This might sound strange from someone who values baseball players for a living. But my problem is not in coming up with accurate valuations — if Player Forecast Manager tells you that Eric Chavez is worth $19.82, well then, damnit he really is. Rather, it’s in applying those estimates to value the “real world” of a live roto baseball auction.
Inevitably, a roto baseball auction goes through four or five distinct phases. These can change, certainly, depending on the personality of the owners in the room. But the basic pattern is as follows:
Phase I. The Eerie Calm. In many ways, valuing players is the easiest at the very start of the auction. Everyone has a blank slate — a full budget to work with, and a full roster to fill in. The order of the day is rationality, sometimes erring on the side of caution. Everyone wants to time the market, and nobody wants to be the first to blow their wad.
Phase II. The Big Name. Inevitably, however, some brash owner throws the first stone, and nominates the Big Name. Everyone knows who the Big Name is — usually, it’s Albert Pujols. It turns out that three or four owners had built their entire drafting strategy upon acquiring the Big Name. One or two more get caught up in the action and increase the Big Name’s price still further. The Big Name winds up being very, very, overpaid…
Phase III. The Feeding Frenzy. …but not as overpaid as the series of players who comes immediately after him. The Big Name having been taken off the board, a couple of things happen: (i) Everyone who missed on acquiring the Big Name finds that they have some “extra” money to spend; (ii) Even those owners who didn’t plan on acquiring the big name begin to worry that they need to do something, lest they be stuck with a roster full of Mike Lowells and Paul Byrds. This is when the very worst contracts are signed, typically involving secondary players at the Big Name’s position.
Phase IV. The Refractory Period. Finally, the Feeding Frenzy exhausts itself — ironically, this is usually just before the draft breaks for lunch. A couple of people have priced themselves out of the market. A couple of others attempt to slow down the action by nominating a second-tier catcher or a middle reliever — which can be had cheaply enough, because nobody cares much about fighting for scraps after the big hunks of meat have been devoured. Still, a few people have been a little too quiet, and are sitting on a little too much money. Thus comes…
Phase V. The Aftershock. Usually, there are a handful of star players who survive the feeding frenzy. Oftentimes, there’s a Next Best Thing, who probably doesn’t play the Big Name’s position, but is nearly as desirable an acquisition. The owners who were treading so carefully before, timing the market so elegantly, go into a fit. Perhaps they avoided bidding on the Big Name precisely because they thought they had a lock on the Next Best Thing. Once they discover that a couple of other owners had the same strategy — well, you can only imagine what happens. The Next Next Next Next Next Best Thing has a $28 contract.
Phase VI. The Reckoning. Finally, everyone really is out of money, or very nearly so. Most of the time, there are still a few pretty good bargains to be had. But occasionally, someone leaves money on the table.
I think you can see where I’m going with this.
Throughout the free agent season, I’ve been tracking the contracts that have been signed. The first wave of contracts — things like the Jim Edmonds and Mike Mussina and Aramis Ramirez deals — portended an expensive winter, but nothing too terribly out of line, considering the change to revenue sharing rules and the influx of income into the game. We were looking at roughly 30% inflation from the 2005 and 2006 free agent markets.
Then came Alfonso Soriano, who was paid as though Tribune Co. was printing greenbacks.
And then (only then!) came Carlos Lee, Juan Pierre, Gary Matthews Jr., and Frank Thomas. All of these guys played (more or less) Soriano’s position. And almost all of them were even more overpriced than Soriano. Year-over-year inflation rose to 70%.
Most recently, we’ve been in the Refractory Period. There have been a number of eminently reasonable contracts signed over the past week or so, from Adam Kennedy to Dave Roberts. Inflation has “slowed” back down to to 50%.
But rest assured: the Aftershock is coming. The Next Best Thing is still out there in the form of Barry Zito. And the market will rise again.
Just like real shocks and aftershocks, the dynamics of an auction market level the playing field. The yeoman’s work of proper player valuation is undermined by the tidal waves of the market — which are orders of magnitude larger than anything a canny tweak to your draft day spreadsheet can tell you. Smart GMs do stupid things, and seat-of-the-pants guys back into good deals. The real “skill” involved here is hard to identify. But it has less to do with the attributes that we’d normally praise or criticize a GM for than you’d think.