FB306: Calculating Inflation

05/20/2007 8:23 PM - 

FantasyBaseball.com University Series
Contributed By: Matthew Baic

Leagues that have auction style drafts and allow protected players from the previous year will experience inflated prices on players available at the draft.  Due to the fact that players are kept at a cheaper rate than what an auction may have yielded, that leaves more remaining budget for the free agents.  If this can be digested, it will give an edge over the other owners who are referencing a downloaded cheatsheet from the internet or a magazine that was probably published before New Year’s Day.  What those lists do not take into account is the spending power of the owners in the league.  An owner should not expect to pay $X, but should be prepared to spend $X multiplied by some inflation value.  This article will walk through how to calculate that value.

1.) How one comes up with their final dollar projections is up to the individual.  Some use one, two, or several services to come up with an average, many others will reference the latest list from the internet as a guide, while still others generate their own estimates.  Regardless, settle on values for each player as if an auction was to occur without keepers. 

2.) If a list of protected players is available prior to the auction, then the work is done for this step.  Just add up the salaries for all protected players.  If the protected players are not announced until just prior to the auction, then evaluate the players before auction day, as there will not be adequate time to make your calculations and then adjust projected dollar figures.  Evaluate all rosters from the previous year and choose the players signed as bargains for this year.  If an owner has a plethora of potential keepers, more than the league limit, then there are a few things to consider.  Does that owner have a penchant for having as big of a budget as possible during the auction?  If so, anticipate he will choose the cheapest players.  Is that owner regarded as a value drafter?  Then approximate that he will keep the biggest value by percentage.  In other words, if an owner needs to decide on player A bought at $10 last year who could garner $20 in the auction versus player B bought at $30 last year, but who is now valued at $40, the owner should decide on player A. Even though both are a $10 discount, player A is actually a 50% discount as opposed to a 25% discount for player B.  One last thing to consider is if a player can help that owner stay competitive in a category such as saves or steals, then decide if he will keep one of those players, even if that player may not be a bargain.  As seen above, there are many things to weigh to complete this step.  Once all decisions are final, add the total salaries the league will protect.

3.) The expected inflation for the auction can now be computed.  What will be determined here is how much buying power remains in relation to the value of the free agents.  Here is the formula.

Inflation = Amount remaining to be spent / (Budget for all teams – true value of players protected)

I’ll use my home league in 2004 as an example. 
• It consists of 12 teams with a $260 salary cap, or a total of a $3120 budget for the entire league. 
• Each owner is able to protect up to 10 players from the previous year.
• Last year, 100 players were protected at a combined salary of $1003, leaving $2117 (3120 – 1003) to be spent on 176 players.
• Using the dollar projections I decided on in step 1, I calculated the "true values" of all protected players as $1477, which is what their estimated auction price would have been during a draft.  That yielded $1643 (budget for all teams = 3120 – 1477) of
true value for the available free-agents against the remaining league budget of $2117.  After dividing 2117/1643, a value of 1.29 is calculated, or a 29% inflation.. 

4.) Now that a figure has been settled, the projections from step one should be reappraised.  Take the inflation rate and multiply by the original projected values, and the new, inflation-adjusted values will be ready for the free-agent players.  This may persuade you to protect players that were not values before inflation was figured, especially at a 29% rate. 

The owner that builds inflation into their projections can confidently bid on players without fretting the wild fluctuations of an auction draft with keepers.  If outbid for the league MVP, Cy Young award winner, or the hometown sweetheart, don’t fret because the owner who won that bid may have just killed his budget.  Owners love to overpay for the “must-get” guys, but in effect have just weakened their spending power for the rest of the auction.  Employ patience by sticking to your pre-auction inflation values and this technique will help insure a better auction.

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