Recently we have been getting a lot of questions from subscribers about keepers. Often times the question is something like â€œshould I keep player X at $12 or player Y at $3?â€ Another is whether one should keep AlbertÂ PujolsÂ or a similarly high-priced player at $38 in an “only” league.
These questions all come down to two things: the ownerÂ is either risk-averse or does not understand opportunity cost.
Understanding opportunity cost is by far the most important skill for the keeper league player. If you do not understand how to navigate the river of keepers on the raft of opportunity cost you will not be able to sustain a string of successful seasons in any keeper league that has reasonably good players in it.
Here isÂ theÂ best general rule: when making tough decisionsÂ always come down onÂ theÂ side of having more money atÂ theÂ draft. If you are inÂ theÂ type of league that allows you to over-auction into your reserve roster so much the better; in that case youÂ shouldÂ do every trade you can to free up money and not worry too much aboutÂ theÂ players going back and forth.
Inflationâ€”Every keeper league has draft inflation. The league that allows you to over-auction intoÂ theÂ reserve roster minimizes inflation. But letâ€™s understand what we are talking about. Draft inflation isÂ notÂ theÂ case ofÂ peopleÂ overpaying for players.
When we discuss draft inflation we are talking about the fact that more value is being retained on roster than the cost of those players. If a league has $500 of value being kept butÂ theÂ total cost of that $500 is only $200 then you have draft inflation. The cost to obtain players inÂ theÂ draft goes up because more ofÂ theÂ value is kept butÂ theÂ cost of that value is not proportionate.
Having more money at the draft isÂ importantÂ to any team with aspirations at winning. If you believe your team to be a contender in a keeperÂ leagueÂ thenÂ everyÂ close decision is made with having more money at the draft as the prime concern. Just as a personal example, my team in my high-stakes keeper league has a few $1 and $2 players that can be extended (names are omitted toÂ protectÂ the innocent). We are extending none, because we are contenders looking to repeat as champions.
Risk Aversionâ€”Inherent in the questions isÂ theÂ fact thatÂ theÂ owner fears that he will not be able to extract the same value duringÂ theÂ auction.
But it is not value we are after but profit, unless your keeper roster is so strong that you only need to get fair value from dollars atÂ theÂ auction. This happens on occasion. If you have a very strong keeper roster at a very low cost, then you should keep other pricey players that may not return profit. As long as they rate to earn their salary and nothing more they becomeÂ keepable.
But most times this is notÂ theÂ case. If it is not, your goal is to extract as much profit as possible. You do not do this byÂ keepingÂ Albert PujolsÂ at $38.Â You can, with virtual certainty get more profit from that $38 in the auction than you can by keeping him.Â And if you cannot, perhaps your fantasy baseball auction skill needs some help (which we are happy to provide by the way).
OpportunityÂ costâ€”You are not just paying $38 forÂ Pujols. You are losing a chance at far greater profit. How much?
Letâ€™s assume that heÂ will produce a $40 season. So you profit $2, or 5%. Not too shabby in reality. Instead now letâ€™s buy four $10 players, and assign values to them:
Player 1â€”cost $10 production $16
Player 2â€”cost $10, production $0
Player 2â€”cost $10, production $12
Player 4â€”cost $10, production $7
This seems like a reasonable range of outcomes on the low side. Here you have spent $40 and gained $35 for a loss of $5. Terrible results to be sure.
What if we spend $40 on a $20 player and fourÂ flyersÂ at $5, and we will assume the $20 player returns fair value. In this example the fourÂ flyersÂ return the following:
Player 1â€”cost $5, production $2
Player 2â€”cost $5, production $20
Player 3â€”cost $5, production $7
Player 4â€”cost $5, production $1
Is this reasonable? Of course it is, at least if you take our advice. Hitting a home run like this happens for good players virtually every year, and often more than once in a year.Â Now you have spent $40 and profited $10.
Assuming these rough calculations are true you only need to hit that home run one time in five to make it better to save the money.Â If you are risk-averse then you wonâ€™t want to take that chance, costing yourself dearly in the long run. If you do not think you can accomplish this, then try this relatively common scenario: spend that $5 on four backup closers and see how often you hit that home run; I will bet it is more than one in five.Â
Every auction, no matter how many keepers there are, presents opportunities for huge profit. You just have to be there to take advantage.Â You canâ€™t do that if you are keeping $40 players.
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