Price, Production, and Value

[cavebird]

The other threads on inflation led to an interesting and more philosophical question that probably deserves its own thread. (The personal attacks that went back and forth most certainly do not; hopefully we can keep this one clean.) The issue is the interrelationship between prices (at auction and as keepers), production (i.e. the stats you get from the players you get both as keepers and at auction), and value, which seems to be a much more amorphous concept---an attempt to build a bridge between production and price---a way to put a single value on the production to translate it to price.

The question this leads to is this: when is it right to "overpay" for production at auction? In other words, when is it the right thing to do to go over the value you have set for a player at auction because the production becomes more important than the price?

Note: it is understood that this assumes that projections are correct and known to the league. Obviously, the person with the most accurate projections (whether they be written into their draft software or just thinking "this guy is going to break out" and being right) has a huge advantage. How to get the most accurate projections is probably the most important thing in an auction or a draft, and more or less the subject of 90%+ of the threads here---the ones about players. The idea here is to take that out---it is understood that more time should be devoted in draft prep to the player side.

Note 2: I also assume 5x5 roto here. In points leagues, this whole thread is moot because the rules convert productions to one set of points and in that situation value will be king. Head-to-head I just generally don't play, and I am not competent to ask questions about auction for head-to-head leagues---I assume it is completely different. And there are other roto leagues than 5x5 (old school is still 4x4), but 5x5 seems dominant now, so I'll go with that---but note, in 4x4 leagues the idea of tanking steals or saves is much scarier.

There seem to be a few obvious times: when you have a massive keeper list with one hole in production. Say you have tons of hitter keepers, but lack speed and your pitcher keepers are good, too. Then, if there is one big speed guy who is not kept, it makes total sense to overpay for that guy. You have so much excess value at other positions, the production you would get from that player is much more important to you than getting more of what you already have at a good value. That would be the same with any asset class (power, starting pitching, saves, etc.).

But are there other times? What if your keeper list is good enough to compete so you are looking for production to win, not just value to build your team for future years? Can auction factors make it make more sense to overpay to get production you cannot get without overpaying?

CBS has some articles (not the best, but they exist) where some of the authors talk about "stolen base derangement syndrome." Basically, it is when there is systemic overpaying for stolen bases. If you want to complete in steals, you have to overpay. If you have a normal, balanced, solid keeper list, should you join the rest in overpaying, or is it best to just tank steals more or less and get value where it can be found? I could see the case for just tanking steals in this situation now---there just aren't that many big steals guys, and you can probably finish top half in steals without overpaying for any big steals guys. You won't be top third---that's for the guys who overpay. But it won't be a complete tank if you find some guys with moderate steals. This seems like the biggest stretch for overpaying for production.

The medium case that likely happens is with saves. Some leagues have all closers go for more than value. In my main league, I have no idea whether they do or not. I cannot for the life of me get the program to value saves right. It is probably due to our weird format (6 dedicated SP slots, 5 dedicated RP slots; anyone remotely a starter is SP only), and the program's inability to adjust properly to it. So, the computer says all closers should go for less. Maybe it's right. I don't know. I do know that you can't get any closer for a price close to what the program spits out. Anyway, back to the scenario. Say saves are systemically over-priced. This is different than steals. If you just don't buy any closers, there are enough to go around for everyone else to have some, and you are tanking the category. That can work, and you can win that way. It's happened many times. But, wow, your margin for error is reduced a bunch when you are giving up a whole 1/10 of the points available in the standings. How much should you suck it up and overpay (assuming you can get decent valuations out of your program, lol) to get that extra margin of error? This seems like the toughest call. You can try to stay decent in saves by getting a lot of non-closers who could get closer jobs (or random Tampa guys since they just don't use closers) and spend on the waiver wire. Still, that is dangerous, because there is no certainty that your next in line guy is the one behind the guy who loses his job---and if it obvious that a guy will lose his job, the second-in-line there will probably also be overpriced.

