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Price Fixing

December 22, 1997

Ever notice how some players seem to stay underpriced relative to others, no matter how well they're doing? Or how some players never seem to drop in price, in spite of poor performance or inactivity, while other players' prices drop like a rock at the first whiff of an injury?

The Smallworld player repricing process is at the root of most of these apparent anomalies. Understanding how it operates can help you better anticipate how prices may or may not move, and this should obviously be helpful in maximizing your roster returns.

Player repricing actually works quite simply. When a player is bought, his price goes up. When a player is sold, his price goes down. The net of buys over sells for any day determines how much the price change will be. There appears to be a limit of $1,500,000 on any daily change, in either direction. Repeated buying can drive a player up by as much as $1.5m per day, and repeated selling can drive his price down by as much as $1.5m per day. The only other limit is a minimum price of $200,000. So much for the rules.

First let's consider Anfernee Hardaway. He opened at $7.2m, but fell to $2.9m on 11/21 when he was injured, then rose again to $7.1m when he returned, and then fell back down to almost nothing when he underwent surgery. Some managers then went bottom fishing, and pushed his price up to $1.7m, where it currently stands. This is just what you'd expect. No news here.

Let's compare Anfernee with Scottie Pippen. Scottie opened the season at a price of $9.7m. He hasn't played a game yet, nor will he for at least several more weeks. You would think his price should be down considerably. But it's still at $9.6m. Why? Probably, everyone knew before the season started that he was going to be inactive for some time. So, nobody bought him in the initial draft. Therefore, no one has sold him since opening day, since no one had him to sell. No sells, no price drops. Easy to understand once again, but a dramatically different result than what we saw for Hardaway.

There are other related, although more subtle effects. Consider Brian Williams. He opened the season dirt cheap at $369,000. Any manager who noticed probably drafted him on his or her opening roster. Those who didn't catch on before the season started have been figuring it out as the season goes along, and consequently, his price has been steadily rising. But still, he's only up to $7.7m, while other players with his SWP output trade at prices of $10m or greater. Why won't he appreciate to a price more comparable to his peers? I can think of at least two possible explanations. One is that he began the season on so many rosters already that there just weren't that many managers left to buy him once trading started. By now, given his attractive combination of output and affordability, he's probably on about as many rosters as is any player. It may also be that, even though all of the buying has pushed his value up by more than $7m, he started from such a low base that the ending price still seems too low. For most players, a $7m price increase would put it in nosebleed territory. Which is the cause here?

Smallworld doesn't publish information to allow us to know for sure, but I suspect both reasons are at work in this case. So, if you're hanging on to Brian until his price gets up to where you think it belongs, you're likely to be waiting a for a long time.

There's one other feature of players like Brian Williams which is worth noting. Because they are obviously so widely owned, watch out if something should happen to trigger a selling wave. There is a lot of potential energy on the downside, just as there is virtually no potential push further upward. So Brian will either remain a perpetual bargain, or a financial accident waiting to happen. Other players who probably fall into this same category include Donyell Marshall, Brevin Knight, and Jayson Williams. Undoubtedly there are others as well.

Finally, there are some players who have been active all season, but whose prices just never seem to move much. Check out guys like Kenny Anderson, Mookie Blaylock, or Kendall Gill. I suspect that they were generally regarded as overpriced when the season began, and since no one has had them to sell, their prices have never come down to a level that makes them attractive to buy. The only way they can come into play is if their SWP output catches up with their lofty prices. There appear to be a lot of players who just aren't a factor for this reason, and that's a shame.

Now that (hopefully) you understand this, does it bother you at all? If so, do you have any suggestions for remedies? I do, but before spilling my beans, I'd like to solicit ideas from other managers. I'll publish a discussion forum for any ideas which seem to have merit, and if we arrive at what seems to be a workable solution, we can present it to Smallworld for their consideration for future leagues. I think it's a worthwhile objective, because it will broaden the number of players at reasonable prices, and promote greater differentiation between managers.

Send your suggestions to me at Guru<davehall@home.com>.

(Special thanks to Victor Davis at U of Wisconsin who surfaced to me some of the issues discussed above, and who has helped clarify my thinking about potential solutions.)

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Hoop Pointers is written by Dave Hall (a.k.a. the Guru), an avid fantasy sports player. He is not an employee of any of the fantasy games discussed within this site, and any opinions expressed are solely his own. Questions or comments are welcome, and should be emailed to Guru<davehall@home.com>.