Friday, March 30, 2007

Trading Update

Another quick update on trading...

Looks like the Delmon Young/Howie Kendrick 'bubble' is over, as prices on both have dropped down to more reasonable levels.

Overall, it looks like there's some mild inflation for now.

I'd be curious to hear how much $ worth of players people have accumulated so far. I'm around $360, and the one person I've compared notes with is about $30 ahead of me.

Still many underpriced players (especially closers) as well as obviously overpriced ones. In fact, if there's one area where the pricing mechanism doesn't seem to work perfectly so far, its guys who were overpriced and barely drafted at all. For example, Keith Foulke's price has barely dropped.

Trading Floor Opens

Quick update now that the trading floor has been open 45 minutes. It looks like the pricing mechanism is working great...nothing weird or out of line so far. The obviously underpriced players are moving up a lot.

Two things that most people don't seem to have realized so far (based on price action):

1. Only the Mets and Cardinals play opening day. If you don't want your roster spots to go to waste Sunday, but guys like Carpenter, Pujols, Reyes, Wright, Beltran, Isringhausen, and Wagner. So far, only Pujols is up much out of that group.

2. You are going to NEED to carry as many closers in your lineup as you can. If you have 2 closers and I have 4, then you're going to be basically giving me a 2,000 point head start. Read the Aaron Brown guest article in my archives if you don't understand why. So far, only the really obviously underpriced closers have gone up much.

Rotohog News & Notes

Some news and notes on a variety of topics:

1. Don't forget that trading starts today at 9am Eastern.

2. You may have noticed that there doesn't seem to be any way to add players to the 'Watch List'. I haven't gotten to ask about this yet, but I'm guessing that it's a trading floor function, and so won't be available until 9am this morning. Somebody else suggested that the issue may be that the watch list is a premium service, but I think we all have premium service for the first two weeks of the season, so I doubt that's the problem.

3. I sent an email to the Rotohog people asking their opinion on whether my proposed 'Rotohog assistant' arrangement is allowed. They basically said 'no', so I won't be doing it. Their feeling is that the goal (for them) is to identify "the best fantasy baseball player in the world" and working with someone would provide an unfair advantage. They don't have any problem with asking someone to fill in for you if you're on vacation or something.

4. Somebody asked about my draft. Keep in mind that my goal was price appreciation...not getting players I'll necessarily want during the season. Here's my current roster: Papelbon, Dotel, R. Hill, Huff, Salas, Valverde, Isringhausen, Dempster, Hermanson, B. Wagner, Lidge, Owens, Gregg, Orvella, and Carpenter. Obviously some of the more speculative picks haven't really worked out but they cost me almost nothing. The only players on that list who are likely to be in my lineup by Sunday are Papelbon, Isringhausen, Wagner, and and Carpenter. The only one who will make to Monday is Papelbon.

5. Also, I've been saying that Rotohog sign-ups were ending this week. It turns out that isn't true. They will remain open thoughout the season. Late entrants just won't get to participate in a draft, and obviously they won't have much chance of winning the overall competition. But there will be monthly and/or weekly contents that they'll be eligible for.

Wednesday, March 28, 2007

Some Good Questions

Somebody asked a few good questions in the comments a couple days ago:

1. How did your draft go?
It went well. I'll probably share the details on Friday, but I got all but two of the bargains that I was targeting and had about $80 to spare. I suspect I may be the only person in the Rotohog universe who only drafted one hitter.

2. You may have explained this before, but why do you think that the player prices will decline as soon as the market opens? I think that all players (well ok, most) might go up in value becuase each owner will have about 10% more money to work with. Sure, 3 additional players may be added to each roster, but those who want to have a strong starting lineup will have more money to spend such players.
Actually, I'm not so sure what will happen anymore. I agree that there will be some initial inflation from the extra $25 that we'll each get on Friday. And I'm positive that there will be long run deflation as money disappears from the Rotohog universe in the form of transaction costs. But I don't know what will happen in between, and don't think that anyone does until we learn more about how trading and pricing work. My original assumption of deflation was based on what is likely to be an incorrect assumption that prices would drop on players who aren't 100% owned.

3. Finally, I like your idea of rotating players, but how feasible do you think this will be? Do you think there will be "transaction costs" (much higher buy prices than sell prices) that will prohibit one from turning his/her lineup over every day/week/etc.? Also, do you think a player will be cheaper (and therefore, also have a low sell price) on his off day than on a day when he will play 5 or 6 straight days?
Transaction costs are a concern, but I think there will be plenty of opportunities for good players to make money through trading, so it shouldn't prevent a strategy of rotating makes it possible to get by with fewer players in the lineup at the same time. I'm not sure that the pricing pattern will be as simple 'cheaper on day off', but I believe that there will be some fairly regular patterns based on playing schedules, and that exploiting these will be one of the biggest edges that the best Rotohog players will have over the rest.

Monday, March 26, 2007

Draft Day

Today is my Rotohog draft day. I'm still considering whether I want to spend all my money or not. I've got a list of players that I'd like to get if they're available, but would basically be spending all my money to get them. That could be a risky strategy if there is the kind of deflation I think is likely, although I think these are all players who should go up in price, or at least retain their value well, even if there's deflation. I also may not be faced with the decision, since some of these guys will probably be drafted before I can get them anyway. I'm also a little nervous about everything going smoothly. I'm using Internet Explorer 6, which Rotohog has suggested may have some problems. It worked fine during the mock draft I did, but it's still something to worry about.

Some helpful tips if you're preparing for your draft:
1. Think about what players you want to pick because of their potential for quick price appreciation.

2. Think about what players you will want in your lineup for opening day, and whether you can get them cheaper in the draft or via trades once the market opens.

3. Pre-rank your players to allow you to make your picks faster.

4. In case #3 didn't persuade you, pre-rank your players in case technical problems or an emergency prevent you from being online during the draft.

NOTE: I just posted something on The Waiver Wire about closer usage patterns that should be directly applicable to Rotohog.

