ottoneu Economics 101

One of the things we hope to do at Points Above is educate people about ottoneu. The writers here all play ottoneu and are huge fans of the game. And the biggest thing that makes ottoneu stand apart from other fantasy baseball options is the economics underlying the game. Over time, we will be providing a series of articles that give insight into how the game works, and today I am starting with the basics of ottoneu economics. The basic rules of the game, including budgets, how cuts work, how you add players, etc., are all covered on the ottoneu site, so today, we want to look at some key concepts that will help you win your leagues.

Because this is a 101, some of the concepts will be basic to experienced ottoneu players, but this is a good place to start to understand how many of us at Points Above think about the game. I want to specifically cover two concepts today: value (and how it differs from salary) and surplus (and why it matters).

Value – The value for a player is, roughly, what that player should be or should have been paid for a season, based on their expected production. In real baseball terms, this would be the dollar amount calculated off of a player’s WAR. I think of this as the most I want to pay a player to have him on my roster. This is different from the player’s salary, which is the actual amount some manager did pay to have them on their roster.

If you check out the ottoneu average salaries page, you can get a sense of how much players typically cost, but this isn’t telling you anything about a player’s value – only their salary. Their salary should reflect what the market at large thinks the player’s value is, but they are not the same. For example, if I told you that Mike Trout’s average salary is $76 but that I was confident he would only be worth $70 (maybe I have access to that almanac from Back to the Future Part II?), that $70 is his value, the $76 is his average salary, and you would know not to pay $76 to get him on your roster.

Of course the fun of any fantasy game is that I don’t know what a player’s value is. I can guess. I can predict or project. And you can, too. And we can come up with different answers, which will drive how we evaluate how much to pay the player, whether to trade for them, what to give up in a trade, etc.

It’s important to note that value is typically measured in terms of on-field production. So, for example, Seattle OF prospect Julio Rodriguez, who is hurt and will miss the year, effectively has a value of $0. However, that is not, necessarily, how much I am willing to pay for that player. I would gladly spend $5 on Rodriguez today, expecting that he will see MLB in 2021 and be worth well more than the $6 it will cost me to keep him. Outside of prospects, though, this is the exception and you can generally think of production, value and how much you are willing to pay for a player as roughly synonymous.

Surplus – This is really the domain of Justin Vibber, but bear with me for the moment. Surplus is the difference between a player’s value and his salary. Going back to that Mike Trout example, if I acquire Trout in a first year auction for his average salary in first year leagues ($69) and believe his value is $70, I have $1 in surplus. If I have Trout for $53, I have $17 in surplus.

Surplus is, in many ways, the most important thing to “collect” in ottoneu leagues. You have $400 to spend – and so do your opponents. If you all max out your budget and fill out your rosters, you will have all spent $400 total or $10 per player. If my players have an average value of $15, I’ll have, on average, $5 in surplus per player and $200 in surplus on my team. Which basically means my team will produce like a $600 team instead of a $400 team. If my opponents gets $10 of average value for their players, they will have $400 teams that perform like $400 teams, and I’ll beat them (most of the time).

In real baseball terms, think of it this way – Tampa has a much smaller player salary budget than New York. The Rays can’t compete by outspending the Yankees. However, if the Yankees spend $200MM and their players are all worth exactly what they are paid, that is a $200MM team and it will perform like it. If the Rays spend $120MM but all of their players at 2x their salary (maybe they are pre-arbitration, or just signed cheaply), that team will play like a $240MM team. So the Rays stock up on youth, extend their young stars, and trade guys away before they cost too much. They look for ways to outproduce their budget.

You need to do the same. And you do it by collecting surplus – players whose value outpaces their salary – in one of four ways: Signing players at the pre-season or in-season auction for less than their value (i.e., signing Trout for $69 when he has a $76 value), trading for players with surplus (i.e., trading for a $69 Trout who has a $76 value), keeping players with surplus (i.e., keeping a $71 Trout the subsequent year, when he still has a $76 value), or finding breakouts (i.e., signing a $5 Julio Rodriguez when his value is $0, but having him turn into a $20 player while on your roster). If you consistently find these values, you’ll consistently compete in ottoneu leagues.

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