Draft Inflation

DRAFT INFLATION

What is draft inflation?

A concept that is central to our valuation system is the difference between a player's TRUE VALUE and his DRAFT VALUE.

We introduced this concept to the fantasy baseball world in 1988 and it is now almost universally accepted in the fantasy sports realm.

Essentially, a player's true value is his value in relation to all other players who will be on fantasy rosters at the conclusion of the draft. A player's draft value will differ from his true value in any league that has protected players from one year to the next. His draft value will be his value in relation to all other players available IN the draft as measured by the salary available to be spent in the draft.

The reason for this distinction is that once your league starts protecting players from one year to the next, the owners will protect those players who have a perceived value in excess of their salaries. While any owner may be wrong about any given player, the league as a whole will not be wrong. Thus, in the draft there will be more salary to spend than there is value to be bought. The system creates a draft value for each player to account for this factor and that value is tailored to the exact circumstances and protected players in EACH LEAGUE.

As an example, assume a "standard" 12 team AL league that uses 260 salary units per team. Thus, there are 3,120 salary units to be spent in the draft on 276 players (12 * 23). However, this league protects players. Therefore, assume that there are players protected whose value (TRUE VALUE) is 1,500 units. However, because the owners are only protecting those players who are perceived to be bargains, only 1,200 salary units are tied up in protecting those players.

Based on the above, there is now 1,620 units of value to be bought in the draft (3,120 - 1,500). However, there are 1,920 salary units chasing that value (3,120 - 1,200). Thus, you would have an inflation factor of 18.5% ((1,920 /1,620) = 118.5).

We further break the draft inflation down between hitters and pitchers. Most teams enter the draft with a set salary allocation between hitters and pitchers. Thus, we create a different inflation factor for each.

It is not unusual to actually see a pitching deflation in a lot of leagues when using our system. Our system penalizes a starter who gets a lot of innings with bad WHIP and ERA. However, every league has an owner who will protect a 1 unit starter if he is the 4th starter on his team. This owner figures he will get 200 innings and 12 to 14 wins. Thus, by protecting players who should not be taken you deflate the value of the remaining players. Remember, you are reducing the available salary without reducing the available value.

In our own AL league’s 1989 draft an owner bid $1 on Jerry Reuss (then a starter for the White Sox who went 9-9 with a 5.13 ERA and 1.46 WHIP that year). As the bid went around the table the owner crowed with glee to his neighbor "How much of a bargain did I get accordingly to the STALLVALUE SYSTEM?" The other owner (who was obviously using our system) replied "You overpaid by $8". Sadly the first owner never did learn and after of few more years of basement finishes he quit the league.

How is it calculated?

It should also be noted that the inflation is calculated on the league as a whole, not just on the players in the draft. What we mean by this is that each player's value is calculated by looking to the makeup of the league after the draft, not what is available in the draft. Under the former method we calculate the value of a player in each category by looking to the make-up of the whole league for that category. Under the latter method you would create his value based on the availability of that statistic in the draft.

As an example, assume that you project the league to steal 1,600 bases and that the protected players project to steal 1,200. Further assume that you have allocated 725 salary units to the steal category and that the protected players have salary allocated to that category of 450. Thus, in the draft you would allocate 275 salary units to acquire 400 steals. This would be fine if the players in the draft competed in a closed universe. However, as soon as the draft is over they will also be competing against the protected players. Therefore, if you only looked to the players in the draft and Alfonso Soriano is projected for 80 steals, his value for this single category would be $55 ((80 / 400) * 275). If you looked at the whole league he would receive value for 80/1,600ths or about 5% of the amount allocated to steals. In this example that would be about $36. $36 is a far cry from $55. As you can see, you must value players on the universe of all players competing in the league and then apply the inflation factor to the result. Also, if there is a large inflation in one category then most owners do not need that category and they will devote their resources to their needs.

Now to the trick question from the Draft Day Preparation essay. Who is better off? Owner A protects $170 of salary which is $200 of true value. Owner B protects $50 of salary which is $100 of true value. Which owner should come out of the draft with the better team?

The reason that is a trick question is because that depends on the inflation factor.

Assume an inflation factor of 30%. Under this scenario, Owner A will purchase $90 of draft value which is only $69 of true value (90 / 1.3). ie in a draft with 30% inflation $69 of true value will sell for $90 of salary. Thus Owner A will end the draft with a team true value of $269. Owner B would exit this draft with a team true value of $262.

If however, we assume an inflation factor of 10%, then Owner A would exit the draft with a true value of $282. Owner B on the other hand will get a lot more for his salary dollars with a low inflation factor and will exit the draft with $291 of true value. Thus the answer really does depend on the inflation factor.

Generally, the higher the inflation factor the more players you want tied up going in. The lower the inflation factor, the more openings you want going in.

One recent misconception about this concept we have seen is that there will be significant swings in the inflation factor in the draft. In actuality, there is very little movement until the late rounds when teams are filled at various positions or owners exiting the draft with unspent salary start making draft inflation calculations meaningless.

For example, assume that the system calculates a true value for Alex Rodriguez of 45 and a draft value of 54. What if he goes for 55? You have only changed the calculation by one unit. In the early rounds some players go for less than their draft value, some go for more and there is little impact on the factor.

Now assume that you are at the end of the draft. Only two owners are left to pick. One owner has 14 salary units and the other has 1. Player A has a true value of 2 and Player B a true value of 1. A computer in the draft would tell you to bid 10 units on player A or 5 units on Player B. Why? Because there are 15 units of salary chasing 3 units of value. However, we all know the rich owner will take either player he wants with a bid of 1 since the other owner cannot outbid him. If it is the poor owner's turn to introduce, if he introduces the 2 unit player at 1, the rich owner will bid 2 and get him.

As you can see draft inflation becomes meaningless at the tail end of the draft. At the end of the draft the only significant data is who is available, what postions they play, which owners can take those positions and what each owner can spend.

Another phenomenon that we have seen and have heard from our customers is that the first 3 to 5 players introduced actually go for less than their draft value. This is because most owners enter the draft thinking that this is the year that they will not overpay. However, where there are protected players you must overpay or else you won't play. Thus, half-way through the first round the inflation factor has actually gone up and some of the best "bargains" to be seen in the first 3 rounds are gone.

Enough on this topic, we would love to hear your thoughts and comments and how this all plays out in your draft so please drop us a line.

Also, in line with our constant search on ways to improve the system and our service, we would be very interested in your league's opening day rosters. So please, drop the rosters in the mail (or email) right after the draft. The information that we acquire will only stand to help you in the future.

For a related essay dealing with self created inflation due to assumptions on the league allocation between hitting and pitching, go to Phantom Inflation

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