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All Kinds of Arbitrage: How I Stole the 2013 RotoViz Dynasty League Draft

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Photo by Ken Teegardin

On June 1, the guys at RotoViz launched the startup veteran draft for the RotoViz Dynasty League (RDL), a venture of which we’re already proud.

I’m sure you know these fantasy football platitudes:

  • “Championships are won in the season, not in the draft.”
  • “The draft is won in the middle rounds, not the first few rounds.”
  • “You can’t win a draft in the first few rounds, but you sure can lose it there.”

With these fantasy nothings in mind, I walked away from the veteran draft of the RDL with this thought: “Because I traded down, avoided the first two rounds, and loaded up on middle-round draft picks, my Riggins Rigs squad STOLE the draft.”

I admit that winning the draft means little once the season starts, but the current constitution of my team at least gives me a leg up (I hope?) on most of the competition at this point. Put another way, I know of few championship fantasy teams that didn’t have at least solid drafts. A good draft makes a good season all the more likely.

I also admit that I must sound at least 68% douchey and disrespectful to my league mates by talking about my team at all and then additionally claiming that I “stole” the draft in a league full of players who span the spectrum from strong to quite strong. I can’t really combat accusations of doucheyness except to say that 1) at least I’m not as douchey as another guy I (electronically) know, 2) I’m mentioning my team as a way of illustrating actionable guidance I want to give, 3) I don’t think that I actually stole the draft (I missed out on a few too many players by 1 or 2 picks, and some fantasy players really might question some of the guys I did draft), and 4) if not for the respect that I have for my league mates, I never would have dared to move so far outside my comfort zone by using the strategies that follow. In other words, if my RDL team is any good, that fact has more to do with the high quality of the dudes in my league and less to do with any skill I actually possess.

Riggins Rigs Buys a Bull

Entering the PPR draft my Riggins Rigs team was sitting right at the turn, 1.14 and 2.1, and Jamaal Charles and LeSean McCoy fell to my spots. I never thought that would be a possibility. I considered those guys mid-first-round PPR players, even in dynasty, because of 1) their ability to catch the ball and 2) their positions in offenses that will likely utilize their skills effectively.

When Charles and McCoy fell to me, I believed that, if I took them, then my ADP arbitrage skills would 1) enable me later in the draft to land players who would outperform their draft position, supplementing my stud RBs, and thus 2) make me a legitimate contender right away. [As a side note, I recommend that you check out RotoViz’s ADP Arbitrage App for WRs. It’s an invaluable tool for fantasy drafts.]

So what did I do? I drafted Steven Jackson instead of Jamaal Charles. OK, I didn’t actually draft Steven Jackson with Jamaal Charles on the board. (Check out my next article for details. It should be accessible soon via my author page.) Instead, I traded down. Multiple times. I traded away my first- and second-round picks in the veteran draft. And then another second-round pick that I had acquired. As a component of those transactions, my first-round rookie pick was also traded away—and that was the #1 overall rookie pick. And then I traded away my fourth-round veteran pick. Over half of the teams already had at least three players per roster by the time I selected my first player (with pick #38!), and that guy was Steven Jackson—one of the most undervalued players in all 2013 fantasy drafts.

What was the net effect of these trades to my draft position and roster? See for yourself. Following is a table that features two rosters. The first is the group of players acquired with the picks I originally owned; it’s a hypothetical “path untraveled.” The second is the group of players I actually picked after I traded down multiple times. I don’t know about you, but I prefer the second group. (Note that the rookie draft is still ongoing.)

