Dynasty Price Elasticity

George Kritikos

dyastyelasticity

While the rookie draft inspires endless analysis of the 2015 class, there is a second component that peaks during this timeframe as well – trades. DLF’s Eric Burtzlaff is someone at the forefront of the dynasty trade market and has provided insight into trade tells. He also shares many of the dynasty trades via his Twitter handle (@dynastytrades).

The trepidation I always have with using dynasty trade history or trade calculators to help value out an offer is the player elasticity that exists. Every dynasty player has a level of price elasticity that causes their value to change throughout the year. What we as dynasty owners try to do is understand that elasticity and use it advantageously in building our championship rosters. Be that through trades, waivers, or drafts, an owner is looking to maximize value and make transactions based on change.

I like to start quite simply with the question. What is elasticity?”

The basic formula is as follows:

elasticity

For a player, this could represent the change in fantasy production for quantity (which can be over any period of time) and the price change is reflected in trade value. However, this will be a focus on the theory of elasticity and how it applies rather than an actual valuation. With that, we will dive into the three forms of elasticity that make up the total elasticity of a player. Afterward, we can apply it to different player archetypes and discuss the best way to assess their value.

Own Elasticity

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Own elasticity is that which the player can control and impacts the value many trade evaluators like to think of as “in a vacuum.” So the focus here is on their fantasy production and talent driving this portion of the elasticity. A player who is consistently productive, think will have a low level of elasticity because their fantasy production and price have normalized. There will be little change in their output or trade value outside of the eventual aging process catching up with them.

A younger player, meanwhile, should have a high level of own elasticity. This is because their production is not established yet and their trade value is similarly immature. A 100-yard receiving game from a player can cause substantial fluctuations in their trade value. Speculation in their performance leads to wild price swings as more and more trades for that player happens.

Internal Elasticity

Internal elasticity focuses on how a product impacts (and is impacted by) the rest of the brand portfolio. In this case, how does your player impact your team’s ability to win and the players you start? The construction of your roster causes changes to the price elasticity of a player as depth will dictate the level of replacement value available. Being a contender or a rebuilding team plays into this elasticity as well as the short and long-term player contributions are valued differently.

External Elasticity

External elasticity is typically the product’s impact on the competitive set. This can be thought of in the trade context as the disruption this trade will have on the rest of the league. Other teams will not only see impacts to their chances against the teams involved in the trade, but also, will have some sort of reaction that will then impact the trade. That could occur in the form of a trade, a waiver pickup, or even maintaining status quo is a reaction.

Trading for a player could make another owner look to upgrade a position on their own team to counteract the positive gains from the initial trade. This would be a form of “protecting share” as a contender is reacting as a means to avoid giving up ground to another would-be-contender. This makes the external elasticity of a player higher since his price would fluctuate based upon the potential moves of other teams in the competitive set.

So what does this all mean?

The quintessential question every time I write an article. All the philosophy is great, but how can this be put into practice? The answer lies in looking at the different types of players and how their elasticity impacts assessing trade value.

The EliteAaron Rodgers is a good example of a player who fits this profile. These players are established so their own elasticity is low. However, because they are so consistent and influential to a team’s success, their internal and external elasticity are high. Overall, you should expect their price tag to be stable from a value perspective but team competitiveness will cause shifts.

Recommendation: Use historical trading and rankings/ADP to gauge baseline value but seek a premium during playoff peaks as teams will inflate the price as a cooperative form of game theory occurs.

The Meaty Veteran Middle – Maybe this is a player who never quite made it into the elite tier (Mike Wallace) or one that was elite but is now a slowly declining asset due to age or recent performance (Larry Fitzgerald). Their own elasticity is moderate as they still have some consistent value but it changes as the inevitable decline occurs. Internal and External elasticity is low as these tend to be highly replaceable assets but have a little additional value to contending teams.

Recommendation: Limited fluctuation means that historical trades and rankings/ADP should be useful here too. Much like elite players, there is some change in value during the heart of the playoff race but don’t expect a windfall. Because they are highly replaceable, also expect plenty of low ball offers in an effort to get them on the cheap. Resist this.

The Young Unknown – This specifically excludes rookies as these players have some level of sample to draw on. Donte Moncrief would fall into this bucket. As mentioned before, their own elasticity is very high as a single breakout game or piece of offseason news can impact price disproportionately. Internal and external elasticity are lower, meaning that roster construction and other transactions have low levels of influence on their value.

Recommendation: Historical trades mean little here and timing is extremely important. I would be shopping these players the second something positive transpires (news, a highlight catch, a single big game, etc.). The trade block is more useful than a trade calculator for these players.

The Rookie Player – There is no sample to draw on outside of combine performances and news. They are similarly volatile in terms of own elasticity as seemingly small events can shift value significantly. The difference between these players and the “Young Unknown” is the internal and external elasticity. They are much more highly coveted by rebuilding teams and during the off-season, when trade activity is usually at its highest.

Recommendation: Another group where historical trades are less valuable. Timing is important relative to positive news. Team construction also weighs in here as a rebuilding team is more likely to pay a premium over a contender.

The Rookie Pick – Since this isn’t a player, the pick itself has a very low own elasticity. Some player news can impact value (injuries, performance) but they stimulate price less than expected. Internal and external elasticity are moderate here as certain teams will value draft picks higher.

Recommendation: I am ok using historical trades to understand draft pick market value. Avoid using rookie players as a proxy for pick value as additional inherent price exists on the freedom to choose at that draft slot. There is some timing influence as you get closer to the draft but the overall arc of a pick’s worth is pretty constant from year to year.

This article is meant to provide a foundation for thinking about the trade market and transactions as a whole. While it would be nice to have one value generator for all players, the market is imperfect, especially when a player is less proven. Instead, it is good to think about the variables that manipulate the market. Examine each team (including your own), the rosters, player news, and the waiver wire before making a move. This is the way to optimize a transaction where you can feel comfortable pulling the trigger.

What are considerations you make before offering a trade or quantifying player trade value?

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