Off-season trading

Today, I'm going to move from freeze list valuation to trading. One of the most signficant gaps in Roto analysis I've seen online and in mainstream publications is the lack of serious discussion about how to make trades in the off-season.

In order of (personal) importance, these are the three facets of trading I look at before the season starts:

1) Value of each player, adjusted for inflation.
2) Availability by position and statistical category in the auction.
3) My chances of finishing in the money, based on my evaluation of my league.

Today, I'll discuss value. More than anything else, you need an undervalued roster if you expect to compete by the time your auction rolls around. If you haven't put that undervalued roster together by dumping the previous year, you're going to have a hard time doing it in March, when everyone's looking at value, value, value. However, you won't get there without understanding a) what value means and b) how inflation impacts value.

A couple of weeks ago I discussed how inflation changes the dynamic of off-season trading. The example I gave was an offer of a $40 Vlad Guerrero for a $10 Jason Bartlett. Conventional wisdom says that if Guerrero is $1 over value and Bartlett is $2 under value, you should pull the trigger. Inflation tells you that the deal is a wash even if inflation is very low. With higher inflation, you lose more by giving up the $30 of salary to spend in the auction for the $3 gain you get between Bartlett's expected gain and Guerrero's expected loss.

To figure out what the inflation rate will be in your auction, you need to guess who everyone else is keeping. If you've played this game long enough, and you're in a pretty stable league, you can figure this out within 95%+ accuracy; heck, you can even guess who the overpriced, "mistake" freezes are going to be.

After you've done this, calculate:

1) the total salaries of players you expect to see frozen.
2) the total value of those players based on your bid limits.

Subtract $3120 (for a 12-team league with a $260 budget) from #1 and #2. Divide #1 by #2. There's your inflation.

For example, The Roto Mojo League has $1350 in projected freezes that are worth $1620. There will be $1770 to spend on $1500 worth of players. Inflation is 18% (1770/1500 = 1.18 = 18%).

Now here comes the hard part.

Next, you need to figure out how much each player will gain you with inflation. Using this example, divide 1500/1770 (or divide 1/your inflation number). Multiply that number by $260.

A league with 18% inflation, then, gives you a result of $220.34 (rounded). This dollar amount is how much a team with no freezes and $260 to spend would be worth entering the auction. In other words, 18% inflation will make this team lose $40 in the auction.

Now, you're ready to figure out what each player on your team is worth. Let's say you own Prince Fielder at $11. You think he's worth $20. Here's how you figure out his inflation value:

1) Take $260 and subtract $11.
2) Take the total ($249) and multiply by (1500/1770). You should get $211.02.
3) Add $20. Your total should be $231.02
4) Subtract $220.34 (your inflation baseline) from $231.02. Prince Fielder, with inflation, is worth +$10.68.

This sounds like a lot of work. But, once you've determined what your inflation factor is, you can save it in the memory component of your calculator and keep using this factor over and over. Also, all players who are freezes at the same salary will simply go up or down based on what they are worth. For example, if Luke Scott is also at $11, like Fielder, and you believe he's worth $15, his value is +$5.68.

Even without this method, any owner with half a brain wouldn't trade an $11 Fielder for an $11 Scott. However, this system should give you an idea of how to gauge fair market value. If someone offers you another +5 player and Scott for Fielder, you might make the trade, based on your needs. Or you might not, based on the fact that all the good 1B are frozen and you don't want to get stuck with Craig Wilson at $23 because he's the only 1B out there.

So determining value with inflation obviously is your top priority when considering trades. Generally speaking, you will always make a trade where you get a significant amount of value back in return. Position scarcity or no, if someone offered you that $11 Fielder for your $38 Jimmy Rollins, you'd make that trade quickly, before Fielder's owner realized that he was being a Grade-A bonehead.

But where do you draw the line, either due to position scarcity or categorical scarcity? I'll tackle that tomorrow.