I have played in an auction keeper league for many years, and I believe out keeper system does not violate either of your two rules.  Our system works like this…
1.  Any player whom you draft for $10 or less, and keep on your roster for the whole season, is eligible to be kept next year at the same price.
2.  You can only keep a player for one year after you original draft him.
3.  you can keep a maximum of 3 players in any year.

We have found that this system allows managers to reap the benefits of drafting under the radar players, yet the rewards are not too high to deter managers who have no keepers from participating.

I think you left out one rule though.  I think any keeper system should not overly diminish the importance of the draft.  The draft is the single best day of the fantasy season.  If most of the top players are already kept, the importance and excitement of the draft day is impaired.  Our system ensures that most of the top players are avail to everyone.

Our system works well. $260 budget. You can keep up to $100 worth of players, and you lose that money at the auction.

A player can be kept his second year for the same salary, though anyone below $5 is bumped up to $5.

In third year, you can either sign the player for one more year at salary +$5, or 3 more years with a $5 bump each year. If you go long term, you can’t cut the player without a penalty—namely, you lose half of his current salary at the next auction.

I don’t see what’s wrong with “normal” rules.  If I have a great keeper list, why shouldn’t I be able to keep my players.

Believe me, if you have a good league with competitive owners, the strength of one team’s keeper list is NOT enough to deter other teams from competing.

Plus, it is extremely rare that one team is that strong (I can only think of one case, in my 12 years in my current league, and that team finished in 3rd place!  You never know what will happen.)  Usually there will be at least 3-5 “strong” teams going into a season - typically the players who dumped the previous year and picked up some good keepers.

What’s wrong with this?  The teams that went for it the previous year got to have a chance to win.  The teams that dumped have a better chance this year, but again, anything can happen.

Keeper leagues typically go on a 2-year cycle.  If I trade all my keepers away to someone who is dumping this year in my quest for the title, I know that my chances next year aren’t that great.  But when you have long-term owners, that makes it fun.

I’m in 2 keeper leagues.

In the auction league, you can keep up to 5 players a year and everyone’s price increases $5 per year.  This does violate rule #2 to some degree (I got Prince Fielder and Tim Lincecum for $1 in a few years do to some quirks in our league rules).  But the league is fairly competitive and everyone knows how beneficial it is to score cheap players (which the rule quirk allows to happen quite a bit).

In the draft league, each player is assigned a point value based on the round he is drafted (1st round = 6 points, 2nd = 5 pts, 3rd/4th = 4 pts, etc.).  A manager can keep up to 6 players who total 10 points.  The kept players count as that managers draft pick for that round.  Every year a player is kept, he costs 1 more point to keep.  There is some rule #2 violation for this league too.

Our structure is as follows (remember that the Delmon Young example was constructed a few years ago, so the word ‘foolish’ is a little harsh):

Salaries

A player who has been under contract at the same salary during the season and whose service has been uninterrupted (that is, he has not been waived or released, although he may have been traded) must, prior to the announcing of keepers in the following season, be released; signed at the same salary for his option year; or signed to a guaranteed long-term contract.
If released, the player returns to the free agent pool and becomes available to the highest bidder at the next season’s auction. If signed at the same salary for an option year, the player must be released back into the free agent pool at the end of that season. If signed to a guaranteed long-term contract, the player’s salary in each year covered by the new contract (which commences with the original auction value) shall be the sum of his current salary plus $3 for each additional year beyond the year that player was acquired in the auction. SEE EXAMPLES.
NOTE: This rule is to prevent blue-chippers, low-priced rookies who blossom into superstars, and undervalued players from being tied up for the duration of their careers by the teams who originally drafted them. It guarantees periodic transfusions of top-flight talent for Auction Draft Day and provides rebuilding teams something to rebuild with. And it makes for some interesting decisions at keeper time.
EXAMPLE

You draft Delmon Young in the Minor League Draft. He costs $1. Signing Young to an option year contract would be foolish because you would only retain his services for 1 year at $1. You want to sign him to a guaranteed long-term contract. You decide to sign him through 2010. Young’s salary zooms to $13 per year ($1 (2006) + $3 (2007) + $3 (2008) + $3 (2009) + $3 (2010)), but he’s yours through the 2010 season. If he continues to mature as a ballplayer, you’ve got a bargain.

You draft Roger Clemens in the Auction Draft. He costs $25. You want to sign him to an option year contract since he may retire soon. So you retain his services for another year at $25.

NOTE: Once a player’s contract runs out, either option year or long-term, that player becomes a free agent.
The cumulative salaries of players protected prior to Auction Draft Day are deducted from a team’s $300 expenditure limit, and the balance is available for acquisition of the remaining players needed to complete the team’s 25-man roster.