Friday, March 23, 2007

Answering Some Questions

First two quick answers to questions people have posted in the comments section recently:

1. Players (like Alex Gordon) who aren't currently in the Rotohog 'universe' will be added shortly after drafts end at a price determined by the Rotohog staff to be 'fair'.

2. The folks at Rotohog have been very careful NOT to answer my questions about the spread and other details of the trading and pricing mechanism. We're just going to have to wait and see. If I had to guess, I would think the spread will be larger on highr priced players, but obviously my strategy depends on it not being too large. That said, I think there will be lots of trading opportunities to make money, so some variation of my strategy should work regardless.

Now, onto a couple things that somebody said in the comments yesterday that I think may represent common misconceptions:

Had there been a pitcher whose cost was $100, the cost per anticipated point would be points/100. Each start should account for approximately 3.5% of the year's production. (It's obviously not a smooth curve, but over the course of the season...) For the second game, if there were no change in the price, the value would be points (.965)/100.

That's not right. At any given time, the total value of all players in the Rotohog universe by definition is equal to the total amount of Rotohog dollars. Since you don't get bonus points for having money at the end of the season, there's no reason to 'hoard' money. You spend whatever you have to get productive players. So all else being equal, player values would be the same at the end of the season as at the beginning. Of course, all else is not equal, because each time there's a transaction some money will disappear from circulation forever (the transaction fee/spread) there will be some deflation, but not as extreme as what happybooker is implying, and I believe it will have the least impact on star players...if anything their prices may increase as more people become aware of the strategy of rotating players.

The other part of his comment that I wanted to address is this:

If a top performer, say Santana, has a great opening game, the price should fall the day after. If he has a normal deviation relatively weak start, the price should stay the same or rise marginally.

That's not how things work. If you project Santana for a 2.50 ERA for the season and he get bombed for 10 runs on opening day, you don't assume he'll now pitch 2.20 ERA baseball for the rest of the season to get him to 2.50 for the season. You have to assume that he'll pitch 2.50 ERA ball and end up somewhere around 2.80 for the season. To give an example of the same principal...when you flip a coin and it comes up heads three times in a row, is it more likely to come up heads or tails on the next flip? His comment suggests that he might say 'tails, since it needs to end up 50/50 overall'. That would wrong though - its still 50/50 on all future flips.

By the way, I now know who I will selecting with the first pick in the Rotohog draft. If you've been reading this blog carefully, you should know too. If not, I'm willing to let you know if you send me an email at telling me that you'd like to be added to my blog mailing list (which is for this blog and my other blog The Waiver Wire. Let me just say that if you're drafting next Monday at noon Eastern and you end up in my draft, you're going to have to be very, very fast with your first pick if you want the same player I do. So you may want to steer clear of that time for your draft.

Thursday, March 22, 2007

Not So Easy, But Worth the Effort

So I just mapped out my strategy for the first 3 days of the season. This stuff is not so easy. Despite there being only 1 game on the 1st, it took me almost 1/2 hour to plan things out through day 3. The process involved looking at the MLB schedule for each day, and figuring out how good a lineup I could realistically expect to put together by rotating players on and off of my team throughout each day.

Going through this process for the first time made me realize two things:
1. Very few people are going to put this kind of effort into Rotohog.
2. Its going to be possible to put together some incredibly good lineups on a daily basis.

In other words, those who put in the hard work are going to absolutely CRUSH everyone else at this game. The folks at Rotohog are marketing the game as putting the skill back into fantasy baseball...and I think they're going to succeed beyond their wildest expectations. There is no chance at all that whoever wins this thing is anything but an excellent player. On the other hand, I expect a LOT of complaining after the fact that the game rewards the wrong skills...and expect that for 2008 some adjustments will be made to the rules.

Tuesday, March 20, 2007

Introducing the 2007 Rotohog MVP...

...Byung-Hyun Kim! What?!?!?! Well, maybe not. But there's actually a pretty realistic scenario where Kim ccould be the single most valuable player to have on your team for Rotohog this year.

I've talked before about how valuable closers with starter eligibility are. Because we're able to 'platoon' playwers who aren't scheduled to play at the same time of day, we can effectively re-use our money...which makes the cost of players much less of a constraint on the total amount of points we can accumulate. So for pitchers, we're face with two main constraints: roster spots and the 1300 innings pitched limmit. Because of the innings pitched limit, we want to get as many innings as possible pitched by closers, because they're going to have a much higher points per innings pitched ratio. The main constraint on our ability to get closer innings is that we only have four roster spots per day to devote to closers - the two relief pitcher slots and the two pitcher slots. The only exception where we can have more than four closers pitch in one day is if there are closers with starter eligibility. Up until now, it appeared that there could be two: Joel Pineiro and Seth McClung. A quick look at their K/BB ratios shows that these guys are both awful pitchers. In a normal league I wouldn't even consider having them on my team, but the unique rules of Rotohog could make them VERY valuable. Except that one or both of them may not actually win their team's job as closer.

Which brings us back to Kim. According to multiple sources yesterday, Florida is one of three teams interested in trading for him. And if they did, he 'would be in the mix for the closer role' (one site actually said he'd be the frontrunner). I know some people have doubts about whether Kim has the mental toughness for long term success as a closer, but I think he can do a good job. And unlike Pineiro and McClung, Kim is a pretty good pitcher. His ERA the past few years disguises that pretty well, but he had 129K and only 61BB in 155IP last year in Colorado, which is really exceptional. If he wins the Florida closer role, I think he'll do well, and his starter eligibility will make him the single most valuable player in Rotohog.

Monday, March 19, 2007

Another Draft Result Discussion

There's another useful discussion of the results of a Rotohog draft over at The Crooked Pitch. My opinion is that the more of these we get a chance to look at, the more we'll know what to expect when we do our drafts.

Rotohog Draft Strategy

Unlike most fantasy baseball drafts, your goal in the Rotohog draft should NOT be to assemble the best team possible for you $275. Because the trading floor will open several days before the season starts and the open market will allow you to get whatever players you need later on, you can focus your draft on achieving two goals:

1. Make as much profit as possible, so that when you do assemble your team for the regular season, you can afford the best possible team.