2013 RDL Draft: Riggins Rigs                                                       

Year Draft Orig.Round Orig.Pick Overall Player Year Draft New Round New Pick Overall Player
2013 Vet. 1 14 14 Jimmy Graham 2013 Vet. 3 10 38 Steven Jackson
2 1 15 Jamaal Charles 3 14 42 Reggie Bush
3 14 42 Reggie Bush 4 5 47 Andre Johnson
4 1 43 Russell Wilson 5 8 64 Frank Gore
5 14 70 James Jones 5 10 66 Danario Alexander
6 1 71 Reggie Wayne 5 14 70 James Jones
7 14 98 Tony Romo 6 1 71 Reggie Wayne
8 1 99 Tony Gonzalez 6 5 75 Jonathan Stewart
9 14 126 Isaiah Pead 7 8 92 DeSean Jackson
10 1 127 Joe Flacco 7 14 98 Tony Romo
11 14 154 Jay Cutler 8 1 99 Tony Gonzalez
12 1 155 Jeremy Kerley 8 5 103 Sidney Rice
13 14 182 DeAngelo Williams 9 8 120 Antonio Gates
14 1 183 Roy Helu 9 14 131 Jon Baldwin
15 14 210 Bilal Powell 10 5 138 Jarius Wright
16 1 211 Beanie Wells 11 8 144 Daniel Thomas
17 14 238 Clyde Gates 12 5 148 Philip Rivers
18 1 239 T.J. Yates 13 8 159 Kealoha Pilares
19 14 266 Cyrus Gray 14 1 176 Evan Royster
20 1 267 Marcedes Lewis 16 1 183 Roy Helu
21 14 294 Stephen Burton 16 7 211 Beanie Wells
22 1 295 Armon Binns 17 10 217 Jarrett Boykin
23 14 322 Shaun Draughn 17 14 234 David Gettis
24 1 323 Ryan Fitzpatrick 18 1 238 Clyde Gates
25 14 350 Jordan Norwood 21 14 294 Stephen Burton
26 1 351 Bernard Scott 22 1 295 Armon Binns
Rook 1 27 1 1 Le’Veon Bell Rook 1 27 7 7 Eddie Lacy
Rook 2 28 14 28 Rook 2 28 4 18
Rook 3 29 1 29 Rook 3 28 8 22
Rook 4 30 14 56 Rook 4 28 14 28

As you can see from the table, I take (somewhat of) a beating in Rounds 1-4 (more on that in a second), but where I start to see the benefits of trading down is in Rounds 5 and 6, with 5 selections coming in the span of 12 picks (#s 64, 66, 70, 71, 75). If one can manage not to screw those picks up, the tactic of trading down should provide a deep and solidly competitive team in 2013. While most teams selected their 7th players in Round 7, I acquired my 7th and 8th players in Round 6. When most teams chose their 9th players in Round 9, I drafted my 13th and 14th players. That is the benefit of trading down. And given the arbitrage strategies I used with those mid-round picks, my team may be stacked enough to win a championship in 2013.

Yes, this league starts only nine players, and so those “extra” guys I select in Rounds 7-9 (and the extra boost I get from selecting my last few starters early) may not seem (to you) worth the productivity lost from the top of the draft, but 1) I believe that an (underrated) element to fantasy success is roster depth , since injuries always occur, bye weeks present difficulties, and quality bench players can be packaged in trades, and 2) I think my top starters have the potential (and even the likelihood) to produce like players chosen in the first and second rounds.

You see, I don’t think that I actually took a beating in Rounds 1-4. I grant that Jimmy Graham is likely to play longer than Tony Gonzalez, but Graham’s not guaranteed to play better than Gonzalez in 2013—and if he does play better, he probably won’t do so by much. And LeSean McCoy at the turn of Rounds 1 and 2 is great, but I’m not sure he’ll do significantly better than Reggie Bush, who was acquired at the turn of Rounds 3 and 4. And I love Jamaal Charles, but Steven Jackson at #38 provides outstanding value, and in my next piece I’ll make the case for why he’s (barring injury) going to be the 2013 Fantasy MVP.

But here I want to talk about the process that led to my selecting Jackson, Bush, and Gonzalez and why I believe my team was better served by my not drafting Charles, McCoy, and Graham. In the RDL draft, I employed three different kinds of what we at RotoViz generally call “arbitrage.” As I write more articles during the summer I might explore some of these in more depth, but here I want to give a basic idea of all three.

