the most part, this is going to come from pre-FA players, since those are the ones who are the most underpaid.  In other words, it certainly hurts that Sandoval, Porcello, etc. have underperformed this year, however if they played to their contracts this wouldn't be a contender anyway, but rather a .500 team.  
 
The complicated bit, of course, is figuring out how to find those 25 extra wins, and I'm really not qualified to figure out whether this is something the Sox are doing wrong or whether they're using a good process and haven't gotten results.  What seems clear, though, is that like every team, they have to hit on pre-FA talent in order to be a contender, even if for the Sox they don't have to be quite as successful, and that this season they haven't done so successfully enough.  Fortunately, it also appears that they may well get those 25 "extra" wins for most of the next few seasons, which is one of the reasons I still back this front office.

 

[OCD SS]

Red Sox Baseball America Farm System ratings:
 
2002 #28
2003 #27
2004 #23
2005 #21
2006 #8
2007 #9
2008 #2
2009 #13 
2010 #5
2011 #17
2012 #9
2013 #6
2014 #2
2015 #2
 
The Red Sox have dramatically improved their farm system lately. Of course, there's more than one way to skin a cat. I'm not sure any key player on the 2004 team was actually drafted by the Red Sox. 
 
EDIT: Well Schilling, duh. Although I guess he was really more acquired in trade. 

One thing worth noting is that BA seems to chronically undervalue Sox prospects around 2004-2005 (a list that included Pedroia, Youks, Hanley, Lester & Paps off the top of my head) and admitted that it was way too lowly ranked in later analysis.

 

[billy ashley]

One thing worth noting is that BA seems to chronically undervalue Sox prospects around 2004-2005 (a list that included Pedroia, Youks, Hanley, Lester & Paps off the top of my head) and admitted that it was way too lowly ranked in later analysis.

 
In fairness to BA
 

• A lot of people whiffed on Pedroia due to his size. Keith Law also famously thought he might make a good utility player. People basically thought he was a high IQ player without any plus tools. They were clearly wrong about his glove and hit skills.
• Youkilis didn't break into the majors until he was 25 and wasn't a starter until 27. His numbers were solid in the minors but he was never really age advanced. The power spike at 29 was pretty hard to envision and turned him from a solid regular to a stealth MVP candidate.  I think it's fair to say that he was undervalued as a minor leaguer but he far exceeded all rational expectations.
• Hanley was largely seen as a headcase with tremendous talent. He was very highly regarded at some points, kind of despised at others.
• Lester was ranked 22nd in 2006 so I don't think he wasn't undervalued. I think it's safe to say he outperformed his expectations but BA couldn't have forecast the cutter and improved command.
• Papelbon was ranked in the 30s in 2006 and 90s in 2005. I would say that was fair given the questions about his ability to start at the time. He clearly worked out beyond expectations. 

What's so shocking about those early to mid aughts teams is that so many players hit (or exceeded) their upsides. Getting past the obvious guys like Pedroia, Youkilis and Lester there's also Anibal Sanchez, Jorge de la Rosa (traded for Schilling), Brandon Moss, Daniel Murphy, Freddy Sanchez, and Kelly Shoppach all were useful for extended periods of time. Then there's the 05 draft class, which was of course just silly. 

 

[Yelling At Clouds]

Red Sox Baseball America Farm System ratings:
 
2002 #28
2003 #27
2004 #23
2005 #21
2006 #8
2007 #9
2008 #2
2009 #13 
2010 #5
2011 #17
2012 #9
2013 #6
2014 #2
2015 #2
 
The Red Sox have dramatically improved their farm system lately. Of course, there's more than one way to skin a cat. I'm not sure any key player on the 2004 team was actually drafted by the Red Sox. 
 
EDIT: Well Schilling, duh. Although I guess he was really more acquired in trade. 