2. Avoid any mistakes that would cause you to fall substantially behind the other good players competing in the game.

In some cases, trying to accomplish one or both of these goals will cause you to pick (or avoid picking) very different players than you plan to have on your team to accumulate points.

For example, I think three players that should yield a nice profit if you draft them and then sell them shortly after trading opens are Delmon Young ($2), Rich Hill ($4), and John Patterson ($.50). None of the three fits well with my strategy for the season, but I'll be targeting all three during the draft in an attempt to make a quick profit...which will help me trade for more of the players that I really want on my team.

An example of something I would do to avoid the risk of any big mistakes that could cause me to fall behind early in the season is that I won't draft Felix Hernandez at $18. In a normal league I think this would be a bargain. But in Rotohog I think there's a pretty good chance that 2nd tier starting pitchers are not going to be in high demand. I'm not risking much by picking cheap guys like Hill and Patterson, even if their price drops to $0, but picking Hernandez represents too much of a risk for me to take before we see how things began to play out once the trading floor opens.

Friday, March 16, 2007

Some Good Values

A few players that appear to be among the best values at their Rotohog draft prices, worthwhile targetting on your draft day:

Delmon Young
Rich Hill
Octavio Dotel

Also, keep a close eye on competitive closer situations in Tampa, Floria, Boston, and well as those in Philadelphia, Seattle, and San Francisco which could all be impacted by injury or trades

Thursday, March 15, 2007

Looking for a Rotohog 'Assistant'

I'm pretty confident that nobody on earth has spent as much time thinking about the strategy for Rotohog as I have. I don't think that very many of the best fantasy baseball players are really making this game their top priority. And I think that there are a lot of subtleties to the strategy that nobody (including me) has been talking about yet.

Add all that up, and I believe that I will have a good chance of winning a top prize. The only problem is that it will be very 'high maintenance' to execute the correct strategy, requiring a bunch of transactions every day...some of them at very specific times of day, and not always at times when I'll be able to get online easily.

So I'm looking for an 'assistant' or partner to help win this thing. Obviously you'd get a nice cut of the money (we can negotiate what a fair amount is).

You don't need to have much fantasy baseball experience for this...I'll be giving some pretty specific guidance on what to do. The main things I'm looking for are:
1. Someone who is reliable and honest (obviously I'll have to make a judgement call based on my impressions of you).
2. Someone who will generally be able to be online for as much time as possible between 1pm-1am, and particularly from about 6pm-2am on weekdays and 1pm-1am on weekends.
3. Someone who won't mind following my instructions on this to the letter.

If you think you might be interested, send me an email at to let me know, and we can talk more about it.

P.S. As far as I know this is in no way against Rotohog's rules. But I have sent them an email to confirm that they don't have anything equivalent to the 'one player per hand rule' that some poker sites theoretically have. If its against the rules, then this offer is obviously off the table.

Tuesday, March 13, 2007

Some Draft Feedback

Here's a link to some interesting comments on an early Rotohog draft by Brad Stewart at the MLB Front Office blog. Judging by some of the results he mentioned, it sounds like people were smarter than I would have expected!

Good News

It looks like the technical problems at Rotohog have been addressed. After a brief period last night when neither of my computers could access the site, everything has been working fine this morning. And this appears to be a permanent fix, rather than the temporary workaround that they had talked about implementing.

If you'd like me to send you some player valuations I'm putting together for hitters in Rotohog, sign up for my blog mailing list by emailing me at Note that I have one mailing list that includes both of my blogs - this one and The Waiver Wire.

I will also be sending the mailing list valuations for another free fantasy baseball game with cash prizes - Game Day Draft, which I talked about at The Waiver Wire here.

And finally, I'm interested in hearing as much as possible from people who have already drafted. Did any positions seem to go quickly? Who were the best undrafted players? Did everyone show up for the drafts, or were there lots of no shows? Anything and everything that you can share with us will be appreciated.

Monday, March 12, 2007


For those of you who (like me) have been having a problem accessing the Rotohog web site...good news. They know about the problem, and while the full solution is currently out of their hands (needs to be taken care of by their service provider), they are currently working on a 'workaround' to give us access to the site in the meantime.

Also, if anyone does their Rotohog draft early, I'd love to hear whatever feedback on it you can share with us...did it go smoothly, what kinds of strategies did people seems to use, etc.

Sunday, March 11, 2007

Closers Listed As Starters

If you've read the guest article that Aaron Brown wrote here a few days ago, you know how valuable closers will be in Rotohog. One side-effect of that is that closers with starter eligibility will be extremely valuable. Keep an eye on whether Joel Pineiro ends up as Boston's closer...even really bad closers will be worth more than any starter. If he doesn't win the role, watch whether Papelbon is moved back to the role. And watch closely to see if other teams end up with someone listed as a starter in the closer's role at any point this season.

EDIT: I just went through the entire list of players listed as starting pitchers, and found another one who may be a closer this season: Seth McClung is the frontrunner to be Tampa Bay's closer, although there are reports today that that is far from a sure thing.

Rules Clarification

Maybe it explains this somewhere in the Rotohog rules, but if so, I wasn't able to find it. Luckily, the guys at Rotohog are very responsive and answered my question about it. The easiest way to explain this is with an example.

Billy Wagner and Mariano Rivera are both trading at $45. Wagner has a day game today and Rivera has a night game. I have Wagner in my 'lineup' until the end of his game, and then sell him and buy Rivera with the money.

Question 1: Can I have Rivera play tonight, effectively re-using the same money for a second player in the same day? Yes.

Question 2: Can Rivera fill the same roster slot that Wagner was in, effectively letting me have more than 15 players play for me each day. No. I need to use a different roster slot for Rivera if I want him to play today.

Friday, March 9, 2007

Don't Draft Too Early

This may be obvious, but you should avoid drafting your Rotohog team until the last few days of drafts for a number of reasons:

1. Because prices will be fixed after March 11th, the later you draft the better your knowledge will be of which players are injured, which have won more playing time, etc.

