BASICS: How To Calculate Draft Inflation

A reader asked about this at Ask Rotoman today. The link gives you his question and the full answer. Here’re the basics:

In a keeper league (4×4 or 5×5 doesn’t matter), where inexpensive players are carried over from one year to the next, you need to adjust the startup prices in the Guide or prices create yourself or you obtain elsewhere to account for these lower priced players.

For example, I allocate $3120 for 168 hitters and 108 pitchers in each 12-team AL and NL league, because that is what is going to be spent.

In your keeper league, however, you may have 50 hitter freezes and 20 pitcher freezes, or someother number. Whatever it is, what you need to figure out is how much money is going to be “saved” by the teams in your league having these freezes.

To do this, list the players in your league who are going to be frozen. Then compare their keeper prices to the startup league prices from the Guide (or the updates). Total each column.

Let’s say the 70 keepers in your league are going to cost their teams $700 in keeper fees, but my price list says that they’re actually worth $1000. How is that going to affect your league’s prices in the auction?

1. To start we have $3120 in value.

2. In your league (after keepers) you’ll have $3120 minus $700 which equals $2420 in cash for buying the available players.

3. Based on the values in the Guide, this money is chasing $3120 minus $1000  in value, which equals $2120 total value in your auction.

4. Figure out an inflation rate by dividing the amount of cash you have by the amount of value ($2420/$2120) which equals a 14 percent increase.

5. This extra money is available to be spent in your auction, which means that a player I gave a price of $35 might actually cost 14 percent more, or $40. (Multiply $35 * 1.14 = $40)

The important thing to recognize here is that teams that don’t take the inflation into account will stop bidding at $35 or $36, thinking they’re going over budget. The savvy player will know that a player’s par price is higher than that (in some leagues, depending on the keeper rules, it can be much much higher).

So, knowing your inflation rate is a big help while tracking your auction, but there are some confounding issues.

The 14 percent inflation is usually not distributed evenly. 

For one thing, the 14 percent increase in price of a $3 player doesn’t round up to $4, so what rounds down is distributed to more expensive players. This effect is echoed up the line, so that more money is distributed to more expensive players.

But it also makes strategic sense to manually allocate more bid money to more expensive players.

Would you rather pay $4 for a $3 player, or get the edge when budgeting of going to $41 on the player who rounds up to $40. The fact is that you might still get the same cheaper player and the more expensive one if your budget allocates the inflation money to the top group.

In which case the important number is not the 14 percent, but rather the $300 extra you have to add back into the available player pool. Go through your list and bump the prices of top players by 14 percent, and then distribute the remaining money (which you didn’t give to those players who cost less than $12) to the players you fancy.

This is subjective, of course, so you’re going to want to be careful, but the effect of inflation is somewhat subjective, too. As an aggressive player you should make sure you err going after the players you value more than those you don’t. Your budgeting can help make those choices clearer in advance.

Another reason to allocate the money to more expensive players is because if you don’t spend on them early on, you may end up holding the bag in the end game by either not having spent all your money, or by being compelled to pour too much extra cash into the last available (and now wildly overpriced) talent.

It’s much more effective to spend an extra dollar on three or four expensive guys than to spend $5 on a $1 player at the end. Or leave $4 (or more) on the table, unspent.

The bottom line is that the proper tracking of inflation can give you a huge advantage over owners who either don’t think about it or try to wing it. Knowing whether owners are spending more or less than they should in the early rounds of the auction will help you decide whether to spend now or wait for bargains later.