Then there is the other extreme (and ya'll knew we were getting here anyway): what if it is good starting pitching that is systemically overpriced? It is hard to tank starting pitching---too many categories attached---wins, K's, and likely ERA and WHIP (although if you don't have SP and RP designated slots you can try a LIMA strategy if you don't have a IP minimum). How is it best to handle that? Should you just suck it up and pay for a stud? Yeah, they are overpriced, but the top players are always overpriced, and you're doing it in an entire asset class that is overpriced. But, of course, those guys are called out early---before you know if all good SP's will be systemically overpriced. You might have a guess based on previous years in the league, but man it would hurt if you were wrong. But if you aren't wrong and don't pay for the studs, isn't it worse to overpay for the good but not great SP's? When this happened in my main league in 2018, I am sure the team who paid $30 for Carlos Martinez and $35 for Jose Quintana (the last two good starters) would have rather paid for a stud instead. They finished tied for last. The guy who paid $37 for 40 IP from Yu Darvish would probably agree. Don't ask me about my $20 Jon Gray from that year, either, lol. But how do you handle this situation? The team that just didn't pay for anyone (except a known massive overpay for Godley when he ended up with way too much money at one point) didn't do so well, either, he was the other team tied for last. (The team that one had Verlander kept and hit on two cheapies--Clevenger and Mikolas).

So, what sayeth the Pen? I have flailed away at these choices for a while. Avoiding overpaying sometimes, and joining the party other times, with more or less the same results. What is the best way?

[chancellor]

I’ve followed these rules of thumb for overpaying:

- Young hitters who have two consistent years in a row of $25 value. Young being 27 or less.
- Older hitters who have two good years in a row or three of four of $25 value. Older being 28+
- Age 30+ hitters with the same specs and don’t have value tied to speed (best extreme example - Nelson Cruz)
- Top 10-15 SPs if they have low WHIP and high K rates

I used to overpay for secure-appearing closers with great looking stats and arms, but I’ve stopped doing that unless I’m desperate for saves and the closers name is Chapman. Call this the Giles-Diaz effect.

Doesn’t mean it always works - following my system, one could have been Kluber’d and Jose Ramirez’d last year - but Ive had better results that way than waiting too long for value and shopping from a highly shrunk talent pool with two or three other equally desperate managers who did the same. Plus, due to discussions on this board, I feel I’m better than average prepared to find talent in and around the endgame.

Great thread idea!

[The Dane]

The question this leads to is this: when is it right to "overpay" for production at auction? In other words, when is it the right thing to do to go over the value you have set for a player at auction because the production becomes more important than the price?

There's two core principles at work here. First, what is value? And second, when is it good strategy to overpay?

Most of all this is so fluid that anything stiffer than a "general guideline" is not appropriate and won't let you adjust to changing dynamics at the draft. Value, as I see it, is found in the difference between how each owner evaluates the player pool.

For me, value looks like a bell curve. At one end, you have players whose performance widely outperformed expectation. If you have a lot of these players, you win. Plain and simple. You did more with your $260 than the other guy. At the other end are the players that greatly under-perform expectations. If you have a lot of these guys (and in some hyper-competitive or deep leagues, maybe only one or two) you lose. The vast middle are players who produce at or around what we expect, and therefore, what we paid. Hits and misses in here don't matter very much, but too many at the low end add up, and too many at the high end can still get you titles. You know that team that every year competes, but never seems to have a good keeper list from year to year? That's because that owner plays well in this middle. To my discredit, I feel I enjoy finding the hidden gem more than projecting the fat middle. I know lots of owners have this problem, and it's a good strategy in the right context, but when my teams under-perform, it's almost always because I took too many risks at the low end which means even if I have average luck at the high end, I'm still toast. Balance is key.

I think if you need a stat, and lots of owners need that stat and you pay more than you expect or project to pay to get that stat, it is NOT overpaying. The budget will get saved elsewhere. Maybe what you had budgeted for another stat will get cheaper. There's a finite number of dollars to spend. If people are overpaying for SBs, something else WILL be cheaper. It could be considered overpaying if what is unexpectedly cheap is the thing you already paid top dollar for. That's unfortunate, but not impossible to overcome if your plans work out elsewhere.

Because of this, I think most preparation for an individual draft is wasted time. Know the player pool and as much of the other owner's tendencies as you can and then just go with it. Everything else just bogs you down. In my best years, I research the players better and take better risks. The years where I carefully calculate inflation (is there a masturbation emoji I can put here?) or hyper-analyze the pool before freeze lists are in, I don't do nearly as well. I'm focused too much on the trees that I miss the forest.

[Ken]

Agree with a lot of what is being said here.

We always have a problem when we try to make the answer black and white. It is more of a spectrum.

If every starting pitcher is going for prices that are too expensive relative to my valuations (and note, in hundreds of auctions I've never actually seen this - most pitchers, sure, every one, nah), then I'm looking for the fluctuations and buying a few that are *less* overpriced than others. Also I'm definitely re-allocating more of my budget away from pitching. If pitching is being overpriced at that level then you will get more for your money with hitters, so you want to allocate as much as you can (to a reasonable level) towards the asset that is underpriced.

