Market Value vs. Performance Value: Why Reality is Somewhere in Between

• By: Chris Liss
• On: 2/29/2012 4:21:00 PM

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One way to get ready for your fantasy baseball auction or draft is to project out the stats of all the relevant players and convert those stats to dollar values (or draft slots). For example, if you think Justin Verlander will win about 18 games, strike out 240 batters and have an ERA of 3.00 and a WHIP of 1.05, your algorithm might say he's worth $30 in a $260 budget 12-team AL-only league. (This is a rough estimate, and your mileage may vary). You might also decide those numbers make him an early second-round pick in your 15-team mixed league draft.

You can do a similar calculation for every relevant player in your league and generate a set of dollar values for all prospective players to be bought that equals the total amount of money all the teams in your league collectively have to spend. Assuming your projections were sound, it would seem you'd have an optimal basis for bidding at auction. (Or drafting).

But you would not.

Even if Verlander's stats were truly worth $30, i.e., 11.5 percent of your budget, it might not be worth spending that much on him. If other owners in your league decide (as many do) that hitting is harder to come by, and pitching is more plentiful on the waiver wire, they might not pay full price for pitching. Consequently, pitchers are available for less than they wind up earning in wins, strikeouts, ERA and WHIP. On the one hand, that might make you want to invest in more pitching - because that's where the bargains are. On the other, it means you'd be unwise to pay full price for any pitcher when others are getting them at a discount.

As a result, you have to balance the two considerations - waiting on pitching despite its superior performance value, but jumping in where the disparity in performance value between the pitcher and the best hitter available is greater than the market's premium/discount for hitting/pitching. As every league is slightly different in its emphasis, finding that line is more of an art than a science. You don't want to take Verlander in the early second when Felix Hernandez is available in the fifth, but you don't want to pass up Roy Halladay early in Round 3, no matter what people have done with the draft's first 30 picks.

Pitching isn't the only area where this kind of balancing act is required - it applies when targeting power vs. one-dimensional steals players, players at scarce positions vs. outfielders/first basemen and in any situation where the market isn't strictly in line with a player's performance value.