On Paying 80% of Projected Value
by David Luciani
Published February 27, 2002

One of the more common areas of confusion from subscribers who use our interactive ranking forms is in relation to the little note at the top of the sheet, which reminds readers that they should assemble a roster worth 75-80% of salary, if they are to win their fantasy league.  Without a doubt, most readers wonder how they can get an Alex Rodriguez or a Randy Johnson for 80% of projected value.

Well, the answer is: You probably can't get those guys.  Let me also emphasize that it certainly is not my recommendation that you bid at least 75% of value.  In some leagues, such as 5X5 NL only leagues, we project Randy Johnson to be worth $57 or more.  Now of course, even 75% of $57 is $42-$43 and in a good majority of leagues such a high bid is unnecessary.  You can probably get Johnson for 65-70% of his projected value in those leagues and that opens up flexibility for other players on your roster.

In fantasy leagues, you are either in a "keeper" league or in a straight auction league.  Draft leagues, of course, don't care about auction price as they can just take the best available remaining player as the draft cycles through.  In this column, I will focus on the keeper leagues and will then return to the topic of newly forming leagues in a future essay.

In a previous column in this space, I discussed an approach to making a good keeper list.  I spent a good deal of time there emphasizing the idea of ROI or "Return On Investment."  As you will see here, there was a good reason for that as it naturally leads into this essay.

You see, in a keeper league, the better your keeper list, the more you can afford to overpay for a player.  The point I wish to emphasize about the so-called 80% rule is that you want to pay no more than 75-80% of the actual value of your team.  The reasoning, quite simply, is that if you pay what players are worth, on average, you will have an average team, ultimately destined to finish in the middle of the pack.  The last place teams will be made up of rosters for which the owners overpaid for players, sometimes even slightly, and the top teams will be made up of rosters with slightly underpriced players, usually around a salary of 75-80% of their ultimate value.

This is not to say that each and every player should be purchased at 75-80% of value.  If, for example, you have one or two dramatically underpriced players (Kelvim Escobar is proving to be one such player in most AL leagues this winter), compared to their projected value, you can then afford to pay more.  In fact, it is no secret in actual Rotisserie leagues that I play in that instead of a laptop computer, which a few have been known to bring, I simply bring a calculator and a scribble pad, in addition to my notes.  I'll explain what I'm doing and you can do the same, if you practice a bit in advance.

Let's say that your keeper list has $140 in projected value and it cost you just $85 to retain the players you're keeping.  In some leagues, it is not uncommon to see such a good keeper list and I have occasionally had super keeper lists which were better than that, especially in leagues where I deliberately forego success in a single season for the express purpose of building a long-term superteam that lasts the subsequent few years or so.

Well, if our goal is to pay 78% of value (and readers probably know that this is the number I actually prefer to settle at between 75-80%) that means that I want to assemble a squad worth $333 and I want to pay just $260 to do it.  In our example, going into the draft, I already have $140 in projected value meaning that I need just $193 in value at this point (i.e. $333 goal - $130 already on my roster = $193 left to acquire).  I have spent $85 of my $260 so I still have $175 left with which to purchase players.

I have $175 with which to buy $193 in value.  That means that I can now afford to bid 91% of the projected price for the remaining players, not 78%.  Indeed, if I pay 91% of player value the rest of the way, my roster will achieve exactly a 78% underprice.  If I get a few bargains in there, I am constantly adjusting the price.  So let's return to Randy Johnson.  Let's say that the owner of Johnson threw him back into the pool rather than retain him for $46.  We now know that at least this particular owner is unlikely, at best, to pay more than $46 for Johnson because if he thought he was worth that much, he would have simply kept him at that price.  At this point, I usually look back over the recent history of the league to see what the top player sold for.  Most leagues, especially the smaller ones, rarely will see a player go for $50 unless the salary scale is higher.  

For argument's sake, let's say we correctly decide that no one will bid more than $50 for Johnson and we also decide that in our league, we projected Johnson to be worth $57 this year.  Well, we could bid 91% of value as I demonstrated above but that would be $52 and in our case, we've decided that if we go to $50, no one will top us.  Why waste the extra $2?  We bid $50, get Johnson and now add him to our roster.

After the purchase of Johnson, we have added $57 in projected value to our $140 worth that we already had.  That means we have a total of $197 in projected value and we have spent a total of $135 to get it.  Though the math seems complicated, it really isn't.  These are the sort of scribbles I usually write down during an auction, usually just crossing out the line above and replacing the new amounts with my calculation.  We now need a remaining $136 in value (we want to achieve at least $333 in projected value) and we still have $125 to spend on it.  That means we can now afford to bid 92% of projected value (we have $125 to buy $136 worth of players so that's 92%).

Eventually, usually later in the draft, we will have picked up enough bargains that we can actually overbid to get players.  That is to say, that we actually need less value than we have money left.  Typically, I have found that this happens when we have about $50-$60 left but a lot will depend on the nature of your league and its players.  Often, you can have $60 left and you only need $40 worth of value.  That means, you can now bid 1.5 times what you project each player to be worth (in other words you have more money than you need and so you divide that as usual - $60 / $40 = 150%) and this is the stage where you will dominate the draft, if you've done your homework, scooping up bargains left and right.  If you're right about the bargains, you'll win your league.  If you're not, you probably won't.

Though I will talk more about new auction leagues in a future essay, as opposed to keeper leagues, I want to emphasize that the emotions make us feel that we will miss getting our favorite players when we know that 80% of their projected value won't get them on our roster.  I can only emphasize to you that if you really believe that Barry Bonds, for example, is a $41 player, then it does you no good to buy him at $41.  You're simply paying average price for him and you will end up with a roster worth exactly $260, just like the average team in your league.  If you want to win, create a slightly underpriced roster, in terms of projected value, and you'll be going a long way toward success.