In-Season Auction and FAAB Strategy

This past week was an FAAB nightmare for many leagues and saw a surge of auctions in ottoneu leagues. My ottoneu leagues have more than seven auctions each, on average, live right now, and an average of 10 auctions completed since the start of August. In my CBS league, I made 15 FAAB bids to add four players to a 25 man roster. And I am not alone. Which makes now the perfect time for a look at FAAB strategy, in-season auction strategy, and how they differ.

Yeah, it’s a mess. Half of MLB has no closer or has a broken closer or an ineffective closer; we’re used to seeing players get shut down, but we’ve had multiple teams shut down; and we are all trying to make quick moves for this 60-game sprint, so we don’t have time to wait to see how things break over time. So it’s chaos.

Before diving into strategy, some basics. FAAB (or free agent acquisition budget) is a way of adding players off waivers/free agency in fantasy leagues. It was created as an improvement over traditional waivers, which tended to be either reverse standings order or first-come, first-served, neither of which are very good. And FAAB is basically fine – every team gets a budget and that budget allows you to prioritize who you value, when you value them and what you want to spend to acquire them. In most cases (including every FAAB league I have played in), FAAB works as a first-price sealed-bid auction, where each manager submits a bid for a player and that player is awarded to the highest-bidding team for the cost of that bid. If I bid $100 for Nick Burdi and that is the highest bid, I pay $100. Bids are typically submitted on a set schedule (for many leagues, it is every Sunday night) and you have no idea who other managers are bidding for or how much they are bidding. The FAAB budget is unrelated to anything else – it is not equivalent or related to draft capital, it doesn’t impact the value or price of the player going forward, etc.

In ottoneu leagues, FAAB doesn’t exist in the traditional sense. Instead, you make in-season acquisitions within the $400 budget allotted for the year. If you spend $399 at auction pre-season, you will only have $1 to acquire new talent during the season, until you either make cuts to clear cap space or make a trade that nets you additional cap space. Rather than happening on a set schedule, players can be put up for auction by any manager at any time. While managers in FAAB leagues have no idea who other teams are bidding on, ottoneu in-season auctions are “public” in that the start of a player auction is announced and every manager has 48 hours to submit their bid.

Like FAAB, ottoneu auctions are sealed-bid (i.e., you don’t see anyone else’s bid until the auction is done), but rather than First-Price Sealed-Bid Auctions, ottoneu uses Vickrey or second-price sealed-bid auctions. In second-price auctions, the player being auctioned goes to the highest bidder, but the price they pay is the second-highest bid (or, in the case of ottoneu, the second-highest bid +$1).

The reason for this approach becomes obvious when you look at ottoneu in-season auction strategy vs. FAAB strategy.

For ottoneu, your strategy for in-season auctions should be the following:

Bid what you think the player is worth. Full stop.

That’s it. No further thinking required. Don’t worry about what other managers might bid. There’s no game theory or anything like that. You value a player at $X, bid $X. The Wikipedia on Vickrey has a nice proof of why this is, but the simple version is this – If you bid $X+1, win the auction and pay $X+1, you are getting negative value for the player – you paid more than the player is worth to you. If you bid $X-1 and lose the auction you have left value on the table.

The hard part, of course, is deciding what the player is worth to your team, and that can be complicated. There is a list of four things I consider when valuing a player in-season:

  1. The value of their production – If I expect the player to perform like a $10 player moving forward, that is a good starting point.
  2. How much cap room I have – If he’s a $10 player but I only have $4 in cap space and don’t have a cut to clear $6 more, I adjust down. Remember your cost to acquire the player is the player’s salary AND whatever else you have to give up to get him. If Mike Trout is suddenly a free agent in your league and you think he is a $70 player, but to pay him $70 you would have to cut a $40 Juan Soto, $20 Shane Bieber, and $10 Mike Moustakas, that $70 Trout is suddenly way too expensive.
  3. Who I will have to cut – Variation on the above. If I am intrigued by JaCoby Jones and think he is worth a $5 flyer, but I don’t have a cut that I value LOWER than that, he’s no longer worth the $5 to me.
  4. Potential keeper value – This is a confusing one because I sometimes bid MORE for players with less keeper value. Using that $5 Jones again, if I think he is $5 right now, but could be $10 or $15 next year, and that is what I am buying, I might bid $8 now (especially if I have good options to clear that space). If I am bidding on Cole Sulser right now, because I need saves, but I expect I’ll cut him again before the end of the year, I might bid $15 for a $10 closer (if I have the cap space) because I am not worried about his salary – I just want to get the saves while I can.