Distribution Arbitrage

This might be thought of as a type of diversification (or amplification) tactic. If a league has lineups calling for 9 starters, all the starters will (roughly) be drafted within the first 9 or 10 rounds. The goal of distribution arbitrage in this case would be to accumulate as many starter-caliber players as possible by taking the original draft capital necessary to select starters (one’s top 9 or 10 picks) and acquiring as many extra picks as possible within the first 9 or 10 rounds. Instead of investing one’s “starter” picks in 9 or 10 players, one diversifies by redistributing those picks to invest them in 12 to 14 players.

Basically, “distribution arbitrage” is “trading down”—as long as one receives more “starter” picks than one trades away. In general, the more players you have who are capable of contributing to your team as starters, the better your team is, and one way of getting as many starter-caliber players as possible is straightforwardly to acquire as many “starter” picks as possible.

The reasons for using distribution arbitrage are manifold: 1) With distribution arbitrage, if a starter is injured, the portion of original investment capital lost is minimized, and a starter-caliber bench player is available to use. 2) The basic idea of RotoViz’s ADP Arbitrage is that you can find values lower in the draft. If this is true, then you should want to trade out of the top rounds in order to acquire more mid-round picks with which to employ arbitrage and maximize the possible return on investment. 3) If you are using a high-round pick on a player, the best he is likely to do is meet your expectations. He has little room to outperform his draft position. In other words, when you use a high-round pick, you have little room for error. When you use multiple mid-round picks on players, you have more room for both upside and error. You can miss on one player—and it’s OK—because what you invested in him wasn’t as great as it otherwise would have been—and maybe one of the other (extra) players you drafted will drastically outperform his draft position and compensate for the lost production.

In the RDL veteran draft I used distribution arbitrage in order to draft 14 players in the first 9 rounds, with each lineup having 9 starters.

And here’s another occasional benefit of distribution arbitrage. Since the team that trades down is ostensibly losing value in the present year, often future draft picks can be acquired in order to offset the current loss in draft position. In other words, not only did I get 14 players in the first 9 rounds of the 2013 draft, but I also improved my draft position in 2014 and especially in 2015, with 3 first-round, 2 second-round, and 2 third-round picks currently owned for the latter year. In other words, like alternative forms of energy, distribution arbitrage may be what’s best for you, now and later.

Discount Arbitrage

This tactic might be thought of as a subset or component of the standard RotoViz ADP arbitrage. The idea of “discount arbitrage” is to minimize the risk of investment by drafting guys whose draft values are discounted, i.e., guys with limited downside in relation to the picks committed. Saying that a guy’s value can’t go any lower isn’t exactly the same thing as saying that it can’t go anywhere but up—but those two are pretty close and often correlated. Even if a guy doesn’t outperform his draft position, one of my goals is for him at least not to underperform it.

For the most part, the guys I targeted in the RDL draft were guys whose values I felt were about as low as they could get at their respective draft positions. Targeting these players occasionally resulted in my barely missing a desired player by a pick or two (since I was perpetually waiting for players to reach the bottom of their value)—but I felt in many instances that I took players near their bottom. In other words, I feel that I put myself in the position to see ample appreciation and production from my team, since most of my guys at a minimum are unlikely to underperform their draft positions.

Age Arbitrage

In fact, I think that most of my players are likely to outperform their draft positions in 2013. What makes me say that? Well, RotoViz’s Similarity Scores App suggests as much. More importantly, though, many of the guys I drafted finished at substantially higher positions last year than their draft positions this year, even though their playing situations have either remained unchanged or even improved. For instance, I selected as the 12th QB off the board the guy who finished last year as the 8th QB—and who has averaged a positional finish of #6.4 for all the seasons since 2007 except for the one in which he started only 6 games (2010). Why did this solid QB1 fall to fringe-QB1 status? The obvious answer is that his last name is “Romo.” The more subtle answer is this: He was born in 1980. He’s old—not for earth, but for dynasty teams.

