VORP For Hitters
The currency of baseball is the out. There is a finite number of outs that a team can make in one game, and it is almost always 27 (or 3 outs/inning * 9 innings/game). A player consumes these outs to create runs, and at the simplest level, runs and outs are the only truly meaningful stats in baseball. Outs are calculated by simply taking at-bats and subtracting hits, then adding in various outs that don't count toward at-bats: sacrifice hits, sacrifice flies, caught stealing, and grounded into double-play. Runs may be estimated by one of many run-approximation methods: Bill James' runs created, Pete Palmer's linear weights, BaseRuns, etc. Baseball Prospectus author Keith Woolner uses Clay Davenport's Equivalent Runs in the calculation of VORP. Armed with runs and outs (for the player and that player's league), one can finally calculate VORP.
Critics of VORP take issue with where the formula's arbitrary "replacement level" is set. Many equations and methods exist for finding the replacement level, but most will set the level somewhere around 80% of the league average, in terms of runs per out. There are two exceptions to this, though: catchers, who shoulder a larger defensive responsibility than any other player in the lineup (and are therefore more scarce), have a replacement level at 75% of the league average. At the other end of the defensive spectrum, first basemen and designated hitters must produce at a level above 85% of the average to be considered better than "replacement level," since defense is not a big consideration at either position (it is not a consideration at all for the DH).
Therefore, to calculate VORP one must multiply the league's average runs per out by the player's total outs; this provides the number of runs an average player would have produced given that certain number of outs to work with. Now multiply that number (of runs) by .8, or whatever percentage of average the replacement level is designated to be; the result is the number of runs you could expect a "replacement player" to put up with that number of outs. Simply subtract the replacement's runs created from the player's actual runs created, and the result is VORP.
This is not the final adjustment, however: while the replacement's run total will be park-neutral (by definition, because replacement numbers are derived from league averages), the player's raw numbers won't be. Before calculating the VORP, the individual player stats must be normalized via park factors to eliminate the distortions that can be created by each ballpark, especially extreme parks like Coors Field in Denver (where the thin high-altitude air allows baseballs to travel farther than at sea level, although the humidor has significantly decreased the runs scored in Coors Field, to the extent that Denver is no longer considered a pure hitter's haven) and Petco Park in San Diego (where the heavier sea air couples with distant fences to suppress run-scoring). After the final adjustment, the resultant VORP may be used to estimate how "valuable" the player in question is by providing a good picture of that player's marginal utility.
Read more about this topic: Value Over Replacement Player