THIS ARTICLE WAS SUBMITTED BY ROSINEATER AS PART OF THE 2004 MEMBER ARTICLE SUBMISSION CONTEST.

“RISK”: likelihood of loss or less than expected returns. (investorwords.com)

Last year (2004), Jamie Moyer ‘slipped’ for $14 in my AL-4x4 Auction League. The winning bidder let out a Homer-style “Woo-hoo!”  Someone said, “Steal of the draft.”

And why not? Moyer was a rotation anchor for a team that routinely won 90+ games. He had returned values of $34, $27 & $37 over the previous three seasons .

No one predicted that Moyer would return the ‘lucky’ bidder a negative value ($-7) for the year, devastate his ERA and WHIP and, in no small part, cost him a shot at the title.

This article looks at fantasy pitching from an investor’s point of view. Although it’s written from the perspective of an auction leaguer, I’ve added notes on how to apply its strategies to straight drafts as well.   

“SYSTEMATIC RISK”: Risk which is common to an entire class of assets or liabilities. (investorwords.com)

Soon after I joined my first rotisserie baseball league in 1993, a veteran of the game provided me this quality advice: “You can’t count on pitchers from year to year.”

Pitching investments are always risky. How well you manage this risk often determines your level of success in your fantasy league.

The Moyer phenomenon is far from unique. Whether you play in the 4x4 or 5x5 format, pitchers are less likely than hitters to deliver or exceed their projected values:

AL Players with 2004 PROJECTED VALUES of $5 or more

Player Type           Tot #       MET or EXCEEDED     MET or EXCEEDED
League Format     Players     PROJECTION(#)       PROJECTION(%)
PITCHERS, 4x4       65                   20                         31%
HITTERS, 4x4        128                  58                         45%
PITCHERS, 5x5       65                   21                         32%
HITTERS, 5x5        129                  58                         45%
SOURCE: 2004 PROJECTED VALUES AND 2004 ACTUAL VALUES FROM ROTOTIMES.COM

2004 AL Players, Min 60 IP (Pitchers) or 100 AB (Hitters)

Player Type            Total             EARNED POS         EARNED NEG         EARNED NEG
League Format         #                VALUE (#)              VALUE (#)              VALUE (%)
PITCHERS, 4x4     125               83                        42                   34%
HITTERS, 4x4       202             168                        34                   17%
PITCHERS, 5x5     125               97                        28                   22%
HITTERS, 5x5       202             180                        22                   11%


Just to clarify, by returning a negative value a player isn’t just performing below expectation (as in a ‘negative return’). Taking the season as a whole, having a negative value player on your squad does you more harm (usually via poor batting average, ERA or WHIP) than good.

The strikeout category saves many pitchers from returning negative values in the 5x5 format (Moyer was an example of this, returning a $3 value in 5x5 leagues). However, the runs category seems to create a similar effect for hitters.

Why is pitching such a risky proposition? I could suggest any number of baseball explanations. Injuries, even slight, can induce mechanical flaws that hinder performance and lead to further injury. Pitchers often have to battle through “dead arm,” confidence issues and general ineffectiveness. Team defence and luck can factor in, too.

One might suggest that hitters face similar hardships, but consider this: even a single, horrible outing can have a huge negative impact on a pitcher’s stats – the kind of impact a hitter would need to mire in a prolonged slump to duplicate. A pitcher needs only to endure a few brutal shellings over the course of a season and he’s staring negative value in the face.

“RISK MANAGEMENT”: The process of analyzing exposure to risk and determining how to best handle each situation. (investorwords.com)

When faced with systematic risk, investors employ some of the following strategies:

1. MINIMIZE YOUR INVESTMENT IN THE SECTOR:

In other words, allocate more of your resources away from pitching and towards hitting.

Before any auction draft you should have an idea of how much you intend to spend on hitting and pitching. Given a $260 cap I’ll rarely spend more than $75 on pitching, and sometimes I’ll go as low as $60. There are exceptions – for example, if I feel I have substantial hitting value protected on my keeper list I’ll spend a bit more on quality pitching.

Given the amount of risk pitchers carry, there really isn’t much separating a pitcher with a projected value of $9 from one with a projected value of $4. So rather than getting into a bidding war for any particular pitcher just grab the next guy on your list. Spend your savings on hitting, where it can really make a difference.

STRAIGHT DRAFTERS: If torn between a pitcher and a hitter, draft the hitter and take your chances with another pitcher down your list. (AKA: the Blaster Draft Method) 

2. HEDGE YOUR BETS:

Never bid to a pitcher’s upside!

Your maximum bid should be somewhere below a pitcher’s projected value -- exactly where depends on how risky the pitcher you’re bidding on. You might wish to go up to 80% for a quality starter. You’ll need to go higher to land a premium closer.

For all other pitchers you should be looking to pay no more than 50% of their projected value.

The key to accomplishing this is patience. Toward the end of any auction there are at least a dozen third and fourth starters or quality set-up men who go for a fraction of their projected values. Why? They’re “unsexy” picks, available at a time in the auction where most owners are low on funds.

Don’t worry if these picks don’t have high “upsides.” If you can round out your staff with four projected $9 pitchers you paid $4 each for, that’s all the upside you need! You’re minimizing your risk and setting up potential bargains.

You won’t get the rookie phenoms at these prices, but that’s ok – they’re among the riskiest pitchers of all. You might just get a “Jake Westbrook,” a guy who suddenly puts it all together several years into his career (again, like Moyer). You’ll get some busts, too, but assuming your league has free agents or a waiver wire, who cares? It hurts a lot less to go to the wire to replace a $4 flyer than a $12 flop.

STRAIGHT DRAFTERS:  The bottom few openings on your pitching staff should be among the last you fill. Let everyone else spend his mid-round picks on risky, middle-tier pitchers while you fill out your offence with the guys you really like. Then swoop in and grab the sleeper pitchers.

3. GO “BLUE CHIP”: 

Look for the most solid, proven assets within the sector. I call them “blue chip” pitchers – guys who consistently produce near or beyond expectations and have no current or lingering arm problems or other debilitations.

I don’t have a set formula for identifying these guys. They can be found by eyeballing career stats. They are often, but not necessarily, the “ace”-types. Sure, they have names like Maddux, Rivera and Johnson (Randy, not Jason). But they also have names like Buehrle and Wells -- guys who don’t dominate but who have rubber arms and provide their particular stat set year-in, year-out.

Because of their relative safety and scarcity, I’m willing to bid up to projected value for blue chip pitchers. Unfortunately, there’s still some risk within the blue chip sector -- before 2004, you’d surely have included Moyer in this group.

STRAIGHT DRAFTERS:  It’s OK to grab a blue chip pitcher a bit earlier than you might other pitchers. I try to get at least one blue chip ace-type and one blue chip closer in the early rounds -- before they’re all gone.

4. MANAGE YOUR PORTFOLIO:

Someone could write an essay just on this topic, but you know the basics. Keep a close eye on your investments. If your bargain starters are struggling, bench ‘em  -- if they continue to struggle, drop ‘em.  Play the matchups – bench ‘em against the stronger teams. Don’t let ‘em start in Denver. Or in Arlington for that matter! Do your research. Use the waiver wire.

STRAIGHT DRAFTERS:  Ditto.

Despite appearances, fantasy baseball isn’t really a baseball contest. It’s a contest in investment. Baseball statistics, instead of market factors, determine the value of your portfolio, and the investor whose portfolio returns the most value over the course of the season wins.

So if you want to win your league, think like an investor.