This article is part of our The Z Files series.
With the LABR (League of Alternative Baseball Reality) in the rear view mirror and Tout Wars weekend approaching, it's time to turn our attention to auctions. That said, the focus of the past few weeks – the flaws of conventional valuation – will still be front and center.
However, before delving into that, here are a couple of archived Z Files with an auction theme:
As mentioned, auction dynamics will be discussed in terms of Flaws and Limitations of Valuation Theory. Exploiting one of the major flaws will be explained, followed by illustrating a practical shortcoming of setting formulaic bid values.
One of the tenets of conventional valuation is that prices are assigned to exactly enough players to fill everyone's Opening Day active roster, with the assumption they are the only players to occupy that spot all season. As was demonstrated in Minding the Gaps, multiple players will populate several roster spots, availing free loot.
Another repercussion of this valuation flaw is the pool of drafted players will not match those you deem draft worthy. In an auction, there will be many players purchased you have priced below the minimum $1 bid. This skews the money distributed to the players with a positive bid price.
I took the most recent projections from RotoWire, BaseballHQ and Mastersball and generated the draft-worthy pool for four common leagues: 12-team AL-only, 12-team NL-only, 12-team mixed and 15-team mixed. Here are the average number