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March 8, 2013

Fantasy Freestyle

What Your Auction Dollar Gets You

by Mike Gianella

If there is one thing in fantasy baseball that is not in short supply, it is opinions on the right or wrong way to play the game. In particular, Rotisserie-style auction theory is littered with myriad pet opinions on the right or wrong way to spend your money.

It never fails. Every year, in late February and early March, these theories are rolled out like the proverbial red carpet. While the theories about dollar allocation are always interesting and occasionally compelling, there is seldom any hard data behind where the sweet spot is in your typical auction.

In order to remedy this, I went back and examined the last three LABR auctions for both the National League and American League. With over 1,800 winning bids to examine, this sampling provides a snapshot of how some of the smartest fantasy minds in the industry spend their auction money, when those investments pay off, and when they don’t.

Table 1: National League LABR Hitter Prices 2010-2012

Range

# of Hitters

$

Salary

$ per Player

Sal per Player

+/- per Player

ROI

$30+

41

$1,150

$1,420

$28.05

$34.63

-$6.58

$0.81

$20-29

82

$1,622

$1,969

$19.78

$24.01

-$4.23

$0.82

$15-19

92

$1,409

$1,548

$15.32

$16.83

-$1.51

$0.91

$10-14

83

$939

$978

$11.31

$11.78

-$0.47

$0.96

$5-9

96

$783

$662

$8.16

$6.90

$1.26

$1.18

$2-4

95

$546

$262

$5.75

$2.76

$2.99

$2.08

$1

57

$287

$57

$5.04

$1.00

$4.04

$5.04

These charts are fairly self-explanatory, with the possible exception of the “ROI” column. This is the return on investment, or the amount of earnings returned in each bracket for every dollar spent.

Without fail, the expert market is taken to task every year for being too conservative on the top players. However, the evidence shows that the experts are right to be cautious. An 81-cent return on the dollar isn’t terrible, but it isn’t what you would call a rousing success either.

One pet theory that is popular among some experts is that you should leave a little extra money floating around in the endgame because you’re better off expressing your preferences on the $2-4 players. The data from the last three years doesn’t support this idea: The $1 players returned nearly as much per player as the $2-4 players did. You would have been far better off spending your money where you saw fit and going with a dollar derby at the end.

Table 2: American League LABR Hitter Prices 2010-2012

Range

# of Hitters

$

Salary

$ per Player

Sal per Player

+/- per Player

ROI

$30+

30

$766

$1,039

$25.53

$34.63

-$9.10

$0.74

$20-29

87

$1,795

$2,072

$20.63

$23.82

-$3.19

$0.87

$15-19

91

$1,356

$1,523

$14.90

$16.74

-$1.84

$0.89

$10-14

78

$922

$940

$11.82

$12.05

-$0.22

$0.98

$5-9

97

$931

$670

$8.16

$6.90

$1.26

$1.18

$2-4

74

$433

$209

$5.85

$2.82

$3.03

$2.07

$1

47

$147

$47

$3.13

$1.00

$2.13

$3.13

The results in the American League are very similar. While the most expensive hitters do worse, the progression in the ROI column is the same: The top hitters provide the poorest return on their investment, and the return gets better and better all the way to the $1 hitters.

In the junior circuit, it seems that you really want to tread more carefully with the $30+ players. Taking a $9 bath on your signature player isn’t a good way to start your auction. Sixteen (39 percent) of the 41 National League hitters who cost $30+ incurred double-digit losses, and 14 (47 percent) out of the 30 American League hitters who cost $30+ did the same. While the eight players purchased in American League LABR for $30+ this past weekend all look like solid buys now, history tells us that three or four of them are going to lose at least $10 for their owners this year.

The $1 argument isn’t quite as compelling in the American League. Yes, the ROI is better, but there is a significant difference between a $6 player and a $3 player. You might be better off saving a little money for your endgame in AL-only formats. 

