What Do "The Stages" Mean?

Scooter asks:

You've often mentioned Stage One leagues, Stage Two leagues, Stage Three leagues, etc. Could you define the stages, list their characteristics, and so on?

Gladly. From one of Alex Patton's books:

Back in Stage One, everybody...wildly overspent on the star hitters with no speed and spent way too much on pitching, especially starting pitching. They had never even heard of Baseball America. The winner was always someone who kept his money, knew the rookies and cleaned up from the middle rounds on.
In Stage Two, everybody tried to be that somebody. There was too much money at the end and Jackie Robinson wouldn't have earned what was expected of the rookies.
In Stage Three, the final stage, everybody knows everything. Skill is so rampant that it's a game of luck.

That's the thumbnail definition.

Because of the proliferation of information on the Internet, almost every league that exists today is a Stage Three league. There might be a handful of Roto owners who are Stage Two players, but leagues on the whole are Stage Three. The caveats Patton listed regarding Stage One are gone. We all understand the power of each and every category; if we choose to pitch a category overboard, it isn't because we don't know how to budget for it. We all know who the rookies are, or at least the ones who will be playing in the majors this year. In other words, there might be some weaker owners who don't know who Matt LaPorta is, but they all know who Jay Bruce and Colby Rasmus are.

And we don't make any of the Stage Two mistakes anymore either. Alex Rodriguez isn't going to go for $33 because someone is waiting for bargains in the middle of your auction, and Joba Chamberlain isn't going to go for $20 because he's the next best thing. Even if some owners in your league don't understand valuation as well as others, everyone has the same intuition about Chamberlain or Bruce's value and will stop at a price that mixes their risk and reward quite well. Or they're looking at the same prices in Sports Weekly that you are, and their bids are maddeningly close to yours.

Keeper leagues don't fit perfectly into the model. Higher inflation rates change the perception of values somewhat, since savvier owners don't apply inflation on a linear curve across the board. Keeper leagues also tend to pay somewhat more for rookies, since we don't want to see Bruce slip to $8 and turn into this year's Ryan Braun.

But, generally, we all have the same general idea of what to pay for a player. You and I might have a different opinion of David Wright, but our bids will be very similar. And this doesn't just apply to the superstars. Whether we're talking about Wright, Moises Alou, or Carlos Ruiz, our bid limits are all going to be very close to one another's.

And that's Stage Three in a nutshell. To get a tactical advantage, you must move beyond valuation and move toward category optimization, which I talked about in a series of posts last year.