Joe Posnanski has a theory why so many lower budget teams are doing well this year. I like that he doesn’t say it is definitively the Age of Peds, but includes that possibility in with some of the other things going on at the end of the last millennium.
The New York TImes has an informative story today about the rise of the daily fantasy baseball game, which has been embraced by MLBAM and managed to avoid being classified as a game of chance.
The writer quotes a guy who says he works 35 hours a week playing the game and made $50,000 last year, which seems very possible. It also mentions a recent surge of casual players who are increasing the pools. It might be time to start playing.
Cory Albertson has, according to the story, put together an algorithm that helps him put together many daily fantasy lineups on any given day, which allows him to enter many fantasy contests and overall make him money. Not every day, the story says a couple of times, but overall. He expects to make $1,000,000 this year, he says.
He makes so much money, according to the story, that he went out and test drove a Tesla!
Yes, that’s my snark. There are a few red flags in this story that challenge the writer’s competence or veracity. For one thing, AlbertsonÂ didn’t buy an expensive car, he test drove one. And he broke the speed limit!
For another, Brad Regan, the writer, blithely reports that Albertson got into the game because a friend started a Daily Sports Fantasy Game last year and waived theÂ fees so that Albertson would help populate the board, making it look like his contests were more popular than they were.
The biggest impediment to winning any gambling game, from daily fantasy basketball to trading stocks as a day trader to online poker to horse racing, is the takeout. That is, you and the other players may put in $100 in money into the pot, but the service rakes some of that for itself, before they pay out some lesser percentage to the winners. That’s how they make money. It should be needless to say, that if your bets are not raked you have a much better chance of winning than if they are.
ReganÂ doesn’t pursue the question of whether Albertson is now subject to the house fees. He doesn’t discuss how much the house usually takes out of a daily fantasy pot when Albertson isn’t playing. He leaves out the single most important piece of the way the business works, while pitching us that Albertson is some new breed of non-gambler who uses data to drive his decisions.
I say Non-gambler because Albertson tries to make the case that betting on Daily Fantasy Sports isn’t a gamble, because he uses his algorithm, which apparently takes all the subjectivity out of it. You can be the judge of that judgment, intellectual and ethical. I say, no wonder Albertson’s religious parents remain concerned about him.
The other interesting bit comes when Andrew Wiggins, who started DraftDay, a daily fantasy game service, talks about the need to get casual players to play. The idea is that the small fish, who might put up a $10 or $20 bid on a daily fantasy team, will drive the growth of the game. That’s what Wiggins wants, because he gets a cut out of every bet made.
But Regan quotes Albertson deftly crushing Wiggins’ dream: The smart guys, Albertson says, will feast on the casual player. This, as Wiggins surely knows (he and I played in a fantasy baseball league that was populated with some professional poker players who feasted on online poker guppies, back in the day before that business collapsed for legal reasons, as well as this inconvenient fact), is surely what will happen.
That imbalance, when heavy advertising is drawing in fresh blood, is one reason that a shark like Albertson and his algorithm might legitimately be doing well. Seasoned players with good data will crush the haphazard random player, the way a card sharp will crush a county fair card game if you give him enough time (but watch out for the rake, it’s going to charity).
Right now daily fantasy sports are a young and growing business. They have appeal to skilled and less-skilled players because of the short results horizon. I can see the appeal, but any smart story about the game should really talk about the way it works, and not pitch some fairy tale get rich quick by working hard line that reads more like a slow pitch PR piece for the industry than the human interest storyÂ is is dressed up as.
I don’t know that Cory Albertson didn’t make $200,000 playing daily fantasy sports, and if he did I don’t know for sure that he won because he didn’t have to pay the fees that normal fantasy players would usually have to pay. I do know that this story and its failure to accurately describe the way the games work casts doubt on every part of the story that can’t be fact checked.
Ken Rosenthal has an excellent piece out today at Fox Sports.
He alludes to something I have long thought had gotten lost in the long history of baseball and PEDs: The union’s opposition to drug testing back in the 90s. The story is usually told that the union looked the other way, or resisted baseball’s efforts (especially in the early part of the decade) to get or stay clean. But this Â simply isn’t true.
The union’s resistance to drug testing and other enforcement procedures was based on its obligation to protect player rights, as well as a profound lack of trust in the owners. Remember that this period coincides with the massive triple-damages award in the collusion ruling against MLB and Peter Ueberroth (based on their 1985-1987 efforts stifle the free agent market).