The selection of Romo (and many of my starters) was the result of a reliance on “age arbitrage,” which involves targeting older players whose immediate productivity is likely to be greater than their draft positions might suggest. I have noticed—and I’m sure that many of you have also—that any given older player is often devalued in a dynasty startup draft because of his advanced age. In other words, drafters discount his present production because of his expected short shelf life.

In some cases this long-term perspective is prudent, but I believe that in many cases strong players are misprized merely because of their age. In the RDL draft, I believe I employed age arbitrage to great effect. I didn’t start out thinking, “I’m going to take nothing but old dudes,” but as the draft proceeded I realized that the players I considered to be both viable 2013 players and the greatest immediate discounts at their draft positions were the guys who have a higher likelihood of being out of the NFL by 2015—old guys (and a few guys who are thought of as “prematurely old,” as in “he’s got the knees of a 90-year-old woman,” i.e., he’s considered to be “injury prone”).

In effect, my RotoViz league mates (and my trading down) forced me to look for dumpster discounts, and the undervalued players I drafted in the first 10 rounds of the draft were usually undervalued because of age. One problem of using the term “undervalued” is that we all have different ways of judging and thus exploiting value. For instance, RotoViz’s James Goldstein has a piece on the strategy he used in the RDL draft—essentially, a BPA approach without reference to team need. Lots of models exist. Regardless, though, of which model you use, age is a factor (in dynasty leagues and even redraft leagues) that often is applied universally. In all valuation systems I’ve run across, younger players are preferred to older players. What this fact tells me is that older players are probably acquirable at a discount to their inherent value in most drafts, since everybody would rather roster younger talent.

My version of “age arbitrage” is (I think) on the other side of the continuum of the “age tactics” suggested in Shawn Siegele’s excellent “Maeby Funke” articles on age: Matthew Stafford and QB AgeTrent Richardson and RB AgeSidney Rice and WR Age, and Jermichael Finley and TE Age. Whereas Shawn notes that certain players are undervalued because not enough people know how young they are, I note that certain players are undervalued because everybody knows how old they are. In either instance, age is (to quote something George W. Bush would say) an “arbitrageable” factor, and in the RDL veteran draft, I arbitraged the bejeezus out of it.

And one (potential) additional benefit of age arbitrage is this: It provides a natural way for rookie players to find spots onto rosters. In dynasty leagues, many people run into the problem of having anywhere from 3-7 rookie picks per year—but not enough roster space for all the rookies they might want to keep. If, however, one makes a habit of acquiring the aging (but still productive) veterans whom few fantasy players want, not only will one often be able to receive solid contributions at discounted rates but one will also have the roster turnover necessary to keep more rookies . . . in theory. Ask me in 2015 how this goes. That’s when I plan on replacing my ancient core with the war chest of high future picks I acquired by trading down.

Timmy Teaches Bo How to Fight

So what’s the takeaway? If you have prime picks that people want and are in a league with people willing to pay a premium, you should seriously considering trading down. Doing so will likely allow you to acquire more startable players, and it will also provide you with more opportunity for ADP arbitrage. And when you’re shopping for draft bargains, you can’t go too wrong by selecting players whose value is depressed—and you just might find that the devaluation of a whole group of players (perhaps because they are old, injured, etc.) will enable you to build a roster with a fighting chance of winning a championship.

What’s OTC?

Throughout the summer, I plan on doing a series of arbitrage pieces, each of which will compare the player taken by one of my original picks (or perhaps available at that pick or whom I would have been tempted to take there) to the player I acquired either with the corresponding “replacement” pick or with an equivalent roster function in mind, i.e., “This guy will be my RB2.” Coincidentally (not really), some of these pieces will also serve to complete the “third-year sleeper WR” series I started a while ago. (I put it on hold, hoping that I would be able to draft some of my deep sleepers. I was, and now I can write without fear of losing these guys in the RDL.)

Keep an eye out for my first player arbitrage piece on Steven Jackson, the 2013 Fantasy MVP.

 

 

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