June 17, 2013
Auction Data: Where the Bargains Fall
Nothing annoys me more than when a reader asks a good question and I don’t get around to answering it. One of my favorite things as a fantasy baseball writer is answering readers’ questions directly. So while this question isn’t a particularly relevant one midseason, hopefully it will still provide some value for my readers, and is something that they will remember and take with them into 2014 and beyond.
Have you ever tried charting auctions to watch where the money gets spent?
The answer is yes. Yes, I have.
For years, I have kept a round-by-round log of my American League home league auctions. This log is primarily for my own personal use. I like to look back and see how I valued players, what they went for, and how I did at predicting how well or poorly each player would do. But I can also use these data to see how my auctions typically progress. Where does the money typically get spent: in the beginning, in the middle, or at the end?
Table 1: Home League Auction Data by “Round”: 2004-2013
As I always do, before I move forward with the analysis, it’s useful to explain what you are looking at in the chart above.
Each “round” consists of 12 players purchased with the exceptions of Rounds 13 and 14, which are often “irregular” in shape. Typically, there are on average about 10 players frozen per team, which is why this isn’t a 23-“round” auction.
The pluses and minuses are based on my recommended bid limits for the players purchased, not on how these players actually performed. While player performance is certainly important, this is a different type of analysis that is not pertinent here. Also, these plusses and minuses are based on the “inflation” price of each player and not his raw bid limit. For example, if I had a $40 bid limit on Miguel Cabrera, his inflation bid limit assuming 20 percent inflation would be $48. If someone purchased Cabrera for $46, this would make Cabrera a +2, not a -6.
Finally, if you add up the pluses and minuses for each year, nearly all of them will not add up to zero. This is primarily due to rounding. For example, a $1 player in a year with 32 percent inflation would theoretically be worth $1.32 but would be rounded down to $1.
As you can see by looking at the chart above, every year is different. On average, what winds up happening is that teams overspend somewhat in the first round of the auction, start going crazy in the second round, and don’t stop going crazy until around the sixth round. This leads to a great deal of profit at the end of most auctions.
To an auction newbie looking at this chart, the conclusion might be that it is best to sit on your hands for the first 5-6 rounds, swoop in for a few bargains in the middle, and clean up in the end game. If everyone else is overspending by a significant amount at the beginning of the auction, this logic dictates that you can be the genius who cleans up at the end.
While this approach seems tantalizing in theory, in practice it would lead to disaster for the following reasons:
1. The early round losses are significant in the aggregate, not per player
That $128 total listed under Round 3 sure sounds like a lot of money. And it is: If you bought a team of 23 players that lost $128 worth of value, you would have purchased a $132 team in a standard $260 Rotisserie auction league, and almost certainly have finished in the basement.
However, since each round represents 12 players and there are 10 years worth of data on the chart, the average loss per player is $1.07 per player. If you purchased a team of 23 players and lost $1.07 per player, you would have purchased a $235.39 team. This isn’t recommended, but it also isn’t a disaster.
2. Every round has bargains
Generally speaking, you would absolutely be wise to lay off players in a round where owners are bleeding auction cash. But this doesn’t mean that bargains don’t fall in these rounds. The reason for this is simple. Fantasy owners aren’t spending their money in a linear fashion.
Table 2: # of Bargains in -20 or Greater Rounds: 2004-2013
It stands to reason that there would be a significant number of bad buys in rounds where $20 or more of auction money was wasted. However, this doesn’t mean that you can’t still snag a bargain at some point in the round. There isn’t a round on the chart above that is so bad that at least one bargain didn’t fall through. Instead of waiting for the later bargains, it is better to try to snag a bargain in the early going if one comes through. There’s a good reason for this, too:
3. You can’t merely sit in the endgame and hope to win
Those plusses in the later rounds look pretty, don’t they? And if you are a savvy auction player, you naturally want bargains. Why, then, wouldn’t you simply wait 5-6 rounds and clean up late?
You need profit to win. But you also need value.
Most of the money in an auction gets spent early. However, most of the talent is also taken out of the auction pool early as well. In a round where $50 gets spent on $72 of value, the bargains that you are obtaining at this phase of the auction are complementary chips, not core players.
Everyone wants bargains. But if you wait and wait and wait for nothing but bargains, there is a good chance that you are going to walk away with bargains but also with a significant amount of money left on the table. This isn’t a winning formula.
Your goal is to get bargains at any point of the auction when you can. There are some years where the bargains might come early. Don’t worry about better bargains coming at a later point in the auction, or about another owner getting better bargains. The idea is to get profit at any point during the auction that you can. In an auction with significant overspending early, you do want to pick your spots. The key is to remember that those spots will come now and again. Even if there is overspending, the opportunities will come.