One thing NOT on that list is price enforcing. I never price-enforce in auctions and I don’t think it is a good strategy. Price enforcing implies you are bidding more than you want to pay or are comfortable paying to make sure no one else gets too good a deal. You see a closer go up for auction and think he is worth $7, but should go for $15 so you bid $12 to make sure no one gets him for $8. The problem with this is it relies on the assumption that you are smart and know the player is only worth $7 and that exactly one other manager in your league is not smart and values the player at $13 or more. If more than one other owner values the player that highly, your price enforcing bid is irrelevant. If no other owners feel that way, you are risking overpaying for a guy you didn’t necessarily want in the first place.

FAAB strategy starts mostly the same – how much do you value the player, how much will you have to give up (in cuts) to make room for him, how much do you value his future value – but there are two other factors you need to add in.

  1. Will I need this FAAB money later? In ottoneu leagues, you can acquire cap space via trade or cut players to create more cap space. If you need saves and speculate on a $10 Sulser now, you get $5 back when you cut him and can get more back via other mechanisms. FAAB dollars are gone once they are gone. If you blow your budget speculating on saves and the players you speculate on don’t return value, that’s that – you are bargain shopping the rest of the way and hoping to get lucky.
  2. What will other managers do? This is the more challenging one. Do I bid full price for a guy if I think other owners might not bid, thereby potentially paying $10 for a player that I could have had for $2?

Here’s an example of where FAAB adds complexity. I am a big fan of Dominic Smith and have been for a while. He is on my roster in every ottoneu league I drafted. He was not on my roster in a shallow CBS league (12 teams, 25 man rosters) where I just didn’t have room for a guy who didn’t have a job. With Yoenis Cespedes opting out, Smith has a job and I was going to add him. In that league, I think Smith is a $15 OF. It isn’t a super active league and Smith could, potentially slip under the radar. If that league used Vickrey auctions, I would have bid $15 – if he slips under the radar, I pay based on the second highest bid and get the guy I want at a great price. If he isn’t under the radar and others bid $8 or $10 or $12, or even $14, I get the guy I want at a price I am still comfortable with. If someone bids $16 or more, so be it.

But with FAAB, I have to guess and take a risk. Would I rather just suck it up and pay the full $15, no matter what, or do I want to try to protect my budget and get him cheap. If I knew no one else would bid, I could bid $1. If I knew the next highest bid would be $3, I could bid $4. Instead, I was stuck with some rough assumptions. The league is shallow and, thanks to the endowment effect, most managers already like the players they have, particularly in 1B/OF where Smith qualifies. The league is active, but guys do often slip under the radar – when Juan Soto was called up initially, I paid $16 for him and was the only bid.

I ended up bidding $6 and that was enough to win. This league does not share other bids, so I am not sure if I could have bid less or if I just escaped. All I know is, $6 is a bad representation of his market price (or at least, very likely is). I didn’t bid what I thought he was worth, instead having to bid what I thought he would go for.

The problem with this bidding approach is that it can deflate prices (everyone is trying to get a deal so they bid low) and inflate prices (one person values a player at $15 and bids $15 and is stuck paying that even though no one else bid at all). It can prevent the team that most values the player from acquiring him (a team values a player at $15 but bids $8 while another team bids $10). It can punish teams for recognizing talent that others don’t (I had to pay $16 for Soto even though no one else wanted him for even $1 at the time).

To summarize – for ottoneu leagues, bid what you think a player is worth, and don’t worry about the rest. For FAAB leagues, balance player value and game theory to try to maximize your budget, but be smart about it – bidding low looking for value on a player makes sense if you are okay losing the player, but not if you aren’t. And if you are starting a new league and have the option to use Vickrey auctions for FAAB, do it – you’ll free up owners to bid actual player values and end up with better pricing as a result.

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