2. With any new software (like Rotohog) technical glitches that could ruin your draft are going to be most likely in the first few days.

3. Waiting until there have been a few days of drafts will allow you to gain some insight into how the drafts are proceeding. Knowing which players are getting drafted early or late, and what kinds of draft strategy people are using should be valuable information.

That said, I won't be waiting until the very last day of drafts...I'm paranoid that I would risk missing the draft if there was an emergency at home or at work.

On another note, has anyone else had problems accessing the past couple days? I've had problems with it, but only from one of my computers. The odd thing is I haven't had problems accessing any other web sites from that computer.

Thursday, March 8, 2007

I've gotten confirmation from the folks at Rotohog that the valuation are intentional and that they were made high deliberately to prevent the entire available supply of good players from being drafted, because it was felt this would prevent the 'market' from being liquid enough.

I think their logic makes sense, but I do think that this is going to lead to some pretty serious deflation initially, although one thing to keep in mind with any speculation about how the market will react is that we don't actually know the mechanism that will drive prices...its not a bid/ask spread like a true stock market. So there's definitely some uncertainty in any prediction about it. It is clear though that prices won't be adjusted drastically prior to the 11th, and that many good players will go undrafted. There also appears to be a LOT of risk if you don't draft could find yourself in a substantially worse position than if you didn't participate in the draft at all!

Wednesday, March 7, 2007


Now that everyone has had some time to begin absorbing Aaron Brown's incredible guest article, I guess its time for me to start contributing something to my own blog again.

First of all, one reader posted over on The Waiver Wire asking when the final pricing changes would be made for Rotohog drafts. I emailed David Wu from Rotohog and he said that the final changes will be made on the 11th, but that very little would change after the 8th. I assume that means someone will review all the pricing tomorrow, and that changes will only be made on the 9th-11th if something big happens (ie "Gagne's arm just fell off...$20 might be a little high for him").

While I was working on my valuations of players for Rotohog, I noticed something odd. If you total up the prices listed for Rotohog drafts (based on data in their system yesterday) for the top 144 position players (12 teams, 9 hitters, 3 bench slots), the total comes out to almost exactly $275 per team. That means that if all bench slots are used for hitters (which I realize isn't going to happen) there will be no money AT ALL left for pitchers. I'm not sure if this was intentional or not, but the fact that the math worked out so neatly to $275 (the amount you start the draft with) makes me think maybe someone doing the valuations messed up and forgot that hitters and pitchers both have to be acquired within that budget. I actually made the same mistake initially when I was doing my projected valuations. It also could be an intentional decision by the Rotohog folks to increase liquidity in the market. Either way, one of two things should happen:

1. Lots of good players go undrafted, leading to a major deflation in the Rotohog universe right after the draft. People who miss the draft will be at an advantage over all but the most skillful drafters.


2. Draft prices will be revised drastically lower by the 11th.

I emailed Rotohog to find out what the story is, and will let everyone know how they respond.

To play Rotohog, go to Rotohog and fill out a registration form. Make sure to enter 'waiverwire' (without the quotes) into the referral code field to let them know we sent you (which will ultimately help me raise money for Save The Children). After that, join 'The Waiver Wire' league at Rotohog for some friendly competition (which doesn't actually affect the overall standings and prizes).

Tuesday, March 6, 2007

I wanted to remind any new readers that 1/4 of whatever I earn from the ads on The Rotohog Blog will be donated to Save The Children. If you're interested in helping this worthy cause, obviously the best thing you can do is give them money directly. The next best thing is to make purchases through the ads on this site and on my other blog The Waiver Wire. If you are planning to buy any books, do it through the ads on this site (even if its for a different book than advertised). If you're going to buy baseball tickets, consider doing it through the StubHub ads on either site, and if there are other vendors you plan to do a lot of online shopping from, let me know and I'll see if I can add them.

To play Rotohog, go to Rotohog and fill out a registration form. Make sure to enter 'waiverwire' (without the quotes) into the referral code field to let them know we sent you.

Sunday, March 4, 2007

The following article was written by Aaron Brown, the author of The Poker Face of Wall Street. I emailed Aaron about Rotohog, hoping that I could get him intrigued enough to write a few paragraphs of speculation on how Rotohog's open trading floor might impact trading in the game. What I got was a whole lot more...a long, detailed article that explained what should happen, and what strategies to use to take advantage. It confirmed some of what I've been thinking, but turned other ideas I had upside down. I definitely recommend you get ahold of Aaron's book if you haven't already read it, but first, enjoy his article about Rotohog...

If you are not a financial professional, you may have wondered why people get so excited about futures trading. You probably understand that you can make a lot of money if you bet correctly that pork bellies will increase in price or that frozen orange juice will fall. But that’s just gambling and the price patterns are random enough that it’s not much easier for an outsider to make money in the futures markets than in Las Vegas. So why do people care so much? Why does the opening of a trading market completely change the game and create entirely new economic opportunities? After all, people are just buying and selling pieces of paper representing stuff that people could buy and sell in real markets before the futures exchange opened.

If you know more about fantasy sports than economics, you can now see the reason demonstrated.’s ingenious game completely changes the way you have to think about fantasy baseball, and sets an entirely different basis for player valuation. I’m going to begin the discussion ignoring the bid/ask spread is imposing on their trading floor. It’s easier to understand the impact of perfectly liquid trading before dealing with some of the complexities of transaction costs.

Let’s start with traditional fantasy valuation. You begin by projecting the stats of the available players. I just used their 2006 stats, so I’m valuing them for last year, under the assumption you knew exactly what each player would do. This produces unrealistic top valuations, because the best performers always do better than expected. That is, you might guess that the best fantasy hitter in the majors will have a season as good as Albert Pujols did in 2006, but at the beginning of 2006 you won’t know which hitter it’s going to be. You expect Pujols to have an excellent season, and he’s among a handful of hitters who might turn in the best overall season, but you have to price him before you know he’s going to be the best.

