April 14, 2014

Fantasy Freestyle

Auction Leagues and Salary/Contract Dynamics

by Mike Gianella

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If you play in a keeper league, one of the most frustrating things about the start of the regular season is that there isn’t a lot of advice out there for you. Nearly all of the fantasy content generated during the regular season is geared toward the here and now. Some advice might look ahead to later in the current season, but little if any advice looks beyond this season.

In a keeper league, you should have a strong foundation not only of this year’s values but of future valuation. This applies not only if you have packed it in and are playing for 2015 but if you are playing for this year as well. Owners playing for this year probably have an even more difficult job than owners who have packed it in, as they have to figure out the best way to sell their next year assets to non-contenders in an effort to win this year.

Below are only a few considerations that owners in freeze leagues with player salaries and contracts have to take into account.

Long-Term Contracts
In leagues that allow freezes, many allow for players to be carried over for at least one more season before they have to be thrown back into the player pool. Other leagues allow for players to be kept for multiple seasons. In auction leagues, a long-term contract is typically the mechanism used to balance the desire to keep players for a few more seasons without allowing owners to keep players forever. There are two common contract rules:

• $5 per season is added for each additional season you wish to retain a player using a one-time bump. For example, prior to the 2014 season, you had Mike Trout at $10. You gave him a $20 contract for three years. You now have him at $20 per season from 2014-2016.
• $5 per season is added once a year right before your auction. In the example above, Mike Trout would be $15 in 2014, $20 in 2015, and $25 in 2016. This methodology seems better for a $10 player like Trout, but for a player who was purchased at auction from $1-3, he could be taken out of the auction or draft for a long, long time. For example, a four-dollar Trout could feasibly be kept from 2014 through 2019 at salaries of nine, $14, $19, $24, $29, and $34. Thirty-four dollars is market price for an in-his-prime Trout, but since the decision doesn’t have to be made until prior to the 2019 season, there is little if any risk placed on the fantasy owner. In leagues with moderate to heavy inflation, Trout theoretically can be kept out of the pool even longer.

Free Agent Salaries
In leagues that use free-agent bidding, the salary of a player usually escalates the following year if you wish to keep the player. In some leagues, the salary increases to five dollars while in others it increases to $10 or even higher. The impact of this rule can be two-fold. Lower free agent salaries can increase dumping opportunities for earlier pick-ups but can also make owners who are out of it less likely to dump for marginal players and try their luck in the free agent pool. A $10 floor makes it less likely that a free agent will turn into a future keeper gem, so the same principles apply in the other direction (harder for contenders to “find” dump chips; harder for non-contenders to pick on up via free agency).

Farm/Reserve Rules
In leagues with liberal minor-league rules, I would argue that there is almost no reason to dump for a minor-league player unless it is an elite talent like Byron Buxton or Javier Baez. If you are allowed to keep picking up minor-league players and churning all year, it makes it easy to simply pay attention to the minor leagues and pick up the hotter minor league bats and arms. Some leagues, however, don’t allow for in-season prospect speculating so it makes acquiring quality players in-season via trade more essential.

Contract value once again rears its ugly head in this scenario. Some leagues allow for minor leaguers to be kept at cheaper salary floors than free agent pick-ups. This is kind of a “good scouting” reward; if you were lucky or smart enough to grab Bryce Harper, you can have him as a five-dollar player for the first two years he is in the majors.

Yet another wrinkle is that some leagues start the contract clock the moment you take a player as a minor leaguer. This eliminates speculation on most players in the lower minors, but does lead to some philosophical questions. Should you take a top prospect in Low A ball if you have to give him a contract two years after you pick him? The answer is generally “no” unless you are talking about a top prospect, but even so you had better be sure, particularly in leagues with limited farm/reserve slots. Remember, Oscar Taveras was a sure thing entering 2013. It doesn’t matter in leagues with a high number of reserve slots, but in leagues with only 3-4 reserve slots and a contract clock, you had better be sure.

