Dynasty GAAP Memo: Wide Receiver Risk Detection
I am a CPA who fits the typical accountant stereotype. I enjoy writing technical accounting memos, accounting research (yes, it’s a thing), and analyzing the financial statements of a business. In accounting, you often must evaluate qualitative and quantitative factors during complex transactions to forecast future performance. I have found that the outlook and rationale of evaluating business transactions parallels another interest of mine, dynasty fantasy football.
In dynasty, we are given both quantitative factors (athletic scores, draft capital, college production, etc.) and qualitative factors (camp hype, team situation, injury history, etc.) that we must consider and evaluate to derive an estimate or projection of a player. Then, we must take calculated risks based on our team’s overall financial statements (i.e., current roster and league). I could go on and on with accounting-based puns and comparisons, but I think you get it.
I will note that I will write in the form of “accounting memos”. For anyone who has not been exposed, the format is very standard. Each memo will start with the “purpose”. Next, it will outline the applicable “guidance” or accounting literature utilized and supply background. Last will be the analysis and conclusion. The goal is to state the issue and quickly address it. My write-ups will follow this same logic.
To summarize, welcome to “Good at Analyzing Players” or “GAAP”. And yes, this is a play on “Generally Accepted Accounting Principles” and my wife did come up with it.
Purpose:
The purpose of this memo is to evaluate the inherent risk profile of the wide receiver position and evaluate any overstatements or understatements based on the first seven weeks of the 2023 season. This analysis will specifically discuss:
- Deebo Samuel, SF
- Calvin Ridley, JAC
- Jakobi Meyers, LV
- Josh Downs, IND
- Courtland Sutton, DEN
Background:
Well, my friends, we have made it. We are officially halfway through the fantasy football season with week seven in our rearview mirrors and week fourteen and the fantasy playoffs on the horizon. With that milestone, this week’s memo will explore the risk profiles of the wide receiver position. If you have not noticed by now, I tend to focus a lot of my time, effort, and disposable assets (draft picks) on wide receivers. Unless in a superflex league, WRs should be the foundation of a dynasty roster due to the longevity of the position and the production we are seeing from the pass-happy NFL. I tend to focus on that position as I believe it has the most talent, opportunity, upside, and discretion needed to evaluate due to the volume of players.
One of the major risks that auditors are presented with while reviewing and testing financial statements is ‘detection risk’. Detection risk is the chance that an auditor will fail to find material misstatements that exist in an entity’s financial statements. These misstatements may be due to either fraud or error. Auditors make use of audit procedures to detect these misstatements. Fantasy managers have seven weeks of evidence at their disposal, and they need to reevaluate the preseason values based on production thus far (error) and be sure to identify potential fraudsters (over-producers).
When deriving audit procedures, fantasy managers should be worried about overstatements and opportunistic of understatements. Some players may have overachieved during the first seven weeks of the season. This could lead to their values being overstated. This refers to accounting for a transaction higher than it is.
Similarly, other players have underachieved during the first seven weeks of the season. This could lead to their values being understated. An understatement in accounting refers to business assets given a valuation lower than their fair market value.
In dynasty (and as auditors), we must ensure that fantasy managers are properly deriving procedures to effectively address detection risk, while seeking value understatements and avoiding value overstatements.
Resources:
- Sleeper: Great interface for looking up historical statistics
- DLF Dynasty Rankings: Best dynasty rankings in the Industry
- DLF Average Draft Position (“ADP”) Data: Best resource to gauge current player value. Based on real dynasty startups.
Analysis:
We need to first identify our population to be considered. I considered the top 48 WRs from points scored through week seven. Please see the population below bucketed by WR1 (Top 12), WR2 (Top 24), WR3 (Top 36) and WR4 (Top 48).
Examining points is an interesting sentiment from a dynasty perspective because, as a community, we romanticize youth and upside, but the scoring metric we utilize on a weekly basis is production. However, we cannot ignore the other inputs into a player’s dynasty value. The best summation of these other inputs (youth, situation, perceived upside, and expected points) are DLF’s dynasty rankings. If we compare the production thus far in the season to dynasty rankings, that intersection can be a good indicator of an overstatement or understatement of a player’s value.
The table below takes the top five fantasy producers thus far this season and compares that to the DLF WR ranking to derive a variance. A positive means production > DLF ranking, and a negative variance indicates that production < DLF ranking.
This population’s value seems to be understated currently. However, we know that Tyreek Hill, Stefon Diggs, and Keenan Allen are 28 years old, so it makes sense that their value is starting to depreciate. AJ Brown is perfect, and Puka Nacua is still undervalued. Hot Take: I’ve seen enough, and Nacua is my WR4 overall in dynasty.