The top price I get for any player is $76.75 for Johan Santana, but at the beginning of 2006 he was probably worth more like $50 to $55; he might have gotten injured, he might have had a disappointing season, he might have just had a pretty good season. You wouldn’t be sure in advance that he’d lead the league in both innings pitched and ERA (and just about everything else). By the way, I use for data and my stats and positions sometimes differ slightly from the ones at

Once you figure out how many points each player can be expected to generate, you take the top 12 players for each slot. The 13th best catcher in the majors in 2006 was Mike Piazza of the Padres, who produced 513 points. Since only 12 catchers will play in the fantasy league, Piazza is worthless. The top catcher, Joe Mauer, produced 921 points. But since you could get 513 for free, you’re paying for the extra 407 (numbers do not add due to rounding). This assumes there is no value to keeping players on the bench, you could add some small value to Piazza for that. Things are a little trickier to deal with utility players and optional pitching slots, but the basic idea is you rate each player based on the extra points they give you versus the 13th best player available for the slot. Sophisticated fantasy owners can refine these methods, but this is the basic idea.

If you add up all the extra points (that is, points above what the 13th best player will give you for free) from the 180 players who will fill all 12 fantasy rosters, you get 24,026 for hitters and 14,377 for pitchers. Add those numbers and divide by the $3,600 available to all 12 fantasy owners and you get $0.0937 per extra point. Mauer gave you 921 extra points, so he’s worth $38. If all the players are priced this way, and all owners spend their $300, there will be a 12-way tie for first. The top line-up given these assumptions is:

Player Team Pos Points Value
Garrett Atkins rock 3B 1,198 $45.43
Carlos Beltran mets OF 1,247 $50.00
Lance Berkman astr OF 1,216 $47.10
Chris Carpenter card P 1,142 $45.14
Ryan Howard phil U 1,321 $56.95
Joe Mauer twin C 921 $38.18
Joe Nathan twin RP 1,156 $46.47
Albert Pujols card 1B 1,418 $66.03
Jose Reyes mets SS 1,211 $51.94
Franc Rodriguez ange RP 1,168 $47.60
Johan Santana twin SP 1,479 $76.75
Alfonso Soriano nati OF 1,194 $45.07
Chase Utley phil 2B 1,139 $48.87
Brandon Webb diam SP 1,143 $45.26
Carlos Zambrano cubs P 1,105 $41.73

This line up would cost $752.52 and give you 18,057 points. Of course, you could never afford it in a traditional fantasy league. The key to this analysis is your constraint is slots, you can have only one player per slot. Now we’ll see how having a liquid trading market changes the constraint, and thereby the basis of valuation, and thereby completely changes the relative values of the players.

I looked at the schedules for the Anaheim Angels (picked because they were first on the list) and the New York Mets (picked because they’re on the other coast and in the other league). Over 2007, there are 28 days on which only one of the two teams is playing, 90 days when both are playing but the games (based on television slots) do not overlap and 58 days on which the two teams have games that overlap in time.

Carlos Beltram was the best fantasy outfielder on the Mets in 2006 and Vladmir Guerrero was the best on the Angels. Suppose that you could buy (and sell) each of them for $45 for the 2007 season. You draft Beltram for $45. After he plays in April 1, you sell him and buy Guerrero, who plays on April 2. You continue buying and selling, always holding the player who has a game. If the Mets and Angels have overlapping games, you pick one outfielder at random. By the end of the season, your $45 has bought you not 162 games, but 266 games.

Of course, you’re limited to 162 games per outfield slot. So budget another $45 to add Lance Berkman and Alfonso Soriano to your platoon. You can move the four dream-teamers around among the three outfield slots to be sure you have 162 games in each slot, a total of 486 outfield games. If one of the four falls off in production, or another player climbs up to their level, you can switch. You have the best outfielders in baseball playing every game, spending only $90 for to fill three slots.

The table below shows the results of this strategy for 2006. You always buy Beltram and Berkman if they have a game. If Soriano is playing, and one or both of Beltram and Berkman are not, you buy Soriano. You buy Guerrero for a few games when you don’t have two slots filled to get your total outfield games up to 486. This produces a total of 3,907 points. It uses a maximum of $97.10 at any one time, and often uses less. You never have more than two outfield slots filled at a time (the rules allow you to leave slots empty, but even if they didn’t, you could fill them with $0.25 scrubs who do not have games that day).

Player Team Pos Innings Points Value
Carlos Beltran mets OF 140 1,247 $50.00
Lance Berkman astr OF 152 1,216 $47.10
Alfonso Soriano nati OF 159 1,194 $45.07
Vladim Guerrero ange OF 35 249 $37.24

Suppose instead you elected to buy and hold Grady Sizemore, Bobby Abreu and Andruw Jones. This will cost you $101.76 all the time, instead of a maximum of $97.10 and often less. You will get 3,226 points, 680 less than the platoon strategy. Some of the difference comes from not using up all 486 games, but most of it comes from getting fewer points per game because the players you can afford to buy are not as productive as the players you can afford to rent when you need them.

Player Team Pos Innings Points Value
Grady Sizemore indi OF 162 1,104 $36.57
Bobby Abreu tota OF 156 1,064 $32.88
Andruw Jones brav OF 156 1,058 $32.30

Pitching offers even more opportunities to platoon. Starting pitching is worthless, because there is a limit of 1,300 innings for all pitching slots combined, and closers are put up about three times the points per inning as starters. Suppose in 2006 you had bought the four best closers playing at any given time, until you got up to 1,300 innings. You would have the following contributions:

Player Team Pos Innings Points Value
Chad Cordero nati RP 73.3 857 $18.48
Francis Cordero brew RP 26.7 429 $0.00
Brian Fuentes rock RP 65.3 766 $9.93
Mike Gonzalez pira RP 54.0 662 $0.18
Tom Gordon phil RP 59.3 787 $11.93
Trevor Hoffman padr RP 63.0 986 $30.60
Jason Isringhausen card RP 58.3 715 $5.12
Bobby Jenks whit RP 69.7 884 $21.00
Joe Nathan twin RP 68.3 1,156 $46.47
Akinori Otsuka rang RP 59.7 767 $10.05
Jon Papelbon rsox RP 68.3 1,060 $37.47
J.J. Putz mari RP 78.3 1,075 $38.89
Chris Ray orio RP 66.0 839 $16.74
Mariano Rivera yank RP 75.0 950 $27.23
Franc Rodriguez ange RP 73.0 1,168 $47.60
B.J. Ryan blue RP 72.3 1,073 $38.75
Takashi Saito dodg RP 78.3 962 $28.34
Huston Street as RP 70.7 893 $21.88
Billy Wagner mets RP 72.3 1,044 $35.95
Bob Wickman tota RP 54.0 682 $2.07