This was also the time of the run up to the owner’s massive (and failed) attempt to crack the union by shutting down baseball in midseason in 1994.
Oh, and this was also when George Steinbrenner accepted a “lifetime” ban from the game because he had hired a whole lot of shadiness to try to extract himself from his obligations to Dave Winfield by tarnishing Winfield’s reputation.
The union’s position that ownership could not be trusted was well earned.
In the A-Rod case, as Rosenthal points out, MLB sued Biogenesis owner Tony Bosch in order to pressure him to testify against A-Rod. Whether they could have won that case is doubtful, but there is no doubt that Bosch was in no position to pay for a defense. This is the place where the player’s union could have stepped in to protect not only A-Rod but all players’ rights, but declined. Rosenthal writes:
“Rodriguezâ€™s legal team could have made its case without attacking Weiner, who died of brain cancer on Nov. 21. But one of the teamâ€™s central points â€“ that the union should have acted to stop baseball from its â€œshamâ€ lawsuit against Biogenesis â€“ is a fair criticism, particularly in hindsight.”
But Rosenthal also points out the bind that the union was in. On first blush, a countersuit would certainly have looked like they were defending drug use, just as history says they were defending it back in the 90s when they were trying to protect against just such a situation with MLB running over player rights.
The silver lining for A-Rod (and could the union have had the foresight to defend him by going at it this way?) is that perhaps his only chance of winning his lawsuit against MLB is to show that his union failed to represent him competently.
Deadspin has published a takeout of “King of Sleaze Mountain” super agent Dan Lozano based on anonymous files it was sent recently. It is no endorsement of Lozano and his behavior over the years to say that this story of a preternaturally adept chameleonic salesmanship and cheesy hooker procurement leaves one feeling a little dirty, because there are only two real issues that seem to have legal legs and a sports implication:
Does Alex Rodriguez own part of Lozano’s business? This is not allowed under the rules of baseball, I gather, for all the obvious ethical reasons you can imagine, but there is some evidence that he does, and Deadspin doesn’t dig beneath the surface of the accusation to find out if that evidence is real or not. And,
Did Lozano push Albert Pujols into an ill-advised contract back in 2004 in order to generate cash flow he needed personally? Again, Deadspin makes the accusation and leaves it at that.
My friend, Cardinals-watching Brian Walton, didn’t leave it at that, and takes a look at the facts of what happened in 2004 with Lozano, the Cards and Pujols at scout.com. You can read his excellent piece at stlcardinals.scout.com.
All we can say to Deadspin is, That wasn’t hard now, was it?
Over the winter I came up with the idea of posting a Tout Wars Leaderboard at toutwars.com. The idea would be to assign an entry fee for each team, and then award prizes at the end of the season reflecting the payout, based on the number of teams in the league (since we have 12 in AL, 13 in NL, and have had anywhere from 12 to 17 in the Mixed league).
One sensitive issue was the prevailing ethos when the first 12 years of Tout Wars were played, which said that, “Second place is first loser.” I know that there were times when, dealt a tough hand, I made the high-risk high-reward (if only) trade rather than grind into battle for fourth place, the way I would have if there was money at stake. I’m certain others played this way, too, so these retroactive results are imposed from above. They don’t reflect how behavior might have been changed if this way of measuring was known when the games were played. In spite of this limitation, I forged forward.
Choosing a $100 entry fee was easy. It’s round, easy to average, like an index. Done.
Deciding how to pay out fairly was more complicated. I’m not going to go into all the round and around I did, but I decided to pay out to the top 33 percent of the teams in each league. In 12 and 13 team leagues this means the top four teams are paid. In 14-16 team leagues five teams are paid. In 17-19 team leagues 6 teams are paid. This seemed in keeping with the original roto rules of Top 4 being paid in a 12 team league.
But the standard roto payout is the somewhat awkward 50-25-15-10, which not only isn’t linear, but it doesn’t scale to the larger-sized league payouts. Since the idea was to compare across leagues, the payout reflecting the difficulty of prevailing, it seemed to me to be a good practice to have the percentages be fairly consistent as they scale up. So I made a simple equation, assigning X to the last money spot and then doubling the value of X for each higher spot. For a 12 team league this looks like: 1x+2x+4x+ 8x. In this case x = 1200/15 = 80. The payouts go:
Sweet. The same process was used in the larger leagues, all of which–I think–does a fairly good job of representing the value we take away from our standard roto leagues, which were the models for Tout Wars. But this isn’t the only way to do this.
