RSO Rookie Picks Pt. 2
The RSO salary cap and contract structure provides a unique setting when compared to other fantasy platforms. A superior player with more expensive contract will be worth less in many instances than a lesser producing player with a cheaper contract for RSO leagues. RSO rookie deals give owners access to cost-controlled, long-term contracts. The question is whether rookies produce enough of the time to be worth the costs involved. This article continues our examination of RSO rookie draft picks from Part 1 looking at the basics of evaluating picks for RSO leagues.
Part 2 expands upon this by comparing the expected production value of rookie picks with the associated RSO rookie contract costs. We can then ascertain where the best bargains can be found and relate draft pick costs to veteran spending. While there is no superbly accurate means of determining how a rookie will turn out given the many variables outside the control of the player and the host of intangible player traits which determine success, but the model below should give the reader an idea of how to value rookie picks.
The Technical Aspects
This section details the technical aspects of my value formulation. As a quick reminder, the values obtained come from shallow, non-PPR leagues. The reader may refer to part 1 for more information about the data. I first converted the player values in part 1 to dollar values based on the salary cap and league settings specified above.
My next step involved weighting player values by the year in which production occurred using a 20% yearly discount rate unless noted otherwise. People generally prefer production in the present when compared to production in the future. An example may help to illustrate the point. Given one rookie who produces only in year 1 of a rookie contract and another rookie who produces equally but only in year 4 of the rookie deal, most RSO GMs prefer the rookie who produces in year 1. There is another more tangible reason to discount the production in future years. You might not be in your RSO league in future seasons. Maybe the league breaks up. Maybe your life circumstances change so that you are no longer able to compete in the league. As shown in part 1, draft picks tend to produce more after the rookie season. The RSO GM is generally receiving less production in the rookie season compared to later years but paying the same price as a percentage of the salary cap. I finally summed the time-weighted values to form an associated present day value for each player.
Lastly, I estimated player values for each draft position using a linear-log regression model. The estimation utilized players selected from 2007 to 2013 rookie drafts. Players selected from 2014 to 2016, included in part 1, were excluded in this analysis as they have not completed their rookie contracts.
Contract Value vs Cost
Reality Sports Online posts rookie contract costs for drafts up to five rounds. Similarly to player values, I converted contract costs to present day dollars in order to compare rookie draft costs to values. There are a few key items worth mentioning after examining the costs. First, there will be a sharp drop in rookie costs from the last pick of the first round to the first pick of the second round. Second, contract costs remain relatively “flat” after the first round. There exists little difference in costs from 2.1 to 2.10 for example. Third, contract costs grow yearly at a rate which should adequately approximate the yearly salary cap growth in the NFL. This means rookie picks should take up approximately the same percentage of cap space for each year of the contract.
The data also presents interesting notions on the relative value of draft picks. The 1.1, for example, is approximately equal in production value to 1) picks 4 and 5 or 2) picks 7 to 9 or 3) picks 9 through 12. The massive premium attached to top picks seems quite reasonable when looking at the expected production. If we want a better a look at how good a rookie contract is, however, we need to take into account the associated costs with each rookie deal. The next section details this further.
Net Contract Value
The net contract value is simply the contract costs subtracted from the contract value. A rookie contract with a net value of zero is expected to produce at the market value rate. As seen from the chart above, rookie deals as a whole tend to be good contracts to owners with 75% of the picks having positive net values and the remaining picks producing minimal losses. In particular, rookie picks near the top of the first and second rounds substantially out-produce their contracts. This is primarily a result of large production from the top picks and the big drop in rookie costs starting with second round picks.
Net Contract Values with Selected Discount Rates
Of course not everyone values future production of players in the same way. It becomes readily apparent from the table above that rookie picks rapidly lose value for those people who sharply discount future production and are focused more on the present. Be sure to understand your personal situation and timeframe before investing heavily in draft picks.
Other Considerations
The analysis above focused on the production value of rookie picks. Another way to look at the problem is through the lens of what I will call “perceived” value or, put another way, how the rest of your league values draft picks. It is well documented that many fantasy leagues value draft picks above their production value, particularly around the time of rookie drafts. RSO owners, particularly those out of the playoff race, might consider trading for draft picks during the season even if the player values traded away is larger than the received draft pick value. You may be able to translate the short-term loss into a long-term profit near the next rookie draft.
The above values for rookie picks are a solid starting point but we also need to remember that not every draft class is created equal. For example, I consider the 2017 rookie class generally superior to the 2016 class with more high-end talent and quality depth throughout. Be sure to adjust your valuations accordingly.
Loading up a roster with draft picks can be an effective salary cap management technique. A roster with many low cost rookie picks, particularly after the first round, allows a lot of cap space to spend on high-end starters in the free agent auction. Misses on rookies (of which there will be plenty) will not have too big of an impact thanks to the low costs involved and gives the RSO GM substantial cap flexibility in the future.
Conclusions
While every RSO GM is different, there are a couple of key points to keep in mind when evaluating rookie picks.
- Rookie pick value is maximized near the top of the first and second rounds. Try to trade up, down, or out if you have picks in the bottom portion of the round. Picks at the end of the second round and later are essentially “throw away” picks which have net values near or below market value. You are better off using your cap space in the free agent market.
- Know yourself and the league when evaluating draft picks. Rookie pick values increase substantially in stable long-lasting leagues for owners who hold a longer-term outlook. The RSO team with a shorter window should seriously consider trading away rookie picks.
Bio: Bernard Faller has degrees in engineering and economics. He currently lives in Las Vegas and enjoys athletics, poker, and fantasy football in his free time. Send your questions and comments (both good and bad) on Twitter @BernardFaller1.
Team: Great Odin’s Raven (Dan Pizzuta, numberFire) 
