The Long Game: The FAAB and How to Swing it

When it comes to handling your FAAB budget in fantasy leagues, there are two main philosophies. One strategy involves a very active approach, as you constantly churn the bottom of your roster looking for potential value. Typically, this strategy features a lot of small dollar transactions with the occasional foray into higher salary territory in specific circumstances (a newly minted closer, for instance).

The other strategy involves holding back your budget for surer things and making sure you get them with big bids, whether it be those aforementioned newly minted closers or stars traded into the player pool in AL-only and NL-only leagues. While your opponents bleed their budgets with smaller pickups, you position yourself to be the team that can guarantee the acquisition of real difference-makers when they appear.

In re-draft leagues, you can make solid arguments for either style, and in NFBC-style leagues with $1,000 budgets instead of $100 you can even blend the two, making micro-bids of less than 1 percent of your budget until you judge the time is right to strike with a massive bid. In keeper leagues, however, owners who hang back and use a big bid strategy are voluntarily putting themselves at a serious competitive disadvantage.

Keepers Not Rentals

This may seem obvious, but it's an easy thing to forget. In a keeper league, you should always be looking to get the best players at the lowest possible salaries. Owners who adopt a big-bid approach focus on the first part of that equation at the expense of the second, by waiting until the player's role and/or playing time have become clearer. It makes the player a "safer" buy, in the sense that you have a better idea of what kind of production he'll get you, but also drives up his price and makes him a one-year rental rather than a potential keeper. To get players at those lowest possible salaries, an owner has to be more aggressive in his bidding. Rather that wait for a reliever to be named closer, or for a veteran outfielder to replace a struggling rookie, go after those players while their job descriptions are still modest. Sure, the odds are better that the player you buy might not pan out (either because the incumbent turns things around or because someone else ended up emerging and grabbing the starting role instead) but when you do make the right call you not only get the same amount of value from the player that you would have gotten had you waited a week or two until his manager made it official, you get that value at a fraction of the salary, and that should always be the primary goal in keeper leagues. And when you do get a buy wrong, as you will from time to time, the blow to your FAAB budget is a lot less painful.

Even if you're competing for a title this year instead of building for the future, it's important to bring in new talent as cheaply as possible simply because it gives you more assets for dump deals. A player bought at or above his market value won't be of interest to a rebuilding team. A player bought for even a little less than his earnings, however, can potentially be flipped for a more valuable player with a higher salary or expiring contract.

To pick an example from this season that's been dominating fantasy chatter, in the Rotowire Staff Keeper league (an 18-team mixed 5x5 with fairly deep reserve and minor league lists) Miguel Castro wasn't on anyone's radar as a major leaguer when we held the auction in late March, and snuck through the reserve/minors draft unclaimed, not a huge surprise for a player who was simply one of dozens of unproven Single-A pitchers with big fastballs. When we did our first FAAB period just as the regular season began, though, I had a reserve spot to churn and thought, "Hey, the kid has a live arm and a big-league job, and Brett Cecil is hardly an elite closer, so what the heck" and tossed a $3 bid Castro's way as my first alternate to another small bid on Zach McAllister. I got outbid on McAllister, lucked into Castro instead, and three days later he had his first big league save. Jason Grilli, on the other hand, had already been all but named the Braves' closer following the Craig Kimbrel trade and went for $37 in that same FAAB period. Will Grilli produce more value than Castro in 2015? It's likely, but hardly a lock. Will he be a keeper in 2016 at that salary? Absolutely not. Instead of the "sure thing" I have a player who could provide me value in the short term and long term, or who I could potentially flip for short-term assets worth as much or more than Grilli later this season, as well as $34 more FAAB dollars to play with the rest of the year than the other owner.

In short, to paraphrase Branch Rickey: buy a player a week too early rather than a week too late.

The Winner's Curse

The "winner's curse" is an economic theory stating that the winner of any auction, where the bidders have equal knowledge of and equal use for the item up for bid, is likely to overpay for that item. The average of the valuations of the bidders might accurately reflect the true value of the item, but it's not the average bid that wins, it's the furthest outlier that brings it home. Fantasy baseball free-agent auctions don't quite conform to that theoretical ideal, as different owners will have different needs at any given time, but it's still an important concept to keep in mind. If you're only focused on making big bids on free agents with established perceived value, your choices essentially come down to winning those hotly-contested auctions and overpaying for those wins, or losing the auctions and having nothing to show for your FAAB dollars. Sure, every once in a while a big winning bid might prove to be worth it, but in the long run a big-bid strategy will prove to be a loser in terms of getting bang for your bucks.

