Wednesday, March 17, 2010

Inflation Myths and Facts - Projecting Your Team

Misunderstanding inflation doesn't simply result in paying the "wrong" prices at your auction. The results of not calculating inflation properly cause a domino effect that can lead to any or all of the following:
  • Mismanagement of who you should freeze and who you should throw back.
  • Poor judgment on trade evaluation and, subsequently, trades.
  • Overestimating or underestimating your freeze list.
There are several myths floating around about inflation, but the most damaging one is this:
The strongest team in the auction is the team with the most "positive value."
Is this true? Usually but not necessarily.

Let's look at two imaginary teams. Team A has $100 of salary tied up in $130 worth of projected value. Team B has $180 worth of salary tied up with $200 of projected value. Which team is better?

Most would say Team A. However, the answer depends on how much inflation there is at the auction.

In a league with 10% inflation: Team A's $160 will buy $145 worth of stats. This team's total value - including freezes - will be worth $275. Team B's $80 will buy $73 worth of stats. This team's total value - including freezes, will be worth $273.

In a league with 20% inflation: Using the same assumptions as above, Team A will walk away from the auction with a $263 team and Team B will buy a $267 team.

In a league with 30% inflation: Team A: $253. Team B: $262.

Team B's freezes didn't get any "better." He still has fewer profits on his freeze list than Team A.

However, every dollar you have to spend at the auction is a dollar that is going to get eaten away at by inflation. In a league with moderate to high inflation, the more money you have tied into your team's freezes, the less inflation will eat away at your profits in the auction.

I'll look at some player-by-player examples of this next time out.

4 comments:

Anonymous said...

Mike, as always love the Tank. I haven't seen this discussed before, but as always if I missed it, feel free to ignore. I have (to me anyway) an interesting problem. My keeper list (10 team AL only 5x5), is solid in that it includes fairly priced players and a few pricing bargains. But does not, at least to my eye, include the type of bargains that would allow me to go after a key star player or two. Q is, have I outsmarted myself with this roster? VMart 27, Napoli 7, Swisher 2, Scutaro 4, Zobrist 10, Cano 19, M. Young (who you I think left off your AL 3b article) 18, Choo 20, N. Cruz 25, Borbon 2. Pitchers Masterson 2, Blackburn 1, Slowey 7. Also have but am likely to deal or cut, Delmon Young 12, Matsui 13, Cust 7, Aviles 14, Danks 22, Duchscherer 1. i get to keep on reserve Flowers 5.

jem1776 said...

Doesn't it depend on when you spend the rest of your salary cap? What if the inflation in your auction has already been spent before you spend a lot of your remaining money, say stage 1? Or say it's stage 2 and you spend at the beginning when everyone else is holding off for the middle rounds when there will be too much money chasing too little predicted value? What then?

Mike Gianella said...

I did leave Michael Young off of my 3B article. I will go back and add him now.

jem1776 said...

Another thought. Even in Stages 3 & 4 doesn't it matter whom you bought? As a league we have to spend the inflation by the end of our auction, but it just can't be prorated evenly among the teams, can it?