Table 3: National League LABR Pitcher Prices 2010-2012

Range

# of Pitchers

$

Salary

$ per Player

Sal per Player

+/- per Player

ROI

$20+

37

$765

$879

$20.68

$23.76

-$3.08

$0.87

$15-19

48

$639

$809

$13.31

$16.85

-$3.54

$0.79

$10-14

57

$657

$687

$11.53

$12.05

-$0.52

$0.96

$5-9

71

$498

$465

$7.01

$6.55

$0.46

$1.07

$2-4

97

$518

$279

$5.34

$2.88

$2.46

$1.86

$1

80

$380

$80

$4.75

$1.00

$3.75

$4.75

It shouldn’t be too surprising that pitching ROI isn’t linear . What is surprising is that the losses per pitcher on those in the $15-19 bracket are higher than they are for the $20+ pitchers (there aren’t enough $30+ pitchers to make up their own group). The second tier of pitchers in the National League is a danger zone. You’re losing money and getting $7 less per pitcher back than you are on the best arms in the league.

Once again, saving a little extra money for the endgame in NL-only formats doesn’t seem like the best idea. The earnings provided by the $1 pitchers are nearly identical to the earnings provided by the $2-4 arms. You are going to find an essentially equal share of surprises and disappointments at the bottom of the barrel; don’t bother saving a few extra dollars for the endgame that you should have spent earlier.

Table 4: American League LABR Pitcher Prices 2010-2012

Range

# of Pitchers

$

Salary

$ per Player

Sal per Player

+/- per Player

ROI

$20+

32

$724

$780

$22.63

$24.38

-$1.75

$0.93

$15-19

42

$448

$695

$10.67

$16.55

-$5.88

$0.64

$10-14

56

$636

$684

$11.36

$12.21

-$0.85

$0.93

$5-9

58

$506

$397

$8.72

$6.84

$1.88

$1.27

$2-4

82

$510

$235

$6.22

$2.87

$3.35

$2.17

$1

54

$245

$80

$4.54

$1.00

$3.54

$4.54

In the American League, the data supports the idea that you should purchase an ace. The ROI on a $20+ pitcher is just as good as the ROI on a $10-14 pitcher, and you’re talking about buying a $23 pitcher compared to an $11 pitcher on average.

Pitchers in the $15-19 range in AL-only auctions take an even worse bath than they do in NL-only formats, and they do worse than the pitchers in the $10-14 range. One out of every three of the $15-19 pitchers took a double-digit loss. With $19 as the maximum price in this cost bracket, there is a possibility your investment will return nothing.

Once again, the theory of saving money for the endgame works better in the American League. The earnings per player in the $2-4 range are significantly better than the returns from the $1 players.

Conclusion

Should you avoid spending on the big-ticket items entirely? No. While bargain hunting is useful, you do need to spend $260 on your team. Getting back $6 on a $3 investment is good, but you cannot populate your entire team with 23 organizational soldiers that earn $6. You do have to spend your money.

However, this analysis does shoot some holes into the concept of Stars and Scrubs. The losses at the top of the food chain are not trivial, and the gains in the endgame aren’t quite enough to make up for these losses. Not every $30+ player is going to lose money (take a bow, Ryan Braun and Miguel Cabrera), but many of them will. Spreading your money across your team mitigates your risk.

On the pitching side, if you’re not one of those “spend nothing on pitching” owners, you should budget some money for an ace, particularly in the American League. This goes against conventional wisdom, but if you’re going to spend $70-80 on your staff, spreading your money around doesn’t mitigate your risk. The $15-19 range is the danger zone; you might get lucky, but history says that you won’t.

All of this analysis should be taken with an appropriate amount of caution. Keep in mind that there are players in every price bracket that succeed or fail wildly. It is always better to analyze individual players, not groups of players. Nonetheless, this data does provide a fairly good picture of historical performance, which can help guide your investments in auctions this year.

Mike Gianella is an author of Baseball Prospectus. 
Click here to see Mike's other articles. You can contact Mike by clicking here

18 comments have been left for this article. (Click to hide comments)

BP Comment Quick Links

Matthew W

Hey Mike,

What does it look like if you pull the closers out of the pitching numbers? Are they murdering the $15-$19 bracket?

Mar 08, 2013 06:50 AM
rating: 2
 
swarmee

Same question on the $1-4 players. What if you remove the guys who were set up men who became half-time or more closers?

Mar 08, 2013 08:06 AM
rating: 0
 
BP staff member Mike Gianella
BP staff

$2-4 without 10+ save pitchers
AL - 71 total. earned $374, cost $205, gained $2.38 per pitcher.
NL - 93 total, earned $464, cost $265, gained $2.14 per pitcher.

$1 without 10+ save pitchers
AL - 53 total, earned $229, cost $53, gained $4.32 per pitcher.
NL - 75 total, earned $322, cost $75, gained $3.29 per pitcher.

