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Keepers and Optimal Bidding
by David Luciani
Published February 6, 2005

This week, I want to revisit two old issues that I had written about in previous years and sadly, should have returned to sooner.  Later in the week, we'll be updating and highlighting and old topic about using the schedule to your advantage in fantasy baseball but this time, I want to address an issue that has quite filled up my email inbox these past few weeks and that's about keeper lists and so-called "optimal bidding."

For those who don't subscribe to our paid sections and need some context, basically the question I'm frequently being asked is this:  The ranking forms that we provide allow the user to set what is called a "bid modifier" or an amount that the projected fantasy value will be multiplied by in order to produce a cheat sheet with easy calculations.  By default, this is set to 78% and that goes back to ideas I presented several years ago in the article "On Paying 80% of Projected Value" which newer members (and even old hats who have forgotten it) are encouraged to revisit.

What the bid modifier does is it takes a player who is projected to be worth $40 and acknowledge that he's projected to be worth the $40 but when multiplied by the bid modifier of 78%, it tells you that you should only be paying about $31 (approximately 78%) for that player if you're to assemble a winning team.  The issue I have received so many emails about was that many readers play in keeper leagues and particularly when there are strong or weak keeper lists, the bid modifier of 78% no longer applies or they're not sure whether they should be adjusting that number.

So, the short question is:  What if my keeper list is really good (or really bad)?  What should I set the bid modifier to be in the interactive ranking forms?  At this time of year, I always receive countless messages asking variations on this same question so I'll attempt to answer it here.  The short answer would be that if your keeper list is terrible, you should be lowering the 78% target and if it's great, you should be raising it.  The problem with lowering it is that if your keeper list is a disastrous one, if the bid modifier becomes too low, you'll get shut out for all the good players in the draft and will likely be cornered into a rebuilding year, which isn't always a bad thing.  What I want to do is to tell you how to set it precisely to be the perfect setting for your team and even if you don't subscribe to our member's section, let me show you how to set a precise target modifier for you in line with the strategies I talked about in that other essay.

As I said in the 80% Essay mentioned above, you're trying to build a roster that's being paid only about 78% of what it's actually projected to be worth.  I've repeated this theme so often that regular readers now have come to call it my "78% Rule."  So, here is a great way to use our interactive ranking forms and a few years ago, I couldn't suggest this because we didn't have a bid modifier as an option.  In fact, as many readers know that our valuation method used to be called "Second Pass Analysis" a few years back and in your own way, you'll be doing a form of a second pass analysis.

Take out your roster and if using our forms (or if you don't subscribe, whatever lists, magazines or other sources you use to obtain projected value), set up the parameters and get a list of exactly what the total projected value is for your keeper list for 2005.  If using our interactive forms, just go ahead and leave the bid modifier at 78% to start with and get your "first pass" of projected values.  If using your own lists or a magazine, write out what each of the projected values are for your roster - not the recommended bid amount that's reduced to 78% but the actual projected value of the player for 2005.  Consider everyone, even players you might not be normally inclined to give a second look.

Now, let's say that you have a $260 salary cap.  Don't worry about the quality of the other keeper lists in your leagues.  Really.  Your goal is simple:  You want to build a $333 team with $260 (i.e. 78% of $333 means that you will spend $260 and get a $333 value team).  So, look through your team to decide who you plan to keep and what their salaries are - if you need some help, we do have an essay here at the site called Making Your Keeper List that might be of help.  Suppose your keeper list costs you $75 and on your projected lists, you have a projected value (not a recommended bid!) of $130.

So, here's how to set the bid modifier going into your draft.  You want to have $333 in value and you already have $130 in projected value on your keeper list.  That means that your goal is to acquire another $203 in value and since you've spent $75 already on your keepers, you have $185 left to spend.  Quite simply, you take the amount you have left to spend and divide it by the total value you still need to obtain, in this case, 185 out of 203 and you get a resulting calculation of 91%.

What that means is that because of your great keeper list, you can now afford to pay 91% of projected value, on average from this point on, and you stand a much better shot at actually getting these players if you can bid 91% as opposed to 78%.  In fact, the tough part about bad or ordinary keeper lists is that when you bid 78% or less of projected value, you tend to miss out on most of the superstars.  While it's nice to get superstars, we're trying to create winners here, as opposed teams who have A-Rod, Carlos Beltran and Randy Johnson and finish in 7th place (acknowledging of course that these player clearly improve a fantasy team's chances of finishing in first).

In terms of our own interactive rankings, what you should do once you've made your new calculation is to go back to the interactive ranking form and with the same league parameters, change the bid modifier to 91 instead of 78 and now, produce for yourself a clean list of what you can afford to pay for each player and still build a winning team. With a pen and paper, you can actually go into the draft constantly modifying what your optimal bid is and you don't need draft software or a rocket science degree.  Again, several essays in our archives page (accessible from the bottom of the home page) already covered the details of precisely what a keeper calculation process looks like so I will not repeat it here.

But here's where great keeper lists do wonders and especially in leagues where I've decided to do a one year rebuilding plan, I've been in this precise situation.  It is possible for a keeper list to be so fantastic that you actually can afford to deliberately overbid for players, above their projected value even that is.  In this situations, it becomes so much easier to win and I've faced such keeper lists rarely but when they do come up, no one can match you in the draft because you know they can't afford the players and you can overpay them.  You can afford to start paying a fair price of $55 for Albert Pujols and so on because your keeper list compensates for the difference and essentially pays for Pujols' salary. 

All of this underscores the real importance of a strong keeper list and if you examine your list from this perspective, you will discover that the same principle can justify you protecting/keeping players at more than they are worth, in an effort to begin your drafting.  If you were planning to keep seven players but could keep more, you may discover that because of the first seven player salaries, you can actually afford to overpay and hang on to that eighth player, the guy you thought had finally become too expensive (many leagues are facing this now as $50+ Albert Pujols may start to end up back in the draft pool).

So, to respond to all who ask, I've already explained the idea of the 78% value model for a number of years now and so, to set your bid modifier, do the sort of exercise I outlined above, calculate your own perfect bid modifier heading into the draft and then follow the strategies in that essay on adjusting your targets.  You will find that your roster will become crammed with quality players who get you tremendous bang for the buck and everyone will wonder how the heck you won.  Encourage their arrogance.  Pretend it was luck and then rinse and repeat next year.  They'll never have any idea why they can't bait you into overpaying for players because your bid modifier will be telling you when it is time to bid high.


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