The Z Files: Fallacies of Keeper League Inflation

For the past month, the focus of this column has been on the flaws of valuation theory and how they affect assembling a fantasy roster. Today, we'll wrap up the series with a look at how valuation is misapplied in keeper formats.

Everyone playing in auction keeper leagues is familiar with the concept of inflation. In the aggregate, players are retained for an amount below what they would collectively sell for in a redraft scenario. The repercussion is the remaining players are purchased for inflated prices. If they sold for the market rate in a redraft league, everyone would leave a ton of money on the table.

Conventionally, an inflation factor is calculated, and all the redraft prices are adjusted linearly.

1. Sum up the total salaries of every keeper

2. Sum up the redraft price of every keeper

3. Determine the total dollars everyone has to spend

4. The inflation coefficient is (#3 - #1)/(#3 - #2).

5. Multiply the redraft price of every player available by #4

By means of example:

12 team league with a $260 per team budget. A total of $1600 worth of players are frozen for $1200.

1. $1200

2. $1600

3. $260 x 12 = $3120

4. (3120 – 1200)/(3120 – 1600) = 1.263

5. The redraft bid price of everyone available is multiplied by 1.263.

This means it takes a $57 bid to buy a $45 Ronald Acuna, or $51 to purchase a $40 Gerrit Cole.

Normally, a piece on inflation would now wax poetic on the virtues of calculating inflation for hitters and pitchers separately or doing it together. I'm not going there as it's a waste of time. Why? To be blunt, the above calculation is garbage.

The conventional treatment of inflation is nothing more than high-school algebra to make the numbers sync in a zero-sum economy. It's not practical.

First off, a $1 player becomes a $1.26 player. This defies one of the tenets of conventional valuation: setting the lowest draft-worthy player to $1. Sure, $1.26 rounds to $1, but that leaves 26 cents on the table. A $2 player becomes $2.52 which rounds to $3, but the net effect is that linearly applied inflation leaves money on the table.

The "proper" way to calculate inflation is distributing the available budget over the remaining players, forcing the lowest ranked player to be $1, then scaling up in proportion to each players relative to their contributions to the rest of the pool. It's the same process done in redraft leagues accounting for the frozen players.

If carried out, Acuna would be priced above $57 and Cole higher than $51 as the "round-off" error gets funneled to the top of the pool. While it's possible to write programs to calculate inflation in this manner, it's still a waste of time, at least in a practical sense.

I've talked about this for years and have received a lot of pushback, and that's fine. The chief argument for quantifying inflation is yielding a ballpark amount to pay for each player. Again, it's not worth the effort. Inflation changes after every purchase as the value of players remaining, and the aggregate remaining budget for the league, change. You can recalculate and readjust prices on the fly, but whether this is done by the conventional method or more accurate process, it doesn't matter.

Keeper auctions have a mind of their own. Those with "great keepers" spend like drunken sailors. Those rebuilding often pay whatever it takes for the studs, aiming to deal them for future help. The main goal of valuation is setting prices for about what the player will cost. There just isn't a way to model a keeper auction, so why try?

I know, many of you have crushed your keeper leagues using some form of inflation-adjusted prices. Answer this honestly to yourself. Did the prices you came in with really help? Did they mimic what happened? More than likely, you won the leagues using logic and common sense, reading the market and intuitively knowing when to swoop in and make sage purchases, paying the same price you would have with or without the adjusted values in front of you. You would have been equally served having a set of redraft prices to get a relative rank of the inventory.

Instead of taking up valuable time adjusting speculative bid prices, the better approach is to learn the available player pool inside and out. Many purchases will come at a loss, so you don't want to take chances. Focus on identifying the safest players or those with an underlying metric portending a breakout. At the same time, identify the risky minefields to avoid.

Another more valuable use of your time is looking to see which of your competitors have openings at the same positions as your roster. Do they have a lot of money to spend? Do they already have a high-priced player at the same position? Can you draw on their history to get an idea how they'll fill that spot? The idea is to delineate which roster spots you can look to fill with a higher-priced player and where patience is necessary. Try to identify a spot or two where there's a reasonable supply of players with a lesser demand. Economics 101 says the price will be more palatable, even if it is bloated.

Most keeper leagues involve present-for-future trades, so the objective is to leave the auction with a strong foundation, keyed by keepers but embellished with solid purchases. You don't need to take chances. The stats needed to win are usually acquired by sacrificing some of your future.

The goal is to have an ample base so dealing future pieces is worthwhile. This isn't accomplished by trying to quantify the flow of an unpredictable auction. It's executed by knowing the available player pool and the probable actions of your competitors.