While the "winner's curse" will also affect the owner who makes more frequent, smaller bids, that owner greatly improves his chances of mitigating or avoiding its effects. The math behind the "winner's curse" theory suggests that it has a stronger impact when more people are involved in the auction. The larger the pool of bidders, the more likely it is that the winning outlier bid is going to overshoot the true value of the player being bought, and by a wider margin. Conversely, the fewer people in on the bidding, the better the odds that you actually get a bargain, or at least acquire the player at about his true value. Again, let's look at the Castro/Grilli situation. I was the only bidder on Miguel Castro, while 13 of the Staff League's 18 owners were in on Grilli. It won't take much for Castro to earn $3 in salary, but Grilli has no chance of earning $37.

Leagues that have adopted Vickery-style auctions (in which the winning bidder only has to pay $1 more than the next-lowest bid) mitigate the "winner's curse" to some extent, but don't eliminate it entirely. If the Staff League used Vickery auctions, Grilli's salary would be $32 instead $37, not much of a savings and certainly not enough to change the general picture.

This is not to say that it's bad to win an auction. Taken to extremes, you'd rather have one $100 player earning $50 than a hundred $1 players earning $2 each, simply because you only have 23 rosters spots to put them in. Getting the player you want, especially when he fills a specific need, is usually a win, and most owners are conditioned not to expect a one-for-one ratio between their FAAB budget and the amount of value it nets them anyway. If all you need to lock up a title is one more closer, and the largest remaining FAAB budget from any of your fellow owners is $76, you are perfectly justified in bidding $77. Flags fly forever and all that. But in the general week-to-week of FAAB management, a small winning bid stands a better chance of returning "true" value than a big winning bid.

Salary Caps and Trade Restrictions

Another reason to go small-ball is the proliferation of rules regarding in-season salary caps, limiting dump deals, and generally making life miserable for fantasy owners. For example, the Staff League has an in-season salary cap of $360 (essentially your $260 auction budget plus your $100 FAAB budget). At no time can your combined active and reserve roster salaries exceed that amount. In that league, adding a $37 closer like Grilli doesn't seem like too big a handicap ... except when you consider that auction inflation in the league produces abominations like a $67 Clayton Kershaw and a $58 Andrew McCutchen. If the Grilli owner wants to trade for either of those players later in the season as part of a title push, they may find it extremely difficult to find a way to bring those high-ticket players aboard.

Other common rules involve restrictions on players who receive FAAB bids above a certain amount ($25, for instance), where such players are forced to be retained the following season, or can't be traded unless the owner is receiving a player with a similar salary back. Leagues with those rules in place tend to push owners into not exceeding that limit anyway, putting an artificial cap on FAAB bidding, but in the event that you do judge a player worth spending that much on, he limits your roster flexibility. Ideally you don't want to trade or drop him and it isn't an issue, but all it takes is one visit to Dr. Andrews to turn that FAAB'ed $30 ace into a $30 albatross.

FAAB Inflation

The final nail in the big-bid strategy coffin is provided by the calendar. A baseball season is only six months, and every week that ticks by is a week of potential value lost that you could have added to your roster through your FAAB budget. A player who ends up earning $15 on the season bought in early April can add more total value to your roster than a $25 player added in late July with a big trade deadline buy. Worse than that, though, every week that slips by also reduces the value of your remaining FAAB budget.

FAAB dollars have a limited shelf life. You can't carry them over to next season. Just as at the auction table, every dollar you don't spend is a dollar wasted. What this means in practice is that as the season progresses, the pressure to spend your FAAB increases. Bids go up as the summer drags on simply because owners become paranoid that there might not be anybody else worth throwing their money at.

If you plotted those two trends on a graph, you'd find that the total cumulative earnings of FAAB buys drops over time (since, obviously, there's less time for them to earn it), while the average FAAB dollars spent on individual bids increases. The lines wouldn't be smooth, of course, but the overall slopes would be clear, and the gap between spending and earnings would widen as the months go by. Just as in normal economic terms a dollar earned this year is worth more than a dollar earned next year due to inflation, generally speaking a FAAB dollar spent in April has a better ROI than a FAAB dollar spent in August. And while there's something to be said for the idea that buys made later in the season can be more "valuable" in the sense that they will better address needs that might not be apparent (or even exist) earlier in the year, only in rare cases will that utility be enough to compensate for that widening ROI gap.

Of course, if every owner in your league adopts an aggressive, small-ball FAAB strategy, there will be more competition for trendy "sleeper" picks (those aforementioned pre-closers and veterans looking to bump aside slumping rookies) and their prices will go up. At a certain point the balance in value might tip back toward the more patient, big-bid owner, as the "winner's curse" chews up a larger and larger slice of other owners' budgets. The primary value in an aggressive, small-ball bid strategy is that uncertainty over role and production keeps the salaries of your acquisitions down, but the lower a discount you get due to that uncertainty, the more the utility of having accurate information on a player's future playing time goes up.

Even in those environments, however, you should still try to make smart bids on players before their earnings potential is established. After all, the worst-case scenario if you still get outbid on those players is that you'll have more money later in the season to fall back on that sub-optimal big-bid strategy as a last resort.