If I planned to buy a $35 pitcher and a $25 pitcher and a $15 pitcher to lead my staff maybe I buy a $28 pitcher for $33 and a $18 pitcher for $22 and an $8 pitcher for $12 instead, and now I'm putting that extra $8 vs what I had planned out towards hitting where my $8 will really be worth $12. I know going into the season that my staff is weaker than I hoped but I focus my FAAB resources towards pitching and look to make trades to improve there.

The tools I have used have told me that people are overpaying so I look to find a spot in the market where I can overpay *less* than what I'm seeing, and I reallocate more funds towards the assets that are cheaper and return more value.

[ssmallz]

The question this leads to is this: when is it right to "overpay" for production at auction? In other words, when is it the right thing to do to go over the value you have set for a player at auction because the production becomes more important than the price?

Any quantitative assessment of value system in a roto format is based on an assumption that accumulating a certain amount of stats increases your overall roto points in that category. Let's take your example where you have a ton of hitting but no speed. For the sake of argument lets assume that prior to the draft you've accumulated enough stats to finish first in all the hitting categories except for speed. In this case any additional value a player bring in categories that aren't stolen bases are essentially worthless for you. A typical commercial software program won't be able to adjust for this but if you make your excel sheet or input values you can certainly mimic this type of market and adjust your values appropriately. In this extreme situation, the valuation would show that Aldeberto Mondesi is more valuable than Mike Trout and in this instance he would be. You would therefore not be "overpaying" for that player, just paying the appropriate amount relative to his value to your team.

The same logic can further be applied to the saves market. Relievers and starters are fundamentally no different except for the fact that relievers can accumulate saves. In a league where save are consistently overpaid for, I would look at the history of the league and total up what relievers go for relative to the pitching market as a whole. I would then inflate the value of saves to point where your projected reliever pool matches that of previous years. I prefer this approach instead of using a separate hitter/pitcher/reliever split as doing it that way would change the value of the other 4 categories that relievers contribute to relative to SPs.

Regarding the systematic inflation of good SPs a slightly different approach needs to be taken. The first key to figure out is what is the anticipated hitter/pitcher split going to be at auction. I would check previous years data and then look at the expected inflation. If all the inflation is going to hitters then it is likely that you need to adjust the split a bit allocating more $$ to pitching to balance things out. This is intuitive as you understand that if you have a ton of value on the hitting side you will spend more on pitchers in the auction. How much to allocate? That's where feel and understanding of your leaguemates will come in but some adjustment is likely needed. Once you have an appropriate hitter/pitcher valuation you can then attack the problem of good SPs being inflated. Starting pitchers are different than hitters as each one of them contribute in all pitching categories every start. If good SPs are being overvalued then that's not necessarily a problem b/c there should be enough talent leftover in the pitching pool to put together a strong staff as the key to accumulating points in pitching is the aggregate value of your pitching staff, not the value of each individual SP. If there is not enough talent left over, then you didn't calculate things correctly and were undervaluing elite SPs.

Obviously we can never be this accurate at an auction as we don't know what others are thinking or doing in advance so my general advice would be calculate your values as best as possible and don't be afraid to overpay by $2-3 for stars so you're not stuck with extra $$ at the end of the auction and can accumulate the necessary value needed to compete throughout the season.

[Ken]

Any quantitative assessment of value system in a roto format is based on an assumption that accumulating a certain amount of stats increases your overall roto points in that category. Let's take your example where you have a ton of hitting but no speed. For the sake of argument lets assume that prior to the draft you've accumulated enough stats to finish first in all the hitting categories except for speed. In this case any additional value a player bring in categories that aren't stolen bases are essentially worthless for you. A typical commercial software program won't be able to adjust for this but if you make your excel sheet or input values you can certainly mimic this type of market and adjust your values appropriately. In this extreme situation, the valuation would show that Aldeberto Mondesi is more valuable than Mike Trout and in this instance he would be. You would therefore not be "overpaying" for that player, just paying the appropriate amount relative to his value to your team.

The same logic can further be applied to the saves market. Relievers and starters are fundamentally no different except for the fact that relievers can accumulate saves. In a league where save are consistently overpaid for, I would look at the history of the league and total up what relievers go for relative to the pitching market as a whole. I would then inflate the value of saves to point where your projected reliever pool matches that of previous years. I prefer this approach instead of using a separate hitter/pitcher/reliever split as doing it that way would change the value of the other 4 categories that relievers contribute to relative to SPs.

