Does Inflation Increase As A League Gets Older?

The answer to the question posed in the headline is yes, but with some caveats. Last month I wrote about the Ottoneu Surplus Calculator, and one of the takeaways at the end of that article was that post-keeper deadline the calculator could be used to calculate inflation. What I’ve done is gone through every Fangraphs Points league in ottoneu and ran those leagues through the Surplus Calculator to gather data on keepers and inflation, in an attempt to get a general sense of how auction keeper leagues (like ottoneu) evolve over time with respect to inflation. Before I present that data, though, I want to explain what inflation is and why you should care about it.

What is inflation?

Here is a useful article posted to RotoGraphs two years ago detailing the process of calculating inflation, so I won’t bother rehashing that information here. For our purposes, just understand that inflation is the result of league owners keeping players whose true value exceeds their salaries. When that happens, there is less value available at the auction than there is money to spend, so prices are higher than they would otherwise be. As an example, assume you play in an ottoneu league and the players kept past the keeper deadline have $3,000 in salaries, and $3,300 in value according to the values you are using (these could be the values from our positional rankings here on RotoGraphs, the ones included with the Surplus Calculator, or ones you have calculated yourself). Given the $400 salary cap in ottoneu, there is $4,800 total cap for the entire 12 owner league. That leaves $1,800 ($4,800 less $3,000 in kept salaries) in salaries for teams to spend at auction, but only $1,500 ($4,800 less $3,300 in kept value) in talent for them to spend it on, so every $1.00 in value requires $1.20 in salary. So in this example the league has 20% inflation.

Why is knowing inflation useful? Well, once you’ve calculated the inflation rate for your league, you can adjust your auction values by that inflation percentage to calculate an inflation-adjusted auction value for that player. Assuming the same 20% inflation we looked at above, that means the $30 OF you have on your auction values sheet should have an adjusted auction value of $36 ($30 + $6 inflation)  It’s important to know what your inflation adjusted values are, because if you were to stick to your true dollar values you would find yourself not winning any players at the auction until only role players were remaining. By making adjustments to your auction values for inflation, you have a truer representation of each player’s value for that particular league.

The Data

The data I collected comes from every Fangraphs Points ottoneu league that had exactly 12 active owners, and I excluded any league that had a team over the $400 salary cap (usually this was due to a team not cutting players by the deadline). The table below represents a subtotal of all the data broken out by the age of the league. In this case the oldest leagues are the ones entering their sixth seasons, and the newest leagues are the ones entering their second. I calculated the average first place team’s projected $ value (based on keeper quality + how much value that team could acquire at auction based on inflation), the average number of keepers, the average salary kept, the average value kept, the average surplus (value less salary), and the average inflation % for each league age.

What does the data tell us?

• There is an anomaly that exists with the fourth year leagues, and I haven’t been able to identify the cause(s). It’s possible this is just a small sample size issue, as each league age “bucket” had only about a dozen leagues in the sample.
• Assuming the fourth year leagues are truly an anomaly, in general ottoneu inflation increases as a league gets older. Second year leagues have a miniscule 1% inflation, third and fourth year leagues average about 18% inflation, fifth year leagues have 23% inflation, and sixth year leagues have just under 31% inflation.
• In addition to inflation increasing as a league gets older, the projected value of the first place team also increases, from a low of $507 for second year leagues to a high of $549 for sixth year leagues. This is highly correlated with inflation itself, but it also tells us that as ottoneu leagues age the very best teams in the league look stronger and stronger. It’s no great surprise then that some of the highest points totals in the history of ottoneu have come from the oldest leagues.
• Second year leagues keep fewer players (271) than any other league age, but the other four league ages are pretty similar in keeping about 295 players.
• There isn’t a huge disparity in how much teams spend on keeper salaries, as leagues overall spend $3,252 on average on keeper salaries

I’ll leave any other possible conclusions for the readers to point out, and I definitely plan on taking a look at this data again next season to see if any of the information changes with another season in the books.