Potential Overstatements
Overstated accounts are usually made to conceal the low performance of an entity. If we utilize the procedure discussed above, players with a positive variance present potential overstatement. See the top 12 positive variances below:
This group is particularly interesting. There are quite a few dynasty darlings I think we can objectively throw out. Players like Justin Jefferson, DK Metcalf, Jaylen Waddle, Garrett Wilson, CeeDee Lamb, DeVonta Smith, and Chris Olave are really really good at football. If your league mates do not read my memos, you could try and show them this if they are panicking and it might be worth kicking the tires on underperforming stars. If you can get any of those guys, do yourself a favor and do it.
The two players that stand out to be as currently overstated are Deebo Samuel and Calvin Ridley. See discussion below:
- Deebo Samuel (DLF WR21; 27 years old): We all remember the 2021 season when Samuel finished as WR3 overall because he did it all (WR, RB, cured world hunger, etc.). However, that was his only season as a top 30 WR in PPR scoring and he has only played more than 13 games twice in his NFL career (and is currently hurt again). Not to mention he has weekly target competition in Christian McCaffrey, George Kittle, and ascending Brandon Aiyuk.
- Calvin Ridley (DLF WR26; 28 years old): Due to his suspension, Ridley plummeted down dynasty rankings, but steadily climbed over the course of the off-season due to being attached to an ascending QB in Trevor Lawerence and a steady drum beat through camp. However, his usage has been troubling with 11 targets in week one but then 2 targets and 4 targets in week 4 and week seven, respectively. I’m not in the business of investing in 28-year-old receivers averaging 11 points per game.
I would rather pivot off the guessing game and into a stable week-to-week asset. I like Terry McLaurin (DLF WR28) or Marquise Brown (DLF WR31) if I wanted to stick at the WR position. I would also take any 2024 first. I would also target an ascending asset like Rashee Rice (DLF WR46) and a rookie pick.
Potential Understatements
Understatements are often utilized to diminish expenses or negative impacts on the company’s financial statements. For the sake of our procedures, players with a negative variance present potential understatement. See the top 12 positive variances below:
This group is a little bit more diverse. We have aging producers in Adam Thielen, Keenan Allen, and Michael Thomas, a bunch of “meh”, and then a few rookies who have outproduced their dynasty ranking thus far in Josh Downs and Michael Wilson. Similar to the discussion above, I highlighted the few players that stood out to me within the population. See discussion below:
- Jakobi Meyers (DLF WR52; 26 years old): During his four years in New England, Meyers never topped 870 receiving yards. If we extrapolate his six games played in 2023 (missed week two due to injury), he is on pace for his first 1,000-yard receiving season and 100 receptions. Let’s also remember that he is only 26 years old. If your league mate is not paying attention to his usage, I would be reaching out and paying WR3 prices for Meyers. Davante Adams has also been coming up in trade rumors recently.
- Josh Downs (DLF WR55; 22 years old): Downs is coming off his first 100-yard game in week seven, so it might not be the time to buy now. However, due to size concerns and landing spot, he was available at the back end of the second round in a majority or rookie drafts. Thus far, this is proving to be a steal. From an advanced metrics perspective, Downs has a lot of upside. He had an 89th percentile burst score, 86th percentile agility score and 87th percentile breakout age. When considering his 401 receiving yards thus far, I am happy to overlook his small 5’9” frame.
- Courtland Sutton (DLF WR48; 27 years old): Sutton is a bit of a wildcard. He or Jerry Jeudy could be traded at the deadline and that could either boost or diminish his production thus far. I personally think he stays in Denver and Jeudy is traded. If that’s the case, I expect Sutton’s production to continue (and Marvin Mims breaks out down the stretch). If Sutton is the one traded or if the Broncos retain Sutton and Jeudy, I expect a massive regression in the second half of the season for Sutton. His fantasy points thus far have been inflated by touchdowns. He is on pace for > 12 TDs in 2023. We know TDs are one of the hardest metrics to predict and he is due for negative regression.
I would be trying to purchase Meyers and Downs as I do believe that they are undervalued currently. My strategy here would be to leverage underperforming assets that have not popped yet. I think you could move players like Jameson Williams (DLF WR39) or Treylon Burks (DLF WR40) for Meyers or Downs.
Sutton would be a piece I would target as a “value plug” in a larger deal because there is upside there for double-digits touchdowns, but I would only make that bet if the cost was low.
Conclusion:
Managers need to be fast to react to production but be sure to not overreact. This is where the procedure above comes into play. Dynasty rankings are often one to two weeks outdated but can serve as a governor device to ensure that our dynasty trades and moves are formulated to address ‘detection risk’ and identify player value overstatements and capitalize on player value understatements.
“If the quarterback throws the ball in the endzone and the wide receiver catches it, it’s a touchdown.” – John Madden
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