I’ve played (and play) in leagues with a more graduated payout. That is, last place may get nothing, and each place up the standings earns a little something more than the one below it. This is more like the way real baseball works. It isn’t all or nothing between fourth and fifth, but a graduated scale reflecting success in winning and managing costs. It would certainly be instructive if we could see the profil/loss statements for the actual teams in addition to the won/lost records. A graduated payout changes the way teams play, since there isn’t the same desperation to get into the money, but there is incentive to win more money.
I’ve played in leagues with no salary cap, where you could spend as much or as little as you wanted (and deemed prudent), in order to win a percentage of the pool. This, I found, turned out to be less interesting than (I think, because we never got that game together) )if we’d played for fixed amounts for first, second, third and fourth, with no salary cap, and any extra money that was spent was paid to those who finished fifth, sixth, seventh and so on, down to next to last.
I’ve also played in winner take all games, and others that paid bonuses for rare events, like no-hitters and hitting for the cycle, or allowed the roster to carry over into the post season, for a second pool. These payouts weren’t major enough to change regular season play, but if they were incentives might be skewed and teams might play differently. The point is that designing the payout structure of your league (which pertains even if you don’t play for actual money) reflects decisions you’re making about how you value winning, being the runner up, the importance of participation all season long, and a host of other things that make your game fun or more or less so.
There isn’t a right or wrong way in the end, but whatever decisions you make will inevitably reflect the values you bring to the game and the value of winning (or not). That’s pretty darn interesting, if you ask me, and relates to whole lot of things we do outside of our fantasy sports pursuits.
I’ve mentioned my friend Les Leopold’s book, The Looting of America, here before. But a review at toomuchonline.com, does a better job than I can recommending the book and explaining what it has to do with fantasy baseball. I copy the whole thing here because the website doesn’t seem to offer permalinks to individual pages. Forgive me:
Can a Book on Derivatives Be Delightful?
Les Leopold,Â The Looting of America: How Wall Streetâ€™s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity. Chelsea Green Publishing, 2009. 220 pp.
Great teachers love metaphors. To help learners grasp the unfamiliar, great teachers â€” like Les Leopold, the founder of the respected Labor Institute in New York â€” latch on to realities students already understand. Leopold has been using metaphors, for decades, to help working men and women understand how our economy really works.
But two years ago, amid the gathering Wall Street storms, Leopold suddenly realized that, as a teacher, he really didnâ€™t understand the high-finance â€œinnovationsâ€ just then beginning to crash into the headlines, the CDOs and the swaps, the tranches and the quants.
So Leopold set about to educate himself on Wall Streetâ€™s innards, and now heâ€™s sharing what he has learned â€” in an energizing and remarkably entertaining new book,The Looting of America.
The bookâ€™s core, perhaps not surprisingly, revolves around a delightfully insightful metaphor. If you really want to comprehend how Wall Street has melted down our economy, Leopold suggests, give a look to fantasy baseball.
In fantasy baseball, groups of baseball fans create their own â€œteamsâ€ and stock them with players they pick from lists of real-life baseball players. If the players you pick for your fantasy team do well on the real-life baseball diamond â€” if they hit lots of homers, for instance â€” your fantasy team will do well.
Your fantasy team, in effect, â€œderivesâ€ value from real baseball. You have no actual relationship to this real baseball. But you can still make money, playing fantasy baseball, if the real-life players you pick for your fantasy team put up better numbers than the players your fantasy league competitors pick.
â€œIn effect,â€ explains Leopold, â€œyou are speculating on the stats derived from real major league players, but those players donâ€™t know theyâ€™re playing on your team.â€
This same sort of speculation, over recent years, has been driving Wall Street. We have â€œfantasy finance.â€ Bankers and traders have created a sticky global web of â€œderivativesâ€ â€” collateralized debt obligations, credit default swaps, and more â€” that bear the same relationship to the â€œrealâ€ economy as fantasy baseball bears to real balls and strikes.
In the â€œoldâ€ days, bankers and tradersÂ bought and sold claims to real things. Owning a stock entitled you to a stake in a real enterprise. Holding a mortgage gave you a claim to an actual home. In fantasy finance, bankers and traders donâ€™t have to hold a claim on anything real. They buy and sell financial products that only â€œderiveâ€ their value from real economic activity.
Bankers, for instance, can sell you a â€œderivativeâ€ that will rise in value if the price of oil goes up. They donâ€™t have to own any oil to sell you this derivative. They can create derivatives based on anything.