Ottoneu 101: How Loans Work in Ottoneu

As mentioned in the past, Ottoneu is a deep but enjoyable game of fantasy baseball economics perfectly suited for the FanGraphs reader.  However, the learning curve in year one can be steep, so consider this point a primer on how “loans” work in Ottoneu leagues.

All Ottoneu teams, regardless of the format (5×5, 4×4, FGPTS, SABR) are bound by both a 40 player roster cap and a $400 salary cap applied between the annual league player auction and the end of the MLB regular season (these caps do not apply in the off-season).  Exceeding either of these caps will result in a “frozen” roster thereby preventing the owner from bidding on players, making trades, or even setting lineups until the issue is resolved, per Rule 1b.  In other words, your only option when faced with an illegal (“over-cap”) roster is to cut players until you get to 40 or fewer players or $400 or less in total salary.  For new Ottoneu players, keep in mind you should never willingly exceed these limits (per Rule 1c), and each of your 40 roster spots inherently costs $1 each, so you really only have $360 in “free” roster salary to play with (see Rule 1bi) at any given time (including during the annual auction).

As in almost all things in life however, there are exceptions.

For example, you can exceed 40 rostered players if one of your players lands on the 60 day DL (Rule 4c), and you can also exceed the $400 “soft” salary cap when salary cap dollars are traded between teams in the form of “loans”, which is what we’ll review today.

Per Rule 6c: “Salary cap dollars can be traded between teams (i.e. team A can agree to count one half of a traded player’s salary against their cap). However, these loans will not remain in place once the regular season ends.”

Let’s use a practical example and then we’ll highlight a few important takeaways about how loans work in Ottoneu and their implication on your strategy.

• This trade took place on May 1^st, 2015 in League 530 (FGPTS).
• This trade could be described as “Lucky Strikes trades Corey Seager ($8) and Jurickson Profar ($1) to Floyd’s Bucco’s for Giancarlo Stanton and a $47 loan”.  In other words, Bucco’s loaned Strikes the $47 necessary to cover the cost of fitting Stanton into their budget (a loan that will disappear, along with all salary caps, in the off-season).
• To keep things simple, let’s assume both teams had both 40 players and $400 in roster salary at the time of the trade.  In practice, this means after the trade Lucky Strikes owned Stanton for $58 by increasing their salary cap from $400 to $447 with the loan, and Bucco’s willingly reduced their salary cap from $400 to $363 for the purpose of acquiring the two cheaper, future assets in Seager and Profar.
• Here’s the math:
  • Lucky Strikes: $400 salary + $47 loan = $447 total salary and 39 players, including Stanton
  • Floyd’s Buccos: $400 salary – $47 loan = $363 total salary and 41 players, including Seager and Profar.

What happens now? Some key takeaways:

• With 41 total players, Floyd’s Bucco’s would need to cut one player to get under the roster cap of 40 players (unless he has a player on the 60 day DL)
• With 39 total players, Lucky Strikes can add one player (up to 40)
• The $47 loan effectively makes the $400 Ottoneu salary cap a “soft” cap in practice, as loans enable teams to trade cap space to make room for expensive players, and help other teams sell off expensive players for cheaper future assets.
• At season’s end, both the 40 player roster cap and the salary cap of $400 disappear, so Lucky Strikes will still have to cut enough players to get under $400 in total salary before participating in the auction player draft the following spring.
• Lucky Strikes will own Stanton at the cost of Seager + Profar ($9 + actual player “value”) for the remainder of the season (or until he is cut or traded), essentially acquiring present value for future value(Seager/Profar).

What I’ve described here are the mechanics of loans in Ottoneu, but what’s left is to discuss the value of loans in Ottoneu.  Cap space (flexibility) certainly has value to owners, but in general, owners of expensive players (i.e. Stanton) will often (by assumption) cover the full difference in salary (via loan) in a trade as along as both parties agree that there is an equal amount of future value being exchanged for present value.  In other words, it’s not uncommon to see teams at the top of the standings with large loan balances (and total salaries exceeding $500 or $600) since rebuilding teams are usually willing to facilitate moving an expensive veteran or two to a contending team in exchange for cheaper, future “surplus” assets (often in the form of multiple prospects or breakout players).  The loan enables these transactions and help balance the economics of the league as the season unfolds.

As you might expect, not every owner sees player value in the same way, and trying to get everyone in your league to view trades that are supported with large loans through the same lens is especially difficult when clouded by the subjectivity of future vs. present value of specific players.  As an example, this trade above was nearly vetoed, but just over one year later you can imagine how it looks a bit different (which side would you prefer today?).  Hopefully an understanding of the mechanics of loans in Ottoneu will better prepare you for debating the value of players in Ottoneu within your league, too.

Trade tip: As with all trades in keeper/dynasty leagues, time plays a key role in evaluating the win/loss of value in player exchanges.  For those in Ottoneu leagues, we’ve built a place for you to post your league trades and the rationale behind them so that you can follow along over time to evaluate how well they worked out for (or against) you.  You can post them here.