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March 8, 2013
What Your Auction Dollar Gets You
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
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
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
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
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.
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.