January 5, 2016

Fantasy Freestyle

Inflation 101

by Mike Gianella

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If you play fantasy baseball in an auction league, one of the additional wrinkles that you have to navigate is freezes and calculating player inflation in the auction. On one level, this is a simple mathematical exercise. However, in order to master keeper-league auctions it isn’t enough to simply perform a rough mathematical calculation and walk away. There are other aspects that may have to be factored in depending upon your league, which players are frozen, and how other fantasy managers behave.

At the most basic level, calculating inflation is a simple matter of dividing the amount of money left to spend in your auction by the amount of value available in the auction. As an example, if your league has $1,400 to spend on $1,200 worth of talent, your league’s inflation rate is 16.7 percent. If you would have paid $40 for Mike Trout in a non-keeper auction, you would pay $47 for him in an auction with 16.7 percent inflation. This concept is rudimentary, and if this were all there was to it, everyone would be playing on a fairly level playing field, and there would not be much of a tactical advantage to gain. Beyond simple math, below are a few other factors to consider when it comes to inflation if you play in a keeper league.

Offseason Trading/Keeper Strategy
Outside of a salary cap, there isn’t much reason to consider player salaries when making trades during the season. If someone offered you Mike Trout and his $40 salary in exchange for your eight dollar Colby Rasmus, you’d take that trade as fast as you possibly could. In the offseason, you might consider hanging onto Rasmus depending on where you had him valued as well as what your league’s overall inflation rate is. In this example, let us assume that you have Trout valued at $38 and Rasmus at $12. With Trout’s salary $2 above his inflation value and Rasmus’s $4 below, it would seem that Rasmus is a no-brainer, as you are gaining $6 in auction value in the trade. However, whether or not this truly is a good trade for the Rasmus owner depends on how high the league’s inflation is.

• With zero percent inflation, Rasmus is $4 undervalued and Trout is $2 overvalued (+6 Rasmus).
• With 10 percent inflation, Rasmus is $4.73 undervalued and Trout is $1.64 undervalued (+3.09 Rasmus).
• With 20 percent inflation, Rasmus is $5.33 undervalued and Trout is $4.67 undervalued (+0.66 Rasmus)
• With 30 percent inflation, Rasmus is $5.84 undervalued and Trout is $7.22 undervalued (+1.38 Trout).

With little or no inflation, Rasmus provides better value than Trout in this example. As inflation gets higher and higher, the choice isn’t nearly as clear-cut and if inflation is high, Trout becomes the better choice.

(This is strictly from a straight inflation-oriented analysis. There are plenty of reasons why you still might want to hang onto Trout, particularly the idea that while there are many players who can reach Rasmus’s ceiling, there are few if any who can reach Trout’s).

For many, it is counterintuitive to keep a player whose salary is higher than his value, even if inflation would push that player’s cost higher in the auction. But this is something that a fantasy manager must consider as well. This principle can be pushed too far in the other direction; you do not want to go into an auction with a team of slightly overvalued players who are slight bargains due to inflation. But having one or two players like this can protect from wild overspending at auction.

Make Sure Your Bids Add Up Correctly
If not making sure that your bids add up properly in a non-carryover league is bad, in a keeper league not doing so can be catastrophic. Being even a few dollars off in one direction or another can lead to a significant miscalculation of inflation and an auction where you either spend too much money too early or sit back for far too long and wind up overspending at the end. The total amount of bids and value for your perceived best 168 hitters and 108 pitchers in the auction should add up to $3,120 in a 12-team league. While this sounds simple, this mistake does happen from time to time.

High Inflation: Be Wary of Overpaying for Superstars
In leagues with a low or moderate level of inflation (defined here as anything between 0-20 percent), the best course of action in a keeper auction is the same as in a non-keeper auction. Fantasy managers should try to buy players at $1-2 below their “par” value; whether that par value is due to inflation or not isn’t particularly relevant. In fact, getting too cute in keeper leagues and trying to obtain deep bargains due to inflation can lead to overspending in the middle or at the end of your auction.

