Auctions and the "Value" Slope

On Saturday, I took a look at two years worth of data from my A.L. keeper league and couldn't discern a pattern as far as why some players were bargains and why some were expensive compared to the prices these players went for in the non-keeper, expert leagues. But Blair had a theory (To read the entire theory, click on the link).

If you have the history of the nomination order in both leagues, I think you'd find that when you compare all the players under $25, there will be a significant and increasing "value" slope as the auction progresses.

Plus/Minus Round by Round

Billy Almon Brown Graduate 2004-2010

Year	1	2	3	4	5	6	7	8	9	10	11	12
2004	14	21	-22	-25	-38	-5	-6	-15	4	12	21	7
2005	-13	-12	-23	-16	-24	-5	0	-17	22	4	18	19
2006	10	-11	-23	-13	-13	5	13	-2	3	5	21	12
2007	-20	-6	-10	-19	-13	-21	-5	7	7	20	14	18
2008	-22	-7	-9	-6	-7	6	14	-21	-9	3	-2	28
2009	-8	-10	-8	-4	-11	-17	-7	14	5	18	10	10
2010	-20	-18	-21	-7	1	8	10	3	4	16	10	11

The chart above contains seven years of auction data for my "home" American League. Each round contains 12 players, and there are 12 rounds above in the chart (most of these auctions go 13 or 14 rounds, but the chart above is fine for illustrative purposes).

And, generally speaking, Blair is correct. Owners spend too much money at the beginning of the auction. This did not happen in 2004 or 2006, but in every other year, owners out of the gate spent too much money on the front end. Like many leagues, Billy Almon tends to throw most of the best available players out there early for bid.

While I agree with the idea that some leagues spend too much money early, I do not agree with Blair's conclusion on how to deal with this.

Find the sweet spot, after inflation INEVITABLY occurs, and stay the hell out of the first 3 rounds... Even if you "win" a player, 12 other owners think you made a mistake. And either your system is better than the rest combined, or you're wrong. 

What the rest of your league thinks about the player you bought - and whether or not that player was a "bargain" or not is moot. Trust your prices. If you have Miguel Cabrera at $42 on your sheet with inflation and you get him for $38, he's a bargain. It's irrelevant if the rest of the room is snickering at you. If you did a good job with your bids, you did well with Cabrera.

You also need to spend your money. Staying out of the first three rounds if everyone is super expensive is a good idea - you'll get bargains later. But in a league where the pricing is as tight as it is in Billy Almon (and LABR and Tout Wars, for that matter), the talent is going to dry up fast. Those pluses in the high teens and low twenties look great on paper...until you consider that you're talking about $55 worth of talent for $33 of salary. You need to buy statistics, not bargain hunt all day long. If you can get a player $2 under value, do it. In a very competitive league, you might even need to buy someone $1 under value now and again.

I tried to do what Blair suggested in 2004 and got burned. Due to a higher-than-normal inflation rate I got some bargains by waiting. But I also found myself with a pile of money in the middle rounds and wound up chasing a few players well past my bid limit, thus sabotaging my team. I recovered somewhat at the end (where the bargains are), but not enough to recover that year.

You should stay away from high prices early. But you should also buy early if you like the prices you see players going for. Overpaying in the middle isn't any better than overpaying early.