Keeper Rules
How many keepers are you allowed the following year? In a league with only 3-4 freezes, your best bet is to try to nab as many high-end freezes as possible; it doesn’t make sense to go for marginal freezes who might not stick on your team anyway. On the other hand, a league that allows freezes in double-digits means that you should push to acquire not only top talent but a balanced roster as well.

Trading Minor League/Reserve Picks
Can you trade your farm picks? Many leagues do allow for picks to be swapped for the next year’s farm or reserve draft but not beyond that. However, in many of these leagues the limit on the number of minor leaguers or reserve slots you can have still applies regardless of how many picks you obtain. So while it might be tempting to hoard a bunch of picks for your overpriced players if you are out of the race, keep in mind that you might have to trade these picks for ten cents on the dollar the following March if you are up against a roster cap.

Regardless of your league’s rule structure, your goal if you are playing for next year is to try and maximize value. Your primary goal should be to maximize value for next season, not 2-3 seasons from now. In a dynasty league it might be a good idea to grab Julio Urias, but in a straight up Roto league, Urias is going to clog up a spot on your reserve list for years, without any guarantee that he will produce for you right away.

The contract clock is also important. Even fantasy advice geared toward keeper leagues will often call a top prospect a “future stud” and leave it at that. But what is the timetable? Clogging up your active roster with 2-3 years of a marginally productive “can’t-miss” prospect is a recipe for failure. Often, by the time a player begins showing improvement, it is time to give him a contract. I dislike speculating on future potential when it comes to handing out a long-term deal and prefer paying for stats rather than for the hope of future success.

Whether you are playing for this year or next year you must consider your league’s trade marketplace. A core of players with $8-10 salaries who are worth $13-15 will build a nice foundation, but it is doubtful that you will be able to flip one of those players next year to a non-contender for one or more top shelf players.

If this sounds counterintuitive and like it runs against the advice I gave above about how rookies often don’t pan out, it is because the marketplace doesn’t always reflect the realities of the game. Even the fantasy owners who love rookies know that most rookies will fail, never live up to expectations, or take a long time to live up to expectations. This doesn’t change the marketplace dynamics of keeper leagues, though. As a result, there is always a balancing act if you are dumping between acquiring players with profit certainty next year and players with more risk but who will entice other owners to trade for them next year as well.

I used to fall into this trap constantly in deep keeper leagues. I would trade for players like a $2 James Loney believing that I could turn around and flip Loney for some decent talent this year. However, most fantasy owners I have played with show little if any interest in acquiring mild to moderate profit plays like Loney. They would rather swing for the fences with a future play like Buxton.

This would not be bad if the teams that overinvest in future plays were the only competitors I had to compete against in my keeper leagues. The challenge is that there are owners who were smart enough to capitalize on this while I refused to overpay for guys like Buxton. The result was that I wound up in a cycle of third to fifth-place finishes for a few years. My teams were good enough to compete—and my valuation principles kept me in the running for years—but by ignoring and sometimes ridiculing the way some owners in my leagues undervalued minor leaguers, I was putting myself at a competitive disadvantage.

Last year, I made a trade in March in my AL-only that I never would have pulled the trigger on a few years ago, flipping Hisashi Iwakuma for a minor-league pick I turned into Buxton. While I didn’t figure Iwakuma would be as incredible as he was, I did realize I was surrendering this year profit for future gains. However, I figured correctly that I would be able to turn Buxton into more in June and I did, flipping him for Dustin Pedroia and Josh Willingham. Neither player was great, but getting two everyday players for a minor leaguer who wasn’t that close was a great return, and at the end of the year that trade combined with a larger deal I made involving another prime prospect—Xander Bogaerts—helped me to win my league.

Having the ability to gauge the marketplace is one of the most important skills you can develop in a keeper league. We experts are often hamstrung by keeper league questions because much depends on the vagaries of your league. “Is Andrew McCutchen for Javier Baez a fair dump deal?” It depends on your league. In my leagues, I think if you can make that trade in April you do it, whereas if you have to wait until late July you might want more than “just” 60-65 games of McCutchen. In the end, this all depends upon your league, so my opinion is worthless if your league’s marketplace is different than mine.

Mike Gianella is an author of Baseball Prospectus. Follow @MikeGianella
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