ASK ROTOMAN: What is FAAB Worth?

Dear Rotoman:

I was thinking about redeeming the DLed Nate Jones in Tout Wars AL, which got me thinking about FAAB, Vickrey bidding and being in last place a few weeks after the season starts. I wrote about it here at USA Today.

Does it make sense to add Jones’ $14 now? Or should I wait to see if he can get healthy and reclaim the closer job in Chicago?

“Ron Shandler”

Dear Ron,

I had some thoughts about your recent column and thought they made a better topic here than at your various discussion boards. Though perhaps I’ll show up at those, too.

You raise a few interesting issues that I wanted to touch on.

I will admit that I thought the Tout Wars redemption process was going to be a disaster. It has instead been a great success. (I thought the same about FAAB trading as well, and was wrong about that, too.) In Tout Wars teams are allowed to cut any player on the DL and reclaim their draft day price as FAAB up until the All Star break—after which they can reclaim half their draft day price as FAAB.

The  usual dynamic for redemption is determining how long a player will be out, versus his utility when/if he returns, filtered by the value of the added FAAB. This means that guys who are out for a while, but who may not be out all season, can reside on a team’s unlimited DL reserve until it becomes clear that the extra FAAB is going to matter (as we approach the break, and the interleague trading deadline).

What makes Nate Jones interesting is that he could return to the bullpen eventually and not gain the closing job, which would pretty much waste his $14. That’s a good reason to cut him and reclaim his bid price, though at this point he’s not close to returning, and it is pretty unlikely that the $14 you add to your FAAB total will have any utility at all until much later in the season.

For those reasons, I suggest waiting until he’s either done for the year, close to returning as a non-closer, or you need the $14 to buy something better.

As for Vickrey, the bidding auction system that we use in Tout Wars, it awards the FAAB player to the highest bidder, but reduces their cost to $1 more than the second highest bidder. Cory Schwartz was quoted earlier this week about how he thinks Vickrey just randomizes the process, and he doesn’t like it, but his bidding last week in Tout Mixed Auction is a prime example of Vickrey’s importance and why you and I like it.

As we all know, there were some closers available in last week’s bidding. Cory decided he needed one of them. Zach Steinhorn agreed with Cory that the best available closer was Francisco Rodriguez. Zach bid an aggressive $33, but Cory trumped him by bidding $60, which was then reduced a la Vickrey to $34. One can look at this as Cory “saving” $26, but it is a fairer evaluation of Vickrey to say that Cory bid aggressively because he wanted K-Rod most. Such overbids are made knowing that someone else who did the same thing would raise the price of K-Rod a lot, but that was a price Cory was willing to pay. The stated intention of Vickrey auctions are to limit system rigging, since bidders are encouraged to bid the absolute most they’re willing to pay (knowing that if they value more than the market they won’t have to pay their full price). Cory bid what he was willing to pay, and since no one else would pay as much, he ended up with a discount, as it were. That’s a feature, not a bug.

Where Vickrey excels is when there are a number of bidders. Where Vickrey falters is on the players for whom there is a limited market. With only 12 or 15 teams in a league, many without holes at particular positions, there may only be one or two teams looking for a player at a particular position. There may only be one or two of those players at that position available. One of those teams may value one of those players a lot, but chances are, even if he bids aggressively, his bid will be reduced to $1 or a few dollars because there was no market for that player. That seems to me to distort the bidding process.

For a couple years we played in Tout Wars with a $10 floor on bidding. If you bid $10 or less, that was the price you would pay if you won, with no reductions. If you bid $10 or more and no one else bid more than $10, your winning bid would be reduced to $10. If two bids exceeded $10 the standard Vickrey rules applied. The idea was to increase the cost of roster churning at the low end, where the market is less than robust. Many objected to this, saying they thought that if we were going to play with Vickrey we should play pure Vickrey. After a rule change, that’s the way we play now, and while I still think it makes the low-level bidding somewhat arbitrary, it isn’t really a problem.

I recommend Vickrey bidding for the most contested players, but the use of a floor for the cheap bidding. That’s the best balance in my opinion.

Okay, back to FAAB and inseason values. One rule that might help us find the balance between Draft Day dollars and FAAB dollars would be to combine the two. Let’s say teams are given $360 on auction day, and are told that they can spend as much of that as they like, with the balance ending up as their available FAAB balance. How much would they actually spend on Draft Day?

Or, less radically, you’re restricted to the $260 for your regular team, but then can bid FAAB $ for the reserve rounds.

By increasing the porousness between Draft Dollars and FAAB budgets, we open up ways for teams to play different strategies at the draft table, in the reserve rounds and all season long during waivers and claims.

Earlier this year I looked at how many stats were available via FAAB and claims in the NL and Mixed Leagues. This is what our money goes to buy on draft day versus what we’re able to add as the season progresses. Would that number change if we spent more cash on draft day and had less available for inseason buys? It sure looks to me that paying more on draft day is the way to go.