June 5, 2014

Fantasy Freestyle

Keeper League Purgatory

by Jeff Quinton

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After taking the last week off, it is good to be back. Today we are talking in-season keeper league strategy (we will get #behavioral next week). More specifically, we will be talking about being in the curious position of being neither a buyer nor a seller—of being in keeper league purgatory. This position does not occur in each league every year. In leagues where half the teams have a shot at a title and the other half clearly do not, every owner is either a buyer or a seller. We have not gathered here today to talk about those leagues because those leagues have no purgatory. No, we are here in this very moment to talk about leagues where first place and, potentially, other top finishes have seemingly been decided, leaving the teams battling for lesser payouts and higher minor league draft picks (or some other similar payout/finish structure) disincentivized to be buyers.

First question of the article: why are these teams disincentivized to be buyers? They are disincentivized because no matter what they buy they are unlikely to meaningfully improve their position. Second question: what do I mean by meaningfully improve their position? Almost a fortnight of Sundays ago I wrote about the fantasy win curve, which denotes the value of an increase in the standings. If the value difference between, let us say, third and seventh is not meaningful, and first and second place are not attainable, then teams likely to finish in the 3-7 range will not be incentivized to sell long term assets for assets that will help them win this year. On top of that, if third-to-seventh-place finishes hold monetary (cash) or long-term (higher picks) value, then these teams will not be incentivize to sell short term assets for long term assets either. Essentially, these teams are incentivized to do nothing; they are in keeper league purgatory.

Standing pat can very well be the correct strategy in order to optimize gains in both the long and short term; however, there are some common negative consequences of standing pat and they are below:

• Misevaluating your competitive position: assuming that you cannot win and that you cannot fall when either or both is possible (not actually in purgatory).
• Missing opportunities to improve your team: “staying the course” can make you complacent and lazy; consequently, you miss trades that you did not anticipate.
• Allowing the top teams to stand pat: if the top teams do not need to trade future production for current production, then the top teams can look toward next season (this, on top of excellent ownership, is how dynasties happen).

If you find yourself in keeper league purgatory, then you need to battle the previously listed follies. An investigation of these follies and a look at how to battle them is below:

Mistake: Misevaluating your competitive position
Corrective Action: Make sure you are actually in purgatory

As per usual, I am going to do a little homo sapiens bashing. Two things: (i) people are bad at forecasting, especially when it comes to themselves, and (ii) people like to view the world in certainties (people do not want to hear there is a 20 percent chance of rain; rather, they want to hear if it will rain or if it will not rain). This means that knowing how the rest of the season will play out, whether that means we will be a buyer, seller or purgatory resident, is going to appeal to our certainty-seeking minds. If you have ever sold or bought too early, then you know the consequences of this behavior. Similarly, if you have ever stood pat only to realize that going for it could have meant flying a flag or not falling out of the money, then you too know the consequences of this behavior.

So what can we do to make sure that we are correctly assessing our current situation? First and obviously, survey the current situation. In head to head leagues this pretty easy, take a look at the standings. In rotisserie leagues, surveying the league becomes a little bit more difficult. The more categories your league uses, the more difficult this becomes. The key here is not to only look at what is most likely to happen, but to look at the future probabilistically. The most likely occurrence, per its name, has the highest chance of occurring, but depending on the odds of less likely occurrences and the potential payouts should those less likely occurrences occur, then going for it may be the profitable play. Next, while it seems obvious, make sure not only to look at how rosters currently stand, but how rosters may be affected by call-ups and players returning from injury. This not only means looking at teams who are rostering such players, but also looking at teams who are rostering players that could be replaced by the call ups and players returning from injury. Lastly, make sure to take competitive response into account. Making a move to make a run is not very helpful if the teams you are chasing can easily do the same (note: it should be more difficult for “the chased” to do so in rotisserie leagues because they already possess more points). To summarize, in order to make sure we are actually in keeper league purgatory, we should do the following:

1. Assess the standings (head-to-head) or the categories (roto)
2. Weigh probabilities (risk-reward) not just most likely outcome
3. Determine the impact of what will change (injuries, call-ups, trades, etc.)
4. Anticipate competitive response

Mistake: Missing opportunities to improve your team
Corrective Action: Test both the buyer’s and seller’s markets

For the sake of the discussion let us say that after doing our due diligence we have determined that we are in fact in purgatory. The first order of business is to test the market. While we can assume that we should be holding pat, it would be a mistake to assume that all of our leaguemates carry those same assumptions about how the league will shake out. If the perfect trade comes along, where one of the buyers is willing put you in position to win next year or where one of the sellers is willing to catapult you into contention, then take it. These opportunities are easy to miss if we have put our feet up and mailed in the season. While these opportunities seem unlikely, it is not as unlikely as you might think. If the teams at the top are both in “go for it mode” with the long-term pieces to trade, then selling to those teams might be worth taking a hit in this season’s performance if the long term value is great enough. Conversely, if one team has seemingly run away with the league, then a seller may be likely to sell a lot for very little because the market is so weak (minimal demand). The point here is to that you need to be willing to change your strategy when the right opportunity arises and in order to do so you cannot simply sit back and wait for that opportunity to come to you.

Mistake: Allowing the top teams to stand pat
Corrective Action: Try to push the top teams to be buyers

Again, for the sake of the discussion let us say that after checking out the buyer’s and seller’s markets we have found no opportunities. The next move is to try to do what we can to get the top teams to sell off their long-term assets. I am currently in an AL only keeper league where last year’s winner astutely stood pat, won out, and now is very likely to repeat. You do not want this to happen in your league. (Note: the owner’s decision did put his championship at risk, as another team made a spirited run, coming within half a point of first on the second to last day of the season). Luckily (for the rest of us) this season, maybe after seeing what happened last season, the first place team has already sold a long-term asset for an expiring contract. The team battling the first place team, who is far more likely to end up in second (the two teams will almost certainly finish first and second), has also sold some future assets for some production this year. As a team in purgatory, this is what you want to happen. But what can a team in purgatory do about it?

Great question, and the answer gets its own paragraph. Ultimately, there is nothing anyone can do to make a team sacrifice next year’s or future years’ production for production this year. But if the lead team wants to ensure a championship, then enough pressure should cause the owner to go for it. The first tactic you want to use is to appear like you are going for it. To do so, contact your league’s obvious sellers and make them an offer they will not accept, an offer that can be beat by the top teams. The hope is that the seller goes to the top teams and says, “Team X is interested in players A and B, are you interested?” Then, the more incentivized teams (the top teams), hopefully buys. The next strategy is to buy short term pieces for fringy long term pieces. In this instance, you trade in a small amount of future value in hopes that the top team responds by giving up even more future value. This strategy is riskier because the top teams can call your bluff, but it does have the added benefit of helping you stay in the money, top draft pick range, purgatory, etcetera. It should be noted that whichever strategy you choose to employ, if any, is going to be completely context dependent.

With the current season already past the one-third marker, it is getting to be go-for-it and play-for-next-year time. If you find yourself in keeper league purgatory, please make sure to take the above into account, and good luck.

Jeff Quinton is an author of Baseball Prospectus. Follow @jjq01
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