Sunday, February 18, 2007

Offseason trades - using inflation as a guide

I've lost or tossed all of the old Rotisserie Baseball books I used to have, but every year, in the rules, there was an example of how off-season trades were different from trades in-season.

In real life, you wouldn't trade Vladimir Guerrero ($40 salary) for Robinson Cano ($15), not even if the Yankees threw in Yankee Stadium. In Roto, the $25 difference between Cano and Guerrero's salaries would be enough to buy a second-tier hitter, so you'd probably pull the trigger.

Or something to that effect. Every few years, the players in the example would change, but the gist of the example was the same. You don't trade a top-tier player for a second or third-tier player during the regular season, but you definitely do it in the offseason, where value is king.

Except when you don't.

To illustrate this point, I'm going to examine a hypothetical off-season trade. I have Vlad Guerrero at $40. My opponent offers me Jason Bartlett at $10. Should I make the deal?

First, I need to establish how much I think each player is worth. I've already done that, with the help of Patton $ Software on Disk, for 2007. Tweaking Patton's bids, I think Vlad is worth $39 and Bartlett $12.

I know a lot of owners who would stop their analysis right here and make the trade. "Vlad is a slight loss and Bartlett is a slight gain. I want profits going into the auction. I'm definitely grabbing Bartlett.

But inflation changes the value in the trade.

Let's take a look at 4 separate scenarios, each one with a varying level of inflation:

0% inflation - Bartlett +2, Guerrero -1. Net gain +3 in value.
10% - Bartlett +2.91, Guerrero +2.64. Net gain +0.27.
20% - Bartlett +3.67, Guerrero +5.67. Net loss -2.
30% - Bartlett +4.3, Guerrero +8.23. Net loss -3.93.

Only with no inflation is this trade a true winner. With 10% inflation, you might make the trade, but you're gaining almost nothing.

I'm willing to bet there are still some who are scratching their heads. For them, it is worth pointing out the following.

0% inflation - $30 spent will bring in a $30 player at par.
10% - $30 spent will bring in a $27.27 player at par.
20% - $30 spent will bring in a $25 player at par.

30% - $30 spent will bring in a $23.08 player at par.

In other words, the higher inflation is, the weaker your auction dollar is. In a start-from-scratch league, you can take your Patton values or (if you insist) your Shandler values or your Rototimes values or your Benson values, and simply print them out and bring them to the auction and bid. In a competitive league, you can simply push players to within $1 or $2 of your bid limit and you'll walk out of your auction with a $285-300 team (in your mind, at least) that you'll feel great about.

Inflation quickly changes that calculation. Even the cagiest bidder is going to lose money in an auction where inflation is 15% or higher.

Players like Vlad, then, stop the losses. Players like Bartlett, though slightly undervalued, won't make up for the hit you'll take in the auction if you move Vlad.

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