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Friday, January 20, 2012

The extra 2 percent: A fantasy market inefficency

The expression "market inefficiency" has become pretty buzzy in the baseball community. What exactly is a market inefficiency, though?

Simply put, it is something that is undervalued by an industry. Using an example that was in the spotlight in 2011 because of a blockbuster movie, the A's recognized that players with high on-base percentage were an undervalued commodity during the Moneyball years. How does this apply to fantasy baseball? Expanding coverage of advanced stats though Web sites such as this one, and others like FanGraphs, may have created a new type of under-appreciated fantasy baseball player. That player is one with glowing scouting reports and poor supporting statistics.

There was a time that understanding stats such as xFIP, BABIP, etc. gave gamers a leg up on the competition. The gap between the stat-savvy gamer and the traditionalist is closing as national fantasy coverage is incorporating these SABR stats. Anyone can go to FanGraphs and use its leader board to sort by an advanced stat and identify who was “unlucky.” It's because of this that preseason sleeper lists are looking increasingly similar year to year. So what's next?

While I'm not familiar with his work, I am familiar with songwriter and entertainer Peter Allen's quote “everything old is new again.” Turning the clock back and trusting scouting may be the key to identifying late-round gems. Derek Carty, the former head of the fantasy sports section here at The Hardball Times, and current head of Baseball Prospectus fantasy section, once told me he strives to blend statistics and scouting analysis in his work. Derek masterfully articulates something every fantasy gamer should do. It's important to use all the information at one's disposal when ranking players and identifying which to draft.

I look for a handful of things when attempting to separate the wheat from the chaff, failed prospects from potential breakouts. One is whether extenuating circumstances may have caused poor play in the majors.

One example is lingering injuries and routine trips to the disabled list. A second example is a player learning a new position. A player who broke out this past season and falls under both examples is Alex Gordon. After two disappointing seasons in the majors at age 23 and 24, he battled injuries and was forced to make a transition from third base to the outfield. Those who didn't turn a blind eye to the scouting buzz he created after ripping through Double-A in his professional debut in 2006 were rewarded for selecting him late in drafts or scooping him off league free agent lists.

Not all players who fall under those categories flourish, of course. Jeff Clement is an example of a prospect who was never able to turn the corner.

Another category of failed prospect I look for is one who reached the bigs quickly and struggled initially. Matt Wieters is a recent example. He spent under a season and a half in the minors following his selection in the 2007 amateur draft. In 2011 he began scratching the surface of a skill set that prompted Chuck Norris-like memes.

Conversely, Rick Porcello is a hyped prospect who got to the show quickly but hasn't turned into a fantasy asset. Porcello serves as a cautionary tale for the importance of keeping up to date on scouting reports. Drafted as a hard throwing prep pitcher with a lethal slider, he adopted an approach of pitching to contact and throwing a two-seam fastball predominantly while mostly scrapping the slider. Coincidentally, Porcello bumped up his slider usage this past year, throwing it 20.1 percent of the time compared to just 9.3 percent of the time his first two years in the majors. With that in mind, he could be a player worth monitoring in 2012.

I also tend to gamble on someone who has received few opportunities in the majors. A sub-category are prospects who were jostled around, getting called up and sent down, or who saw inconsistent starting time and rode the pine frequently (think Brandon Belt last season).

Going back a few seasons, you could hold up Nelson Cruz as an example of this fourth category of prospect. Cruz pummeled Triple-A pitching as a member of the Brewers and Rangers organization, but didn't receive a full time gig until 2009 after finishing the 2008 season with a flurry in 31 games with the Rangers. As has been the case with every other category of prospect worth gambling on that I've discussed, category four has a poster boy for failure: Brandon Wood. He has had no problem beating up on Triple-A pitching, but his contact struggles and questionable hit tool have caused him to fall on his face with both the Angels and Pirates.

As with most things, moderation is suggested. Rostering a full team of potential late bloomers is a recipe for disaster, even at the cheap cost of late-round picks or minimal auction dollars. Glue guys that fill out rosters are important, but passing on a few for a lottery ticket or two can result in a great return on investment and possibly even a fantasy title.

Posted by Josh Shepardson at 2:07am

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