Mar 08, 2013 09:52 AM
 
Dave Holgado

Excellent question.

Mar 08, 2013 08:44 AM
rating: 0
 
geneclaude

This is interesting, but raises a ton of questions and seems very...un-nuanced. I play in a 4x4 (OBP instead of AVG and K instead of W, only 4 keepers per team, so mostly a reset league) 13 team NL/AL Central that is hyper aggressive, we normally have several $40+ players and often several $50 players. First, of course lower dollar players have a higher ROI as they have minimal downside. A $1 player's worth $0 doesn't kill ROI like a $29 player worth $0 does. Second, I hypothesize the mid-range players have the worst ROI because they are overrpriced by conservative leagues. If you are unwilling to pay $35 on Miguel Cabrera, you have a lot of money left in the mid-rounds to overbid on Adam Dunn. Same with Justin Verlander and Ubaldo, etc. It is exceedingly rare that a top rated player is worth close to 0, barring catastrophic injury (says Tim Lincecum's owner last year...). Much less rare with those middle players. You are paying a premium for decreased variance.

Another thing...this very much ignores roster and time dynamics. Yes, a $1 player may return $10 of value. In the second half, when he is called up, or figures it out. In the meantime, you are carrying a $1 player producing 0 value while free agents exist that can offer a current return on investment. The time value of players is very important in an actual league dynamic, and uncertainty is a killer. A $10 hitter may only return $10, but if he is playing from the start, you can better judge where you are. Owning a bunch of guys that might have great ROIs in the second half is not a prescription for victory.

Mar 08, 2013 08:07 AM
rating: 0
 
tcxnieman

correct, and you still have to get to a number of runs, hr's, etc... and keeper inflation spreads a lot more players into the 40+ and 50+ category, because you have roughly 40 to 60 less players in the total pool of around 300...

Mar 08, 2013 08:27 AM
rating: 0
 
gpurcell

Interesting. I've always had a feeling that its the second tier of pitchers where people are most likely to get burned...and these data support that feeling.

Mar 08, 2013 08:57 AM
rating: 0
 
BP staff member Mike Gianella
BP staff

$15-19
AL SP - 22 total. earned $255, cost $358, lost $4.68 per pitcher.
AL RP - 20 total, earned $193, cost $337, lost $7.20 per pitcher.

NL SP - 24 total, earned $297, cost $409, lost $4.67 per picther.
NL RP - 24 total, earned $342, cost $400, lost $2.42 per pitcher.

Mar 08, 2013 08:58 AM
 
Michael
(736)

Great raw data. Can you help me understand it?

When add up both hitters and pitchers, both AL and NL, I get $19,612 of $ and $19,466 of salary. It's possible I made a data entry mistake, so let me ask whether you get the same numbers.

If those totals are correct, then that raises some questions. Why are they not the same if you are attributing the value of any roster replacements to the original money spent. If you are not going that, then the $ should be much less than the Salary.

Mar 08, 2013 09:46 AM
rating: 0
 
BP staff member Mike Gianella
BP staff

The dollar values don't add up because while the salaries are all from the LABR universe of players the $ values are derived from the universe of the 117 most expensive pitchers in the CBS, LABR, and Tout Wars auctions. This overlap doesn't create too many differences in the player pool used to derive the earnings but it does create a small handful. You are technically correct that the $ values should be reduced by 0.7% in order to create a "perfect" translation from salary to earnings. In reality, this would have an incremental effect on a player-by-player basis. Using the "correct" earnings for 2012 Justin Verlander - the highest AL-only earner in 2012 - would drop him from $39.30 to $39.01. Redistributing $146 of earnings across the board doesn't significantly alter the results you see above.

Mar 08, 2013 10:25 AM
 
Michael
(736)

Thank you (belatedly).

Mar 19, 2013 06:05 AM
rating: 0
 
ravenight

I don't think this argues against the idea of stars and scrubs, honestly, it just suggests that "scrubs" needs to mean $1-4 players, not just $1. If you spent $130 on 4 hitters at an ROI of .77, $72 on 3 pitchers at an ROI of .9, and the remaining $58 on 20 players in the $2-4 range (ROI 2.07) and 2 $1 players (ROI 3.75), you'd end up with a total value of $288.32 for your $260. That's a better return than spending $252 on 21 players in the $10-14 range (ROI .96) and getting 8 $1 players (ROI 3.75), which only totals 271.92.

