On Market Value Stars

We’ve had our first big offseason trade in the ottoneu league FanGraphs Staff Two. Chad Young and prospect guy Marc Hulet combined for a doozy. In the aftermath of the trade, Chad and I discussed the relative value of his players versus similar guys I had available. While I’ll refer to our ottoneu league, today’s topic has implications for most keeper leagues.

First, let’s touch upon the trade.

Chad Acquired
$8 Maikel Franco
$5 Blake Swihart
$6 Rougned Odor
$10 Jorge Soler

Marc Acquired
$48 Buster Posey
$48 Felix Hernandez
$3 Carson Smith

Marc had about $200 of salary space while Chad was way way over the cap. In a sense both owners did the right thing for their respective payrolls. Marc added a couple elite names that were affordable for him. Chad snatched four young, cheap core performers.

Honestly, I’m a little sour about the deal. Chad added four players I had on my list. And I know I had superior talent available including $62 Mike Trout, $64 Clayton Kershaw, $36 Zack Greinke, and others. Marc made the offer to Chad without so much as pinging me. (He turned down a feeler offer from me earlier in the day without comment).

Chad and I manage a dynasty team together so we often chat about our shared leagues. I griped that he got a steal when I could have easily outbid him. He countered that he believed Trout and Kershaw are at market value based on this analysis. It’s a good article and well worth a read for ottoneu owners.

In short, using data from all FG Points-based leagues, Chad finds that Trout owners who pay over $65 usually finish in the bottom half of their league. When he’s $65 and under, his owners finish top four (i.e. better than expected). This seemingly clashes with my own pricing analysis that has both Trout and Kershaw at over $80 in market value. Inflation accounts for a healthy chunk of my number – I’d pay about $68 for each in a fresh league.

Chad also informed me that he found no evidence for an inflation effect. Regardless of league age, the inflection for Trout helping his team to victory was right around $65. This is not an intuitive finding. In fact, it ensures that some sort of behavioral phenomenon is in play.

In an old THT article (which I can no longer find), I discovered that keeper inflation plateaus after the third season of a league. In that analysis, I looked at a small sample of 12 team 5×5 leagues with set keeper prices ranging from $5 to $7 per player. The draft price of players increased in the second and third draft because there was more surplus value kept. Thereafter, an equilibrium was reached. Since the findings mirrored expectations, I wasn’t concerned about the small sample. Ottoneu is similar enough to follow the same principles.

So we have a sticky situation. Actual data says that Trouts over $65 are detrimental to team success. Projections say Trouts are worth anywhere from the high $60s to low $80s depending on league age. Actual data says league age is irrelevant. Can we reconcile the actual data with the projections?

Actually, yes. Simply put, the use case for an expensive Trout is very team specific.

An entirely market rate team should be expected to finish somewhere between fourth and eighth. As Trout approaches his market rate, there is a greater onus to fill the rest of the roster with big bargains. If Trout is relatively cheap, then his owner has more room for error. And because Trout is such a premium asset, the effect is much larger than with a player like Anthony Rendon. 

My theory – and it’s entirely unprovable – is the owners with $65 or greater Trout were not prime candidates to own him. I would expect to find these teams entering the season with a $1 Michael Morse at first base, a $5 bullpen, or some other punted position. Any kind of punt is a bad idea in ottoneu points.

If a Trout owner didn’t punt a position, then his team should have performed well (subject to injuries). You should be able to own Trout at close to his market rate and still succeed. It’s just that your margin for error is smaller.

For example, the team I built last season could have easily succeeded with a $70 or higher Trout. I simply wouldn’t have drafted an $18 David Wright to back up Matt Carpenter. Wright actually accounted for a small net negative because I sat a few good Carpenter and Alex Rodriguez games to use him.

Alternatively, the team I have now is not a good fit for Trout. To keep Trout, Kershaw, and Greinke, I’d have to start Brock Holt, Franklin Gutierrez, and draft 20 $1 players. Woof.

Going back to the trade, Marc was exactly the kind of owner who could have benefited from a Trout or Kershaw. He still has salary space, but every big upgrade will cost him one or more of those cheap studs he needs to support these swaps.

However, Marc can still play another angle. In ottoneu, the ability to trade money during the season causes elite player trade value to surge after the draft. If Trout costs X in the offseason, he’ll cost somewhere around 2X in-season. By virtue of having salary space, Hulet could play Trout middleman and earn a tidy profit in the process. Not every Trout owner has to be a contender.