Regarding the systematic inflation of good SPs a slightly different approach needs to be taken. The first key to figure out is what is the anticipated hitter/pitcher split going to be at auction. I would check previous years data and then look at the expected inflation. If all the inflation is going to hitters then it is likely that you need to adjust the split a bit allocating more $$ to pitching to balance things out. This is intuitive as you understand that if you have a ton of value on the hitting side you will spend more on pitchers in the auction. How much to allocate? That's where feel and understanding of your leaguemates will come in but some adjustment is likely needed. Once you have an appropriate hitter/pitcher valuation you can then attack the problem of good SPs being inflated. Starting pitchers are different than hitters as each one of them contribute in all pitching categories every start. If good SPs are being overvalued then that's not necessarily a problem b/c there should be enough talent leftover in the pitching pool to put together a strong staff as the key to accumulating points in pitching is the aggregate value of your pitching staff, not the value of each individual SP. If there is not enough talent left over, then you didn't calculate things correctly and were undervaluing elite SPs.

Obviously we can never be this accurate at an auction as we don't know what others are thinking or doing in advance so my general advice would be calculate your values as best as possible and don't be afraid to overpay by $2-3 for stars so you're not stuck with extra $$ at the end of the auction and can accumulate the necessary value needed to compete throughout the season.

This is a great post with tons of detail. Wonderful analysis.

I agree with almost all of it - outside of allocating more resources to the overpriced assets. I feel like this is a situation where the league is handing you cheap offensive stats. The first thing I do when handed something for less than what it should cost is take it. Bird in hand vs two in the bush mentality. Then I look for creative ways to compete in the category that's over priced.

If I take 1 less SP in the mid tier range can that both keep me from overpaying for SP in the general sense, and also allow me to allocate more towards hitters? If so, then I concede that 1 pitcher and plan to spend FAAB on finding a replacement, or look at the trade market.

I know that's subjective though, and I applaud you on your analysis. It's top notch.

[ssmallz]

This is a great post with tons of detail. Wonderful analysis.

I agree with almost all of it - outside of allocating more resources to the overpriced assets. I feel like this is a situation where the league is handing you cheap offensive stats. The first thing I do when handed something for less than what it should cost is take it. Bird in hand vs two in the bush mentality. Then I look for creative ways to compete in the category that's over priced.

If I take 1 less SP in the mid tier range can that both keep me from overpaying for SP in the general sense, and also allow me to allocate more towards hitters? If so, then I concede that 1 pitcher and plan to spend FAAB on finding a replacement, or look at the trade market.

I know that's subjective though, and I applaud you on your analysis. It's top notch.

Agree completely, the approach I described is a draft and hold approach w/out consideration of trading or free agency. Once those factors come into play, other strategies become more viable and the idea of paying a ridiculous premium for SBs or some other stat/player may not be the ideal way to win.

[Sharky]

Lots of great perspectives here. One element that to me seems underanalyzed: the ability to sit out “overpaying” and pursue bargains elsewhere assumes 1) ability to identify more underpriced assets with adequate total production and/or 2) ability to convert your surplus “value” into more useful production via trades. In my experience (and in leagues I usually play in), this second piece is often a big stumbling block. Leagues without very active trade markets - or with trade restrictions - make it very tough to convert surplus value into useful / needed production.

[Sour Masher]

Lots of great perspectives here. One element that to me seems underanalyzed: the ability to sit out “overpaying” and pursue bargains elsewhere assumes 1) ability to identify more underpriced assets with adequate total production and/or 2) ability to convert your surplus “value” into more useful production via trades. In my experience (and in leagues I usually play in), this second piece is often a big stumbling block. Leagues without very active trade markets - or with trade restrictions - make it very tough to convert surplus value into useful / needed production.

Great point. I am an active trader and I've take pursue value approach over specific needs, but even for me, sometimes, it is a scary way to do it. Sometimes other folks will sit on what they have for awhile with the delusional hope that middle reliever will become the closer soon enough, or that ground ball hitter who seems to have changed his approach this spring will suddenly become a 30 homer guy. Then it becomes a game of chicken, and I must admit on occasion, my impatience to convert my surplus assets into what I actually need has led me to give discounts to trade partners that all but negated the surplus value I picked up in the auction.

[cavebird]

Great stuff, everyone. I appreciate it. I am more or less openly looking for help in what happens in my league (and almost certainly will happen again this year). I don't know a good way to handle it. Ssmaltz, your analysis is great, but I want to throw a caveat into it. You say RP's are basically the same as SP's except for saves. My league has 6 dedicated SP slots and 5 dedicated RP slots (16-team mixed) so it gets very ugly at the end of pitching, and they aren't the same since you can replace one with the other---finding a 6th SP who won't kill the ratios without not getting enough K's and W's to kill you is a tough task. (Two years ago, I tried a cheesy trick to help this by getting Ohtani, then shifting him to UT to get a seventh SP (who happened to be 2018 Folty---and got my poor keeper list into the money; but then I kept Folty last year, oops)). But great analysis; very thorough. And, yes, rules and people make the trade market tougher.