Of course, you could also do $167 on 10 hitters in the $15-19 range (ROI .9), $87 on 13 pitchers and hitters in the $5-9 range (ROI 1.15) and 6 $1 players (ROI 3.75) for a total of $272.85.

I'm sure there's a set up in there that's more optimized, but just throwing together some naive breakdowns seems to support stars-and-scrubs as a plan. The reason is basically that you get a lot more ROI on <$4 players, so the more of them you have, the better, but you still need to spend the whole $260, because the ROI on unspent dollars is 0, which means you are better off getting some star players despite a poor return to just spend the money and making up for it with far better returns from your scrubs. It also gives you the roster flexibility to capitalize on the scrubs that pan out, instead of having great ROI players sit on your bench because you spent $12 on the guys at their positions.

Basically, what this data says to me is exactly what you'd expect: victory means finding the guys who outperform their expectations and only paying slightly more than the expected value in order to get them. It's obviously hard to find an undervalued $35 player, but the data says it's also hard to find undervalued guys that go for the average price.

Mar 08, 2013 11:49 AM
rating: 3
 
Scott Gilroy

I'm enjoying this type of article. More auction discussion is apreciated.

Mar 10, 2013 14:02 PM
rating: 3
 
jfranco77

Can you post something about the distribution of the $1 players?

I assume that an average $4 profit (on $1 hitters) actually means the group looks like this:

0
1
0
4
17
16
0
1
5
0

Which is great for the guys who get the 17 and the 16, but not so great for everyone who assumes they'll get a $4 profit on every $1 hitter.

Mar 11, 2013 08:07 AM
rating: 1
 
BP staff member Mike Gianella
BP staff

AL
$20 2
$16 1
$13 1
$7 2
$6 4
$5 2
$4 3
$3 2
$2 7
$1 5
$0 12
($1) 4
($2) 2

NL
$21 1
$20 1
$17 1
$15 2
$14 1
$13 1
$12 1
$11 4
$10 1
$9 3
$8 1
$6 2
$5 4
$4 6
$3 3
$2 4
$1 2
$0 16
($1) 2
($2) 1

Mar 11, 2013 08:49 AM
 
Robotey

Mike - Fun stuff - I don't win my league every year or even every other but one thing I've learned is that you should slot a half dozen spots on your roster for $1

5th OF - 5th & 6th SP - 2nd C - Utility of MID - 3rd RP - the fun part is the chess game at the end of the draft - as any savvy owner knows one of the best payoffs at the draft is knowing you are the only team with an SP slot open on your roster so you can nominate the best remaining SP and he's yours for a buck - even in a deep league you can grab first year phenoms like Tommy Hanson this way. Keeping this in mind it's really that a $1 bid isn't the same late in the draft as it is early in the draft. Thus the ability to bid $2 at the end can be crucial, just enough to snag a decent player at the moment all other owners are topped out at a buck.

Mar 13, 2013 07:50 AM
rating: 0
 
BP staff member Mike Gianella
BP staff

I think a lot of this depends on your league. In a league like LABR, Tout Wars, or my home league that has been in existence for 25 years and has 4-6 owners that could show up at LABR/Tout and not embarrass themselves, I contend it doesn't make much of a difference. Yes, you get to express a preference, but the room is too tight that a perceived $4-5 player isn't slipping down to $1-2 in the end game. If I go dollar derby in Tout, I find myself missing out on $2-3 players, not $4-5 guys.

In a less experienced league, I'd agree having money at the end is more important. I've been in those leagues (just not for some time now) where a phenom is sitting there for the taking at the end because half the room knows little about him and is thumbing through Sports Weekly trying to figure out who half these guys are. As I always say, a lot of this depends on the room you're sitting in.

Mar 13, 2013 08:07 AM
 
Robotey

Mike, I hear what you're saying; wouldn't you say some of the best moments in the draft though are when a player goes--in an experienced league (and really who wants to play in any other?)--for what seems significantly below everyone's estimation? For instance, in my deep NL league a few years ago Halladay went for only $25 due to an odd confluence of different teams' keeper priorities (they'd kept strong SP's and needed $ for offense) and the 'it's a new league' question. Even last year, Beltran and Heyward went for less than $20 and delivered way more. Have you witnessed this at any drafts this year or last?

Mar 13, 2013 13:59 PM
rating: 0
 
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