The total is an astounding 17,756 points. This is only slightly less than the 18,057 a buy-and-hold owner could earn with an unlimited budget and perfect foresight. And you get it all from relief pitching. One of your contributors, Francis Cordero, would not even be playing in a traditional league, and another, Mike Gonzalez, would be worth only $0.18. When the top closers are all playing, you have to devote $171.71 of your budget to owning Rodriguez, Nathan, Putz and Ryan. But most of the time you have less than $100 allocated to relievers, with the rest available to rent hitters.

The infield positions use the same idea as outfielders and pitchers, except you have to pay attention to make sure you’re getting enough games at each position individually. So instead of getting the best hitters playing at any given time, you have to spread games around among the best catcher, the best shortstop and so forth. You need 162 more games to fill the utility slot, but you can use any batter for those, so it makes sense to fill them only after a defensive position has its full quota of 162. Generally, you’ll fill it with games from outfielders, first basemen and designated hitters.

So far, I’ve assumed everyone else sticks with traditional fantasy valuation. In reality, a lot of people will start platooning. That will drive up the values of the best players, especially relief pitchers, at the expense of the others. Also, a player’s value will be highest right before his team has a game (or right before he has a start for a starting pitcher) and drop afterwards.

This last point is crucial, and changes the valuation equation again. If you follow the obvious platooning strategy above, you will lose money on each buy and sell. You might buy Carlos Beltram for $45 just before he plays on April 1, and find he’s only worth $44 after the game. No one wants to buy him until just before his next game on April 3. You can’t wait for that, because you want to sell him and use the money to buy Vladmir Guerrero for his April 2 game. These game-by-game losses will erode your initial $300. If you don’t do anything about them, you’ll be forced to choose between settling for less than the best players, or not filling all your innings and games. You won’t be able to keep enough stars in play to add up to 162 games per batting slot and 1,300 pitching innings.

One way around this would be to use your traditional fantasy skills. You could buy relatively cheap players who deliver good stats, and hold them for price appreciation. You could watch for games in parks or against pitchers where certain batters can be expected to do much better than their average; or closers in situations likely to offer a save opportunity.

You may have noticed that my entire discussion has ignored these factors, in fact anything to do with baseball or talent evaluation. Professional traders in the financial markets have to know little or nothing about the underlying economics of what they trade. You may now see why that’s true. My strategies demand only basic projections of value that any casual fan would have, or can be easily found on the internet. I’m going to concentrate on analysis that assumes you do not have superior knowledge of baseball. If you do have that knowledge, you can use it to refine the strategies. But trading skills are far more important than baseball skills at

The trader’s way to recoup the money lost from buying players just before games and selling them right afterwards is to lend out spare cash. Suppose, for example, that at one point you are playing only four players for some reason, with $150 total salary. You have $150 idle. You can use this to buy players who have just finished games, with the idea of selling them just before their next games. You should earn a reliable profit doing that, replacing losses from other transactions. In the financial market, this is known as a “reverse repo” transaction (for “repurchase agreement,” the person on the other side, who is effectively borrowing your $150, is doing a repo). You are doing a mental reverse repo, that is you have made up your mind to resell the player and are buying him only to earn interest on spare cash; in a real reverse repo you sign a contract to resell him. The repo market is one of the most common ways a trading organization earns interest on its spare cash, or borrows extra money to fund short-term trading positions.

One danger in all this is holding a player at the time he gets injured. You might buy him for $40, planning to sell him for $38 after the game. In your mind, you’re renting him for one game for $2. But if he gets a season-ending injury, you lose the entire $40. And injuries are just an extreme case of value volatility. A player’s value may fluctuate depending on his performance or other factors. If he has a bad game, you may end up paying $4 as his price drops to $36 instead of $38. If he has a good game, you might get him free, or even earn a profit from having him.

That’s why the real world developed futures markets. If added those, you could buy him for $40, agree in advance to sell him for $38 after the game (healthy or dead, great game or terrible, it doesn’t matter). That way you get the game for $2 as you wanted. Someone else takes the risk of value volatility.

Player health and performance are not the only risks. You never know if a closer will pitch. A rain-out can wipe out the game for all players. In these cases, you don’t lose principal, but you don’t earn the expected return. An east-coast game may go into extra innings, frustrating your plans to sell one of the players in it to buy a player for a west-coast game the same day. You don’t lose money on your long position (owning the player), but the funding costs were higher than expected (you pay “interest” over two game windows instead of one), which has the same effect.

The next evolution in the real world is specialized institutions to help with these activities by trading in the markets, just like other participants. One institution might take spare cash from owners and pay a fixed rate of interest, then use the money to hold players in between games. It is effectively providing banking and insurance services to other owners. Another institution might sell derivatives, such as the stats to the next game a pitcher pitches, regardless of the day it happens, or the stats to his next nine full innings, or the best stats posted by any shortstop on a given day. This allows owners to pursue more flexible strategies, while financial engineers can create the derivative payoffs by buying and selling in the underlying player market. These institutions cannot evolve at, because you can’t transfer money among players, and the institutions would build up a lot of fantasy cash in profit, but that would be worthless without stats.