 
 

In comparison, the St Louis Cardinals:
 
2002 #30
2003 #28
2004 #28
2005 #30
2006 #21
2007 #23
2008 #16
2009 #8
2010 #29
2011 #24
2012 #10
2013 #1
2014 #7
2015 #16
 
The Cards do seem to have a better time transitioning their prospects to MLB, though. Carpenter wasn't thought that highly of as a prospect but really turned into a star. Wong's been solid, and Lynn/Wacha/Martinez/Rosenthal seemed pretty excellent right out of the gate. Miller, too, although St Louis probably made a mistake in trading him to Atlanta. 

 
Mostly what I feel like this demonstrates is that these rankings aren't super-meaningful with regards to predicting future success, and maybe we should take them with a larger grain of salt than we do currently. At the risk of stating the obvious, it's nice that the Sox have a high-ranking system right now, but if the organization can't turn those prospects into good Major Leaguers either directly or indirectly (via trades) than that ranking doesn't mean anything. 

 

[jscola85]

The more pertinent issue with the Red Sox prospects right now is that, save for Owens and a now-shelved Johnson, pretty much all the Sox prospects are at least a year away.  Sam Travis is probably the closest and he has less than 150 ABs under his belt in AA.  Devers, Moncada, Guerra, Kopech, Espinoza, Benintendi, Ball, Rijo and Dubon haven't ever sniffed Portland, and most not even Salem, while Margot is scuffling a bit in his first taste of the high minors in AA.
 
It's great they have so many high upside players in the low minors, but undoubtedly at least half those guys are going to completely flame out before they ever even reach the majors.  The key for this FO is determining which ones they think will figure it out.  The best orgs like the 90s Braves were always able to self-identify the right prospects to keep vs. trade.  GIven the MLB payroll inflexibility, the best and only realistic way of contention in the near future is trading some of those high upside, low minors players for proven talent.
 
EDIT - also, with respect to the Cards, they tend to ease their prospects in effectively.  They started Carlos Martinez in the bullpen and used Kolten Wong as something of a utility player initially.  Matt Adams was also used as a part time player at the start, rather than being thrown in head-first.  Even Michael Wacha and Lance Lynn were used in relief as rookies and then were not pushed into a front-of-the-rotation role right off the bat.  They've always had Carpenter and then Wainwright to be the "ace" of the staff, and now Lackey.

 

[alwyn96]

Yep...you look at the 2012 top prospects, for example, and the list included guys like Barnes, WMB, Lavarnway, Jacobs, Ranaudo, Cecchini, Coyle...the write-ups on those guys, by Sickels, were generally really favorable. That class has been a success, because of X and Tazawa and the promise of Swihart, Owens, Vaz, etc. but it is interesting to see how many of the players had or now have little to no value just a few years later. 

 
I'm kind of fascinated looking at various prospect lists. Just looking at the 2011 Rays' system, which BA had as #2 in baseball, you've got Hellickson, Moore, Jennings, Archer, McGee, (Josh) Sale, and Hak-Ju Lee. Hellickson had some good years where he way outpitched his peripherals, but I'd say he's been a bit disappointing given that he was a #6 overall prospect. Moore's out with TJ for what looks like 2 full years, Jennings' out with knee surgery, Archer is an ace, McGee is an elite-ish reliever, and Sale/Lee are looking like busts. Archer and McGee pretty much makes that class a success, but the rest of the them haven't added much value this year. Moore and Jennings have given them some value, and will probably bounce back next year. The prospects the Rays got for Hellickson look fine but are a few years away. 
 
The Red Sox 2008 system was #2, with Buccholz, Ellsbury, Lars Anderson (I'm still upset about him washing out), Masterson, Lowrie, Bowden and Kalish. 
 
I'm not sure what my point is - just that it's interesting to compare the Red Sox to other systems. I guess you'd hope a #2 system gives you a star, a good player, and a couple averageish players with upside, but it's hard to predict exactly who those guys are going to be. The 2014 system produced Bogaerts and Betts, who hopefully can be stars/good, and the jury's still out on what Swihart/Castillo/Owens/Bradley will be. It's a little weird to call Castillo a prospect, but he's probably facing some of the same adjustment issues a young guy would be facing when moving up to a superior league.