By all means, keep the ideas flowing. I love this stuff!

[ssmallz]

My league has 6 dedicated SP slots and 5 dedicated RP slots (16-team mixed) so it gets very ugly at the end of pitching, and they aren't the same since you can replace one with the other---finding a 6th SP who won't kill the ratios without not getting enough K's and W's to kill you is a tough task.

Even in this situation RPs are no different than SPs except for saves, they still contribute in the other 4 categories in aggregate with your SPs just at a lower impact b/c of their lack of innings. Your league settings create a positional scarcity for RPs which needs to be accounted for. What you need to do is adjust the replacement level for RPs to account for the fact that your league requires 80 RPs. Once you do this, you will have accurate values of what you should be pay for relievers. I find doing this type of analysis very enlightening, especially with leauges that use different formats. By making accurate valuations you can gain a huge advantage over the competition in places where they are not aware of the adjustment's they need to make. The key to any good draft strategy is to find the market inefficiencies and exploit them

[cavebird]

Even in this situation RPs are no different than SPs except for saves, they still contribute in the other 4 categories in aggregate with your SPs just at a lower impact b/c of their lack of innings. Your league settings create a positional scarcity for RPs which needs to be accounted for. What you need to do is adjust the replacement level for RPs to account for the fact that your league requires 80 RPs. Once you do this, you will have accurate values of what you should be pay for relievers. I find doing this type of analysis very enlightening, especially with leauges that use different formats. By making accurate valuations you can gain a huge advantage over the competition in places where they are not aware of the adjustment's they need to make. The key to any good draft strategy is to find the market inefficiencies and exploit them

I agree with this in principle, but in practice it is very hard to get the "values" in RP's. All the closers with jobs are overpriced in my league. The key is finding the good MR's who aren't just small sample size miracles. For example, I can keep Nick Anderson and Emmanuel Clase for $6 each this year. If Anderson just repeats last year, he's easily worth more than that. If Clase can repeat what he did in limited time last year to a full year, he's worth it, too. But RP's are so volatile due to small sample sizes---which cuts both ways; last year could be an over-achieving small sample size or this year could be an under-achieving one---and locking them in the lineup can be dangerous. Especially since the next version of them will go for a buck at auction (the end is almost all $1 middle relievers).

Still, none of that helps the who the crap fills SP#6. Often it is a rotation from the bench and the waiver wire because it is so hard to find and afford six solid starters. It's a tricky situation. I like the principles, however. Find value where you can. It's the avoiding crap that is tricky. Maybe our rules make having the best projections more important than other factors---getting the $1 SP breakout guy is so important----even if you have great keepers and are willing to trade them for what you need, we have an in-season salary cap, so a cheap guy who produces is gold.

[Ken]

With only 6 SP spots vs up to 9 in a traditional league, I'm struggling to fully understand how SPs are so overpriced. It sounds like replacement level would be higher than normal. The $1 starting pitcher should be 10 or 15 pitchers *better* than replacement from a typical league.

Now with a total of 11 pitchers maybe you should be allocating more of your budget to pitchers than in a 9/14 P/H league. Are you doing that already? What percent of your budget do you put on pitching? ** that said, random good relief pitcher is pretty ubiquitous, so I struggle to imagine spending too much of my budget on a middle reliever....

[Art Vandelay]

With only 6 SP spots vs up to 9 in a traditional league, I'm struggling to fully understand how SPs are so overpriced. It sounds like replacement level would be higher than normal. The $1 starting pitcher should be 10 or 15 pitchers *better* than replacement from a typical league.

Now with a total of 11 pitchers maybe you should be allocating more of your budget to pitchers than in a 9/14 P/H league. Are you doing that already? What percent of your budget do you put on pitching? ** that said, random good relief pitcher is pretty ubiquitous, so I struggle to imagine spending too much of my budget on a middle reliever....

I think there are 11 pitching slots in cb's league...6 sp...5 rp.

[Ken]

I think there are 11 pitching slots in cb's league...6 sp...5 rp.

Agree, and that's my point.

In my leagues, on average 7 SP get taken per team. In his, 6 SP per team. So starters should be cheaper since replacement value is higher.