Another difference between and real markets is that you cannot short players. In a fully-efficient market, you can sell players you don’t own (called “shorting”). Their stats would be subtracted from your totals, but you could use the money from selling them to buy other players who would (hopefully) more than make up for that. You would also hope the players you shorted went down in value, so you could buy them back for less than the original sales price; thereby making a profit. You could short players between games, effectively borrowing money to field a more expensive team than your bankroll supports. Your stats wouldn’t suffer, because the player wouldn’t play. But since player value tends to rise in between games, you pay an expected cost for this borrowing. Another strategy would be to leverage your slots by buying games from all-stars, then shorting scrubs to reduce your games-played total without much decrease to your point total. This could dramatically increase the gain when you’re doing well, but increase the losses by the same ratio when you’re doing badly. One effect of shorting is that true scrubs would acquire negative values, you would be paid to own them, and would have to pay to remove them from your roster.

A key economic statistic in the world is the interest rate versus the cost-per-game of owning a player. If the effective interest rate is relatively high, team owners can pursue the platooning strategy without much constraint. All the value will be concentrated in the top players. But if the interest rate is relatively low, team owners will have to allocate more cash to holding players between games to earn interest. This will distribute value more evenly among players.

The interest rate and the cost of ownership are clearly related. If players drop a lot in value immediately after games (high cost of ownership), they can be expected to rise a lot before the next game (high interest rate). But the two amounts will not be equal, because the season has a finite length. The initial endowments ($300) set the initial prices. Rational owners who plan perfectly want to be broke by the end of the season (there’s no reward for having spare cash left in your account, or players on your roster at season end). We therefore expect inflation as the season continues. Stats have constant value, but money heads to zero value. So we expect the loss from owning a player for a game to exceed, on average, the profit earned from holding the same player between games. The average difference should be about 1/162 of the initial player value ($0.25 for a $40 player), but it could vary considerably during the season, and even become negative in some circumstances.

But not everyone has to go broke at the same rate. One owner might choose to spend recklessly at the beginning of the season, when cost of ownership is lowest, hoping to fill up his 162 games and 1,300 innings by June with an insurmountable lead (and no money or players left). Another might choose to compile no stats early in the season, holding players only when they have no games, hoping to build up a large enough bankroll to buy victory in August through September. Most owners will pursue alternating strategies, piling up stats and spending money when they judge the price of talent is relatively low, and ignoring stats to pile up money when they judge the price of talent is relatively high. And the game might not be the same for all positions. There may be times when outfielders are cheap and pitchers dear, or vice versa.

Things are complex because two prices matter. Absolute price limits the number of players you can play at one time. The price drop from before to after a game is what you have to pay for one game’s stats. Traditional fantasy owners are looking only at absolute price, and are holding full rosters all the time. Trader owners concentrate mostly on rental cost per game. They might have only 8 of their 15 roster spots filled on average, buying and selling intraday to get 15 roster spots of production without ever owning 15 players at once.

In the real world, we have the Federal Reserve (and other countries have their central banks) to worry about the relation between return on real assets (cost of owning a player during a game) and interest rates (profit from owning a player between games). The Fed can change the rules, and buy and sell securities, to keep the supply of money in line with the demand for assets. In the real world, the season doesn’t end, and the Fed doesn’t want people playing as if it does (that results in first inflation, then a crash, just like the season end in fantasy baseball). In the game, the people running have the ability to adjust several parameters. My guess is they’ll use them to keep the amount of trading high enough to distinguish from traditional fantasy leagues, but low enough that baseball acumen matters more than trading skills. I’d say that means top owners having turnover ratios of about 100% per month (the average player stays on the roster for a month); most owners will trade much less, and not be in contention as a result; owners who try to trade more will find it suboptimal. Of course, I have no connection to the site, so I could be wildly off in my guesses.

That brings up the bid/ask spread,’s primarily “lever” for regulating the marketplace. The real-world Fed regulates interest rates (it sets the Discount Rate and influences the Fed Funds rate strongly), has instead chosen to regulate via real asset returns. The example in the rules is $0.50 on a $30 athlete. It’s not a true bid/ask spread, it is a transaction cost imposed by the market regulator.

If all owners played perfectly, the bid/ask spread should eat up endowments over the course of the season so everyone ends up broke. At $0.50 per trade, that’s 600 trades. If the entire $300 were eaten up by bid/ask spread, there would be nothing left for a spread between interest rates and the cost of owning a player. Player values would stay constant, on average, throughout the season. The natural inflation of the economy from the season winding down would be kept in check by removing money from the system via transaction fees.

It doesn’t take a prophet to know owners will be far from perfect. Many will sign up and never look at the site again. Others will fall behind in their leagues, and be far out of the running for the overall cash prizes, and give up. Many who do play actively will fail to grasp the difference between and traditional fantasy leagues, and will buy and hold good players, hoping for good stats and price appreciation.

Since lots of owners will not be thinking in terms of spending their money and ending up broke, not all the initial endowments will be eaten up by transaction costs. Active owners will spend some of their $300 on net losses from owning players during games versus earning income by holding players between games. This extra money will go to the smarter traditional owners, who will use it to improve gradually the quality of their teams through long-term acquisitions. Some of them will end the season with an all-star roster valued at $600 or more, but without filling their quotas of 162 games per spot or 1,300 innings, and without getting major-league best stats from the games they do have. We’d expect Warren Buffet to play this way if he enters. They’ll win their local leagues with huge leads over owners who didn’t trade much, or who relied upon baseball acumen rather than economics, but they won’t be in contention for the overall money spots. The $100,000 will go to a hedge fund guy with great trading skills and the luck not to blow up.

Because there is a net cost of ownership (you lose more money owning a player for a game than you gain holding him between games), the entire $300 initial endowment is not available to pay bid/ask spreads, so owners should trade fewer than 600 times per year. The average price of players has to fall, because money is leaving the system but players aren’t. Top player values should increase. This will be more than offset by decline in the values of lesser players. The decline will start from the bottom, the players with lowest initial values will fall to zero, as owners fill up position slots with 162 games. If you want to win your league without much effort, draft only closers, stars and scrubs, then swap them for all starting pitchers and second-tier players as the season progresses.

