When a First Isn’t a First
“I’ll give you my 2020 first, my 2021 first and my 2022 first for Mike Evans. That’s three firsts!”
Is it though? Is a dollar two years from now worth as much as a dollar right now?
Listen.
We all agree that the rookie class of 2020 is going to be epic. It’s going to powerful and mighty, with instant stars at every position. Every running back will be Saquon Barkley, every receiver will be Odell Beckham, and even the quarterbacks will be everything that Sam Darnold and Josh Allen are not. We have that fear of missing out, and we move heaven and earth for 2020 draft picks so we can bask in the awesome glory of the rookie class.
We also know that the 2021 rookie class is full of mystery and intrigue, like those Christmas presents sitting beneath the tree.
Trevor Lawrence is that big, perfectly-wrapped package with the ribbon around it and the beautiful bow on top. It is the exact size and shape of that brand new bike you’ve had your eye on. Of course, you have a very nice ten-speed bike that has served you well, and you really haven’t even had it that long (Deshaun Watson is the “old bike” in this analogy). It’s a great bike, but this box is far more exciting. It’s new! It’s WRAPPED! And under the wrapping is nothing but potential. You know what the old bike can do; you have no idea what the new bike can do (assuming it is, in fact, a bike)… and you’re willing to wait anxiously to find out!
This is the exact trap that claims hundreds of new victims every day. Dynasty players will forego the bike ride now for the feeling of anticipation while waiting for the chance to ride a new bike… sometime in the future… maybe.
The itch becomes obsessive and all-consuming. And then it becomes a trade poll. “Should I trade my 2019 pick for a 2020 first (early)?” or “Which side: Calvin Ridley or a 2020 first? The 2020 first is likely to be early-mid.”
And the poll responses are overrun with “accept the trade and take the first!”
Translation: “I agree with you! Why ride your bike now when you could wait anxiously to possibly ride a different bike later?”
First of all, let’s clear something up. There is no such thing as an “early 2020 first.” It is June; fantasy points are still three months away from being calculated. And those fantasy points that dictate the value of a draft pick are half a year from being compiled to a point of accurately predicting their sum. In other words, we have absolutely no idea how “early” a 2020 first round rookie pick will be; we don’t have enough information to even begin to project that.
What we do know, by the way, is that the team that turns a 2020 first into Calvin Ridley just improved its ability to score fantasy points in 2019, increasing the likelihood of winning more games and, thus, making the 2020 first later than it would have been before the trade. Ridley scored 209 fantasy points in his rookie year, which will only increase in his second year. That “early” 2020 first just became less “early.”
But there is a bigger issue with these trades than the fallacy of predicting draft picks. A 2019 first, a 2020 first, a 2021 first and a 2022 first are the same thing semantically, but that is the only thing they have in common. Value-wise, they are miles apart. And it’s time that we adjust our thinking on this, and acknowledge the discrepancy.
Here’s the formula we are discussing: FV = PV(1+r)^n.
So that clears it up, right? Lesson over? No? You’re going to make me explain the formula, aren’t you? Well, I don’t understand it either. Sooo…
Here’s what I can tell you: it’s an economic formula that calculates interest. It explains the economic concept of time value. It is essentially saying that a dollar today is worth more than a dollar in the future – if only intrinsically – because the dollar today can be spent today. We know that inflation could make the dollar worth more in the future, but a dollar in a savings account accrues interest to compensate for the lost opportunity to spend the dollar while saving it. If a dollar today was going to be worth the same after saving it for a year, there would be no need to accrue interest.
Before we all die of boredom, let’s apply the concept to dynasty football.
Will the value of a future draft pick increase? Of course it will. But so will the value of a player. In the meantime, a player in the league will score fantasy points in 2019, while a 2020 pick will not. And even more compelling than that, a player will score fantasy points in both 2019 and 2020 while a 2021 pick will not score any points in either season. Just like the dollar, the intrinsic value of a 2021 first is more than counterfeited by the extrinsic value of a 2019 first or a player already in the league.
The Average Draft Position for first-round rookies in 2018 (available here) in May of last year looked like this: Saquon Barkley, Derrius Guice, Nick Chubb, Rashaad Penny, Ronald Jones, DJ Moore, Sony Michel, Royce Freeman, Kerryon Johnson, Calvin Ridley, Courtland Sutton, and Christian Kirk. Some hits, some misses.
But the average fantasy output among first-round rookies in 2018 was 140.87 FP. That’s the juice; the interest. Trading a 2018 first round pick for a 2019 first round pick would have cost 140.87 fantasy points in 2018. And the team that gave up the 2019 pick would have gained 140.87 fantasy points, putting them that much farther from the first overall pick in 2019.
The ADP for first-round rookies in 2017 as of May of that year (available here) went Corey Davis, Leonard Fournette, Christian McCaffrey, Joe Mixon, Dalvin Cook, Mike Williams, OJ Howard, John Ross, Evan Engram, JuJu Smith-Schuster, David Njoku and Alvin Kamara. The average first-round rookie in 2017 scored 135.84 FP, even though the running back group was objectively stronger overall than 2018 (hint, hint: that’s the buzz on 2020 as well).
Trading a 2017 first for a 2018 first would have cost 135.84 FP in 2017, but there are even bigger losses to calculate.
First, while the 2018 rookie class managed 140.87 FP in 2018 (because, well, they were rookies), the sophomore class from 2017 scored an average of 198.18 FP in 2018, increasing the difference in output between the two classes to an average of 193.46 FP over two seasons. In other words, trading a 2017 first for a 2018 first has a current price tag of 193.46 fantasy points lost.
Second, trading even farther into the future would have resulted in a far greater loss in points. In two seasons, the first round of the 2017 rookie class scored an average of 167.01 FP per season. A 2019 rookie would have to score twice that – 334.03 fantasy points – as a rookie, just to make up the lost points over the last two seasons. Barkley is the only rookie from either of the last two draft classes to exceed that number as a rookie, meaning he is the only “dollar” worth a full dollar.
And that output only recovers the total number of fantasy points lost over the course of two years; it does not make up for the fact that the team would have missed out on 135.84 FP in 2017 and another 198.18 in 2018. That’s where this concept is truly damning.
Think of those fantasy points as dollar bills; you could spend $136 now and $198 next year, or you could wait two years and spend the entire $334 all at once. Sure, $334 goes a lot farther, but what did you have to give up while you waited for that lump sum? The sacrifice diminishes the marginal benefit of the purchase. Back to fantasy football, those 334 fantasy points this year aren’t nearly as valuable to you as 167 points in each of the last two years would have been.
The Future Value of a pick (FV) = the Present Value of a pick (PV) x the interest rate (167.01 fantasy points) to the power of n (where n = the number of years waiting to make the pick). 2019 first x (167.01)^2 = 2021 first. We figured it out! And it’s outrageously steep!
Time value. The term speaks for itself. A 2019 first-round rookie pick is still worth more than a 2020 first-round rookie pick because there is value in the time you have with that player. There is an opportunity cost in waiting for a pick to become a player and begin scoring fantasy points… and that cost is tangible. The cost is about 140 fantasy points, which the average rookie will score in 2019. Those are fantasy points that you won’t be able to recover.
The feeling of anticipation is abstract; maybe the new bike will perform better than the old bike, and in the future, the wait will feel like it was worth it. But the time value is real, tangible and calculable. While you wait for your payday, others are cashing in right now. They are riding their bikes and putting more and more distance between themselves and you.
A first isn’t always a first, just like a dollar today is worth more than a dollar tomorrow. There is value in time, and there is no time like the present.
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