Optimal Bidding - APPLYING THE 78% RULE

Most regular readers know of my so-called "78% Rule" but if you don't, it's pretty simple and no useful advice on fantasy auction strategy can begin without understanding the general concept.

In short, the 78% rule is a guideline that says that if you end up with a team that costs about 78% of its eventual value, you're probably going to be a strong contender.  Now, there are no guarantees and just because you had a team at 78% of its projected value, it never assures you that its real eventual value will end up being the same.  For that to happen, your team needs to perform as projected, of course.

The 78% rule is rooted in this idea: The average team ends up acquiring average value at average cost.  There's no escaping this.  So, if you end up paying what a player is worth based on all of the auction dollars being assigned out, then you end up with an average team.  The goal is to be better than average.  We originally came up with the 78% number more than ten years ago when we were able to study hundreds of final league results to see what the winning teams had done to acquire players.  There was no consistent number and in some leagues, the winning team might have only had to pay 85% of eventual value on auction day salaries and in other cases, they did well and managed 70% but when the dust had settled on our review, the average winning team seemed to acquire talent at a discount that worked out to paying about 78% of actual eventual value.  The percentage continues to work well and we keep using it in our own targets.

Now, easily one of the most common questions that arrives both in my mail bag and to our member support team has to do with the surprising player values that show up for new users.  For example, we often hear something like this:

"Albert Pujols is coming out as only worth $28 in my league.  Players like Pujols typically go for $40 and up in my league so how am I going to get Pujols at 78% of that $28 value?  I wouldn't even be able to get him for the $28."

There are several telling statements in a message like this and I literally can't count the number of emails that read almost exactly like this one.

First, there is an understandable tendency for readers to want projected dollar values that are in line with what they expect to see rather than what actually will help them win.  In other words, every change in the league parameters modifies a player's projected dollar value and the further you get from what an imaginary so-called "standard league" has, the more likely you are to see projected dollar values that are different than what you are used to.  I'm going to exaggerate here to make a point.  Let's pretend that each team in your league drafted the usual number of hitters but was allowed to have only one active pitcher.  What do you think that would do to the dollar values for pitchers?  Well, there would be very few pitchers with any value at all and each would be enormously important to your chances of winning and their projected dollar values would reflect that.

Let's take it to the other extreme.  What if you were required to have an active roster of fifty hitters.  Would there be any chance that Albert Pujols would be worth $40 to your team if you have a grand total of $260 to spend?  Of course not.  In short, our ranking sheets are trying to measure the value of each player as they contribute to winning given the parameters of your league.  It's the reason why starting pitchers tend to be more highly valued by us than many people expect them to be.  They are key contributors to assembling a winning team, especially in 5x5 leagues.

Of course, and this is really the trap that we all have to be careful to avoid, there is a two-part presumption here.  First, just because someone in your league always takes the bidding up to $40 for Pujols doesn't actually make him worth $40.  Look back at last year's league winner.  How many such players did he have on your roster?  We're not saying you can't win by overpaying for star players but go ahead and have a look at last year's rosters and salaries.  Did the winning team end up with any eventual bargains, players who far outperformed their salary?  Chances are good that they had several of them, at least.  How many of those $40 type salaries were on the winning team?  One?  None?  The second part of the assumption here is that the reader seems to think that you need players like Pujols to win a fantasy league and this simply isn't true.

Returning to the 78% rule, what you want is to target assembling a team for about 78% of its eventual value.  So, in a $260 league, you're trying to end up with about $333 worth of players or more, if possible.  However, and this is the key clarification, the strategy doesn't mean you have to pay exactly 78% of each player's value.  In fact, trying to do that during an auction could easily put you in a situation where you're sitting there two thirds of the way through the auction with plenty of dollars to spend and no players.

What you're trying to do is achieve that 78% by the end of the auction.  In other words, let's say you're absolutely convinced that you do need a player like Pujols to win your league.  You can not only honor the 78% target but also bid in line with how your league values superstar salaries.  To do this, you overbid on Pujols and compensate for the overbid by targeting bargains later in the auction.

Let's continue with the example above.  Let's say that Pujols is showing up as a $28 value in your league and you know that it will cost you $41 to end up with him and you want to do that.  So, here's how the math plays out in this situation:

You started with $260 and spent $41 on Pujols.  Your target for the whole auction is $333 of player value because if you end up with $333 worth of player value for $260, you've bought a team at about 78% of its value.  So, you now have $219 left to spend (i.e. $260 minus the $41 you spent on Pujols) and you still need to acquire $305 worth of value (i.e. $333 minus the $28 estimated value of Pujols).

The implication of your significantly overpaying for Pujols is that needing $305 more value with $219 is that your target for the remainder of the auction is to pay about 72% of projected value for the remaining players or $219 to spend to acquire $305 of remaining value = 71.8%.

This is why keeper leagues are so great for applying the 78% rule.  With a tremendous keeper list, you can easily find yourself in a position where your remaining target actually goes above 100%.  This can also happen early in a draft if you end up with some bargains and your modifier will actually change throughout the draft.  You shoud keep track of the following two items constantly: How much remaining value do I want to end up with?  How much do I have left to spend?  As long as you can answer these two questions, you actually can bid with your instinct, especially in the first half of the auction.  Of course, you can't wait forever to achieve your targets and you have to know that you're rarely going to end up with $40 of projected value for only $1.

In short, this is where fantasy auction strategy really does depend on your knowledge of what it takes to win and not just a mechanical bidding method.  If you think Pujols is the type of player that you can build a winning team around, you can bid whatever you want for him without defying the 78% target rule.  In fact, I suggest that in most leagues, there are cases where you have to overpay for some of the well-established producers.  What you try to do is compensate for the overpaying by adding other potential bargain picks in the second half of the auction, the riskier picks who are projected to do well but who will be much more easily (and cheaply) acquired later.