Friday, August 22, 2008

Stars at Par and Dumping

The good dr. hibbert weighs in with his own dumping peeve:
I run into a similar problem in my league, though slightly inverted. We have several owners who are reluctant to part with their at-par or even above par salaried stars as they are part of their "rebuilding effort". "I want to build around Sizemore next year". GUHHHH...
I talked about this briefly in response to Brett. The issue is important enough, though, to address here at greater length.

An owner in my league had Alex Rodriguez at $42, was in 8th place at the deadline and had already dumped Brian Roberts ($33), Erik Bedard ($40), and Carl Crawford ($50) in other deals. But he refused to part with A-Rod.

As Dr. Hibbert might say, GUHHHH!

However, depending on what A-Rod's owner was offered - and where he had A-Rod valued, it might not make sense to part with A-Rod.

Let's once again use Jose Guillen as an example. Entering the season, Alex Patton had a bid limit on A-Rod of $42 - or exactly his freeze price. So that means that A-Rod's has a net value of zero. Right?

Not so fast. If your league has any kind of inflation, A-Rod's value suddenly increases. The higher the inflation, the more it increases.

Let's say inflation in your league is 10%. As a result, A-Rod's inflated bid is $46.2. At 20%, A-Rod's inflated bid is $50.4. At 30%, that bid price jumps all the way to $54.6!

Now let's look at Guillen. Let's assume that Guillen is at $9 in your league and your bid price on him for next year is $15. His inflation prices would be:

10% = $16.5
20% = $18
30% = $19.5

In the league with 10% inflation, Guillen is $7.5 under value while A-Rod is "only" $4.2 under value. However, in the league with 30% inflation, A-Rod is $12.6 under value while Guillen is $10.5 under value. In the league with a 10% inflation rate, Guillen is a better keep than A-Rod. But as the inflation rate spikes, that's no longer the case. At some point, Guillen stops being a better keep than A-Rod.

And there's yet another factor that plays into this equation as well. There's a $33 difference in salaries between A-Rod and Guillen. What happens to that money in your auction?

In a league with zero inflation, nothing happens. You will spend $33 on $33 worth of players if you have a par auction.

Once again, inflation will play a role here as well. The higher the inflation rate, the more money you will lose on those extra $33. In a league with 10% inflation, $33 will buy you $30 worth of stats. Suddenly, your $3.3 gain between Guillen and Rodriguez has nearly been eroded. Flipping A-Rod for Guillen to gain 30 cents in auction value is a virtual wash.

At 30%, your $33 buys $25.38 worth of stats. Suddenly, Guillen for A-Rod straight up is a lousy offer. You lose $9.72 in the auction if you make this trade.

This is all assuming, of course, that A-Rod is worth $42 and Guillen is worth $15. If you have A-Rod valued at $38 and Guillen at $18, it's a different story. But even then, you still might be better off with A-Rod in leagues with higher inflation.

Most owners know this instinctively, even if they don't know it mathematically. That's why they won't move an A-Rod, even though Guillen is undervalued and A-Rod isn't.

Dr. Hibbert continues:
So even though you offer a Guillen type, the also-ran is reluctant to let go of the much higher priced talent even though they are going nowhere. So if you miss the boat on the few owners who are dumping, you're screwed.
In the broader context, going into your auction with a lot of money to spend and a high inflation rate is bad news. Inflation will eat away at your value, unless you have a lot of it. I think this is the real reason why guys like Jose Guillen at $9 often wind up staying on the contending teams. It's not that Jose Guillen is not a keep. It's that guys like A-Rod provide a high level of value, and are more than just par freezes in keeper leagues.

The players we often wind up getting are the guys like Torii Hunter at $35 and Magglio Ordonez at $38: players who are overvalued even with inflation and have no value unless inflation is absurdly high. Owners who hang on to these players are being stubborn. However, hanging on to A-Rod, under the right circumstances, might be a good play.

1 comment:

Anonymous said...

FWIW, ARod went for $52 in my AL-Only 4x4 keeper. He had been protected for three seasons prior for $49.