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March 13, 2014

Fantasy Freestyle

Raise Decisions and the Fantasy Win Curve

by Jeff Quinton


It is that wonderful time of year when fantasy baseball keeper and raise decisions are in the air. Many keys have been typed about keep, cut, and raise decisions, but today we will be discussing strategy around the opportunity cost of a raise dollar. Why? Because determining the best raise for a player is not simply an “Is player X going to be worth Y dollars for each of the next Z seasons?” decision. Every dollar we spend on a keeper is a dollar that we cannot spend in the auction. The value of a dollar in the auction will be different for each auction depending on inflation. Furthermore, the value of an inflation-adjusted dollar will be different for each owner depending on where his or her team lies on the fantasy win curve. Because we are all familiar with keeper inflation, we will be discussing the latter point.

The fantasy equivalent of the MLB win curve, the aptly named (by me) fantasy win curve denotes the value of an increase in the standings. Below is the fantasy win curve for a keeper league that pays out for first-, second-, third-, and fourth-place finishes, while minor-league draft order is determined by finish (fifth through 12th followed by fourth through first). Each league will have its own curve based on payouts and league structure, but the below is representative of a standard fantasy win curve for a keeper league (removing non-monetary factors, which do exist, but we will get to that later).

Regardless of the exact win curve, having auction money that will enable your team to move from 10th to ninth place is not very valuable. Having auction money that will enable your team to move from 2nd to first place is incredibly valuable. Giving out potential auction money to keepers in the form of a raise in the latter situation has a much higher opportunity cost than it does in the former situation. To illustrate, an example follows:

You own a $5 Josh Donaldson in a 10-team, AL-only keeper league with low inflation. The league has a traditional raise structure, meaning you can keep Donaldson next season at $5, the next two seasons at $10, the next three seasons at $15, etcetera. A four-year, $20-per-season contract is too risky for you, so that leaves you with the three previously listed options. For the sake of the example, let us say that you project that three years of Donaldson at $15 will return more value than two years of Donaldson at $10, which will return more value than one year of Donaldson at $5. So do you give him the three-year, $15/year contract and call it a day? No, you should not; let us go back to the fantasy win curve. The value of the extra auction money depends on your team’s competitive situation. To illustrate, an example within an example follows:

Sub-Example 1: Your team is a year away from competing for first place. Your team’s competitive window is 2015-2016.
Optimal Contract: Three years, $15/yr. The additional bid dollars resulting from a cheaper contract are less valuable than owning a $15 Donaldson throughout your competitive window.

Sub-Example 2: Your team is not the favorite to come in first, but it is one of the four teams with a legitimate chance to fly a flag in 2014. You have some older players and four of your best players’ contracts will expire after the 2014 season. Your competitive window is 2014 with an outside shot in 2015.
Optimal Contract: Two years, $10/yr. The additional bid dollars over the next two years increases your chances at a first place finish by enough that it becomes worth giving up a third year of Donaldson.

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<< Previous Article
Fantasy Article Sporer Report: My Tout... (03/13)
<< Previous Column
Fantasy Article Fantasy Freestyle: Fan... (03/11)
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Fantasy Article Fantasy Freestyle: The... (03/18)
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