Buying at the Trade Deadline

It's dynasty trade deadline time. If you're a buyer, this post is for you!

Hi folks,

As I mentioned last week, the early-week column is going to become more versatile (while the late-week column will be a one-stop shop for the HHG/RB content).

Today’s post is regarding Dynasty Trade Deadlines, and specifically from the perspective of a buyer.

Last year I did two columns focused on in-season trading and some of this will be repetitive for folks who read those, but hopefully a bit more specific and tailored to a buyer’s perspective in this current year.

For those who want to check out the columns I’m referencing, one is called “Reasons to Trade in Dynasty” and the other is called “Tearing Down your Dynasty Team.”

I would especially recommend the “Reasons to trade” piece as somewhat of an introduction for this column.

But before getting into the meat of today’s column I’m going to start with an introduction from my personal soap box: Dynasty trade deadlines are good!

Ironically, this introduction will serve a dual purpose as a strategy guide to trading in non-deadline leagues by pointing out all the troublesome incentives that exist.

A Defense of Dynasty Trade Deadlines

Every time the topic of trade deadline strategy comes up, there are invariably a punch of dynasty Ron Pauls populating “X” to scream that no league should have trade deadlines in the first place.

They are wrong.

And if you’re expecting me to come off like a massive boomer here, I assure you that it’s quite the opposite. Generally speaking I am a libertarian commissioner. I have a very narrow view of what constitutes “collusion” for example: my view is that the only trades which should be vetoed on a “collusion” basis is if one party is acting outside of their interests in the league. I am even pro “rental” trades — trades in which a two teams agree to make, and later reverse, a trade of a player (or players) while one manager pays the other for the short-term production. This is my most “guy in the Rockwell painting” take.

The reason behind all this is that my favourite part about playing dynasty is the distribution of incentives.

Everyone is competing against each other yes, but if everyone is playing optimally different managers in different leagues will have different incentives at each given time. Finding ways to align your incentives with those of a fellow manager, and then using your social skills to actually convert that incentive alignment into a trade is — to me — what most sets great dynasty players apart from strong players other game formats.

As far as I’m concerned, any rule allowance that creates more optionality for managers, and for competing incentives to sort through as they determine what moves to make, is a good one.

In theory, getting rid of a trade deadline would seem to be right up my alley. Give managers more time to make deals! Great!

The issue however is that it often has the opposite of the intended effect. Rather than creating more trades, the incentives work in reverse.

The fundamental strategic hinge point for each dynasty team is how heavily you choose to invest in maximizing your chance to win in the current season vs. spreading your win equity across as many seasons as possible.

What makes that choice difficult is that we are typically working off incomplete information. Even the best team in the league has a less-than 50% chance to win the championship each year. So how much of your future are you willing to risk in order to increase your chances at the margins?

Alternatively, how early are you willing to bail in order to preserve value for future years?

Take away the trade deadline and the optimal strategy becomes rather clear. Let’s explain why, incentive by incentive.

The fewer inputs remaining in the season, the easier it is to measure the expected impact of any one transaction. If you trade for Saquon Barkley today it’s hard to know exactly how much you’ve increased your odds to win. He could get hurt, your team could suffer other injuries that render you a non-contender, or you could simply lose (or win) in a playoff game by enough of a margin that Barkley’s presence makes no material impact.

You can never guarantee a championship, but if you make that trade for Barkley once you are already in the finals, it’s at least much easier to measure exactly how much better your odds are. Further, you’ll then be at the point where it actually is feasible to have a greater-than-50% chance to win your league. It’s a lot easier to justify taking a chunk out of your future when the championship is so close you can almost taste it.

To be clear, I’m not saying that buyers are incentivized to withhold from buying until the finals. I’m saying that they are incentivized to pay a higher price in the finals than they are in mid-season, conditional on having already reached the finals.

And if the price is higher mid-playoffs than mid-season, sellers are of course incentivized to withhold from trading their win now pieces until the playoffs.

But which sellers have the most attractive pieces to sell?

The team patiently assembling a sustainable dynasty with youth and picks? Or the team who just lost in the semi-finals? Probably the latter!

Now this is the part where you could argue that tanking teams simply need to sell early to get ahead of the game. Assuming everyone is playing optimally, this makes some degree of sense: yes, the finalists will be the teams most incentivized to overpay market value for win-now pieces, but there is likely a maximum market of 4-5 players to go to those teams. So the teams with less appealing win-now players are incentivized to backfill this gap and sell early.

This is not a perfect solution however. Consider each element we’ve discussed so far:

1. Buyers are most incentivized to “over pay” in the finals.

2. Sellers are therefore most incentivized to withhold premium scorers until the finals.

3. The Sellers most likely to take advantage of the above are those with the highest producing players on their roster in the lead up to the finals.

All of these elements point you in one strategic direction. The clear-cut best path is to simply go “all gas no breaks” all year long in hopes of winning the league. Then if you get eliminated, you can likely sell off your best pieces at significant premiums and still come out ahead.

It’s a no-lose situation.

I don’t raise this objection because I am inherently against win-now dynasty players. I am critical of a win-now-at-all costs dynasty strategy because it’s typically a diminishing returns approach that takes on far more downside risk over the long term than it earns back in short-term win equity.

But this objection is inapplicable if the downside risk is substantially reduced by your ability to simply trade away your expiring veterans after you’re eliminated.

It’s as if you’re asked whether or not to spend $10,000 in veterinarian bills for Schrodinger’s cat, but you get a full refund if they look inside the box and find out the cat has been dead all along.

Ultimately, every team in a no-deadline league is pushed toward the exact same incentive structure, which should mean that if folks are playing optimally there is very little trade activity in-season and then a mad dash at the end, where the teams who were closest to winning the title wind up extracting the most value.

The league becomes static and the rich become richer.

So if you play in a no-deadline league, I urge you to exploit the incentive structure that exists and play with far more aggression than you’re likely used to.

And if you play in a league that’s voting whether or not to adopt a deadline, tell them that trickle down economics doesn’t work, because a market economy demands the money actually enter the market … or just send them this article.

Strategy for Deadline Buyers