In leagues with high inflation, there is a risk that you can obtain one or two slight bargains early, spend nearly all of your money, and then sit back while other fantasy managers get even better bargains. This phenomenon happens because the higher the inflation rate, the more that slighter differences in value are accentuated. This creates a great differentiation in the middle of the auction and a far greater opportunity for bargains in this phase. Nearly every fantasy manager will have the elite players like Bryce Harper and Trout ranked the same, and all it takes is one other person to have Harper ranked as highly as you do to push him to par. On the other hand, there is so much variability in the middle and at the bottom that this is the best place to build your team in an auction with extremely high inflation.

The other problem with building around one or two superstars in high inflation leagues is that even if your inflation valuations are correct, it will be nearly impossible for your superstar to earn what you pay him. A $20 player you pay $28 might be able to earn that $28 but it is next to impossible for your $40 player to earn $56. Furthermore, if the $20 player crashes and burns it will sting but it will not torpedo your team. On the other hand, if your $40 player who you paid $56 for crashes and burns, your season is likely over before it even started. It isn’t appropriate to simply allow an elite player to go for non-inflated value, but at some point you have to pump the brakes.

Separate Hitting/Pitching Inflation
This is a somewhat controversial idea and not a universally accepted concept. But there are circumstances where an auction could have radically different hitting and pitching inflation based on the value of the players frozen. Most commonly, this happens when there is a significant number of extremely undervalued pitching freezes. Inflation overall might only be 20-25 percent, but hitting inflation could be as low as 5-10% while pitching inflation could be as high as 40-50 percent.

This isn’t to say that a fantasy manager should truly siphon all of his money toward pitching in this situation. However, auction leagues to tend to adhere to or at least come close to a $180/$80 hitter/pitcher split regardless of the actual talent in the pool. Even if other fantasy managers aren’t specifically identifying separate hitting and pitching inflation in their auction calculations, supply and demand tend to push pitching prices up and hitting prices down.

As in the example with high inflation, care must be taken not to spend too much on pitching. If pitching inflation is 40 percent and Chris Sale is available, you could feasibly have an inflation price on Sale of $45. While Sale would theoretically be “worth” this price, acquiring one pitcher who would comprise of 56 percent of a “typical” pitching budget could sink your entire team. Skewing the top prices down somewhat in this scheme is more workable than simply applying inflation at a flat rate across the board.

Position/Category Scarcity
If you regularly read my work, you know that I think position scarcity in auctions or drafts is overblown, and that only catchers in two-catcher formats see a significant bump based on scarcity. In keeper leagues, if a high amount of players is frozen at a position, it may be worth considering reallocating some of your inflation prices around after you complete your initial calculations so you don’t get shut out at a position. Packing value onto your team is great, but if there is a glut of outfielders in your auction and everyone is getting value in the outfield, it doesn’t matter if you get the best values there but then have to either settle for three one-dollar middle infielders or—worse—overspend on middle infielders because you weren’t willing to be a little flexible on price.

This concept applies with statistical categories as well. If most of the closers in your league are frozen, applying linear inflation to the available player pool will result in “low” closer prices, since the market will likely push the handful of available closers beyond their standard inflation prices. As is the case in the positional example above, while you do not want to be too aggressive and wreck your team by spending wildly on one category, it is worth considering pushing some additional money into saves so that you can be competitive in the category.

Tying It All Together
The goal with any and all of these changes isn’t to massively overhaul your auction preparation process. The basic guidelines for calculating auction inflation should be the primary driver in the success or failure of your auction. The purpose of all of the above is to be aware that there can be situations that may require tweaks to your baselines and to apply them if necessary. As with much advice, there is some trial and error involved; auction theory does not replace the experience of honing your ability through multiple auctions. Whether you are an experienced fantasy manager or not, preparing for your auctions with the contingencies above in mind will increase your chances of success and put you at a tactical advantage over your opponents.

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