If you want to win the $100,000, my advice is to draft the seven best relief pitchers you can get, then trade up for better ones as soon as the market opens. Use your additional money, if any, to buy only stars and scrubs. Focus entirely on closers, activating your four best ones for every game opportunity and swapping in the trading market to pick up extra innings (that is, if you don’t have four closers playing at any given time, sell one to buy a closer who is playing). Your goal is to accumulate closer innings as quickly as possible.

Never play a starting pitcher, this uses up precious pitching innings. Don’t worry about your batting slots. Use your extra money, when available, to purchase stars; but never miss a closer opportunity to get a superstar hitter. You’ll make up your hitting games later in the season.

As people catch on to the game, the value of closers and star hitters will soar. Since you’ll have lots of closer innings already, you will be able to take profits to buy more star hitters. With luck, you’ll be able to fill up 162 games at each hitting slot, using only stars. As the season progresses, you may find that even with your profits from owning relief pitchers and stars early, the price of top hitters has increased so you can’t play enough of them at a time to get your full quota of games. If that happens, you’ll have to drop down in hitter quality. Remember, even a player with zero value in a buy-and-hold league produces valuable stats. The 13th best player at a position typically gives you about 2/3 of the points of the best player. You don’t want to waste games early on average major leaguers, because you might be able to fill them later with stars. But if it becomes clear you cannot fill your games with stars, don’t miss the opportunity to fill them period.

So focus on closers, then on batting stars, platoon early, chart interest rates and player-ownership costs, seize the best available opportunities whether for stats or cash and figure you can even things out later; and be sure to invite me for the party celebrating your $100,000 payout.

Thursday, March 1, 2007

Position Scarcity

Will there be position scarcity in Rotohog? I've attempted to answer that question by determining the project points that a 'replacement level' player at each position should accumulate. These are the players that figure to be mostly unowned, and available for little to nothing:

1. I took all the ZIPS projections and used those to calculate expected points for each hitter based on Rotohog's scoring system.

2. For 1B, 2B, 3B, SS, and C I determined the points value of the 13th player. These #s were: 1B-752 , 2B-610 , 3B-715 , SS-632 , C-473.

3. I did the same thing for the 37th outfielder, whose points value turned out to be 679.

4. Of the players I hadn't 'used up' already, I took the next twelve overall (for the 'utility' position). The 13th had a points value of 676.

5. Rotohog has three bench spots on the roster, which can be used for hitters or pitchers. If you assume that on average one of these will be a hitter, eliminating the next twelve hitters brings you to a points value of 653. If you assume that people will generally carry two hitters on the bench, you're down to 636.

This was definitely a pretty crude process. ZIPS projections don't capture a lot of known information about expected playing time. I was assigning positions by what was in the ZIPS data, not what position the players are classified by in Rotohog, and I'm sure there are other substantial 'errors' as well. That said, I think this process should paint a pretty clear picture of where the position scarcity lies in Rotohog.

There is a very slight scarcity issue at second base, but probably small enough that it can be ignored when assigning values to players. There is a much more substantial position scarcity premium for catchers however! The replacement level catchers that are unowned and can be picked up for almost nothing are going to average almost 150 points worse than at any other position!


Paul Greco at Fantasy Baseball Guy had the following to say about me...

"For me, what Alex is doing is great. He’s a better man then me for explain how to win $100,000. Or is he doing this to throw you off? Hmmmm."

I think Paul was kidding, but this is actually something I've been planning to address. I should tell everyone right up front: I will win the $100,000. You guys are playing for 2nd place. That said, I can promise two things:

1. The information I provide will never be deliberately misleading, and should be very valuable in helping you to a strong performance in Rotohog.

2. The information I provide will leave out a portion of what I'm thinking or planning for my Rotohog strategy. A percentage of the very juiciest, most valuable information is either going to be a secret until its too late to help anyone beat me in the competition, or I may choose to provide it all as part of a Rotohog Strategy Guide that I would charge a substantial amount for. I'll be making a decision on that in the next week or two, depending on how much interest in the guide I think there would be, and how much material I'm able to put together soon enough to do people some good doing into their drafts.

If you haven't already registered, go to Rotohog and sign up. Make sure to enter 'waiverwire' (without the quotes) into the referral code field to let them know we sent you. And then join The Waiver Wire league for some friendly competition.

Why I Can't Sleep at Night

As you may have gathered, I've become completely obsessed with figuring out the correct strategy to win at Rotohog. I'm focused on it to such an extent that I may not play in any other fantasy baseball leagues this season, although I haven't decided that for sure yet.

Why am I so obsessed with 'figuring out' Rotohog? Why is thinking about it keeping me up at night? Because nobody has ever done this before. For normal fantasy league strategy, plenty of people have a pretty good idea what to do, and any adjustments are minor. But in Rotohog, we really have no idea what will happen! Nobody has ever done fantasy baseball league drafts where everyone picks simultaneously. How will that affect strategy? Nobody has ever done fantasy baseball where 100,000 people can trade with eachother on an open market. How will that affect winning strategy?

One thing that's become clear is that a lot of really bad advice will be given. People who should know better will not do the work necessary to give accurate advice on how to win at Rotohog, instead just recycling the work they've done for other types of rotisserie league strategy. I went to bed last night thinking that less than 5% of the 100,000 will go into the draft with reasonable strategy plan and reasonable player valuations. After reading some of the advice available on the internet earlier this morning, I'm going to revise that opinion to less than 1%. Probably substantially less. That means that of the 100,000 entrants, at least 99,000 will come out of the draft with virtually no shot at winning, no matter what they do for the rest of the season. That's great news for those of us who hope and expect to be part of the remaining 1%. Not considering anything other than the likely results of the drafts, our 'equity' in the $160K+ total prize pool is $160 each!!!

Player Valuation

I'll be talking a lot more about player valuation in Rotohog as the draft approaches, but one thing that should be obvious is that you can't just use rankings or valuations designed for other fantasy baseball games and expect to have a shot at winning the $100K. The rules and scoring system for Rotohog are unique, and you're going to have to calculate valuations specifically for this game. I haven't read the book shown below yet, but I'm looking forward to doing so. It's written by a finance guy, and I expect it to be an interesting read and provide a good theoretical framework for creating your own player valuations.