NOTE: The following only applies to players that are signed to long-term contracts AND have more than one year left on their contract. In other words, if after the auction, a player is in the last year of his contract and will become a free agent after the season, he may be released at no cost to the owner.

Penalties: (1) If you sign a player to a long-term contract and you release him, then you are deducted 50% of his contract in the first year, while reducing the penalties by another 50% each year until the contract is up; so in the example it would go from 13—-> 7——> 4 and so on. If after the deduction, the price results in a decimal, you round up. So for a $25 contract, it would cost an owner $12.5 = $13. This means that $13 would be deducted from your initial $300 before each preceding auction that player had been signed through. (2) If a player that is signed to a long-term contract is traded then the team that is trading the player AWAY is credited with a 25% deduction of his contract unless otherwise stated in the trade. In other words, a team may trade a player away, along with his contract penalty. The team that receives the player picks up 75% of his remaining contract. The team that is trading the player away MAY NOT take on more than 25% of the player’s remaining contract.

NOTE: The team that receives the player MAY NOT sign that player to another contract. Once the contract runs out, then that player is released back into the free agent pool.
NOTE: In terms of retirement or career ending injury, I feel an owner needs to take retirement into account when signing a player to a long-term contract, but in such a circumstance I think a reduction from the initial 50% penalty to a 10% penalty for each year should suffice.

EXAMPLE

Following from the Delmon Young example earlier, if you sign Young through 2010 with his new salary of $13, and after an unfortunate bat throwing incident he is thrown out of baseball, you want to release him. If you release him during the 2006 season, then you would be charged $13 * 50% = $6.5 and since we round up, it would cost you $7 for the first year; $13 * 25% = $3.25 or $4 for the second; and so on. Therefore, you would begin each of those years (2007-2010) with a cap penalty.

If Delmon Young is traded, then the team that is trading away Delmon Young is credited with $13 * 25% = $3.25, and since we round up, it would cost you $4 for the first year; and so on as described. The team receiving Young now takes on 75% of his remaining contract which is now $9 for the first year; and so on. Remember, teams may also deal away the 25% contract penalty.
Cap penalty acquired through both the release of a player under contract or through the trade of a player under contract may be traded.

Keepers

Each team is afforded 3 rookie/prospect slots which they may use or trade to retain players that are eligible as prospects. Prospect eligibility is determined by the following:

1) Prospect was acquired via the Minor League Drafts or Trades and was not originally acquired via the auction or free agency.
2) Prospect has never been moved out of your Minors, in other words, he hasn’t been on the bench or in the lineup at any point.

Each team is afforded a maximum of 6 players in which they can retain, sign to an option year contract or to a guaranteed long-term contract, from their major league roster. A team may choose to retain additional minor leagues instead of major leaguers but must sign them to a contract. There is no minimum on the amount of players a team may retain allowing for teams to start from a clean slate.

If you sign 6 players to long-term contracts you must keep them as your 6 keepers until their contracts expire, or release one if you choose to keep another player, resulting in a salary cap penalty. Therefore, it is advised to not sign all of your keepers to long-term contracts.

Protected players will need to be declared by a designated date from the Commissioner. Email your team’s list either to the commissioner or post in the designated area of the Auction Board so each team knows who is available for the draft. The commissioner should promptly notify all teams in the League of each team’s protected roster, including player salaries, contract status, and amount available to spend in the Auction.

We have a keeper league operating through an auction format.

Each player has a dollar value that he was drafted at (MLB undrafted players come in at $10 default) and a “year” assigned. If it is the player’s “first year” he can be kept; second year players cannot be kept…so everyone goes through the draft at least every other year.

Owners can only keep up to 10 first year players and their value comes off the $260 you start with in the auction. All unkept players go back in to the undrafted player pool if they are not drafted.

My keeper league uses the same categories and $260 budget. We draft 23 guys using an auction and then snake draft 7 additional guys (who all cost $0). We’re allowed to keep up to 4 players who were drafted plus at their original prices + $1,4,7,10 (respectively).

Players picked up off waivers during the season aren’t eligible to be kept at all and go back into the draft pool along with all non-kept players. Players who are drafted and then dropped during the season aren’t eligible to be kept at any price. Players can be on a roster for a total of 3 years without having to go back into the draft pool (original season + being kept twice).

The total cost of your keepers counts against the next auction budget. Trading a player doesn’t affect his keeper status.

I’ll add that I don’t like the price guide rule. First of all, my league argues so much that we’d never be able to agree on a single guide or two. But regardless, many of the price guides are prepared in December and January, well ahead of the drafting season, when many free agents aren’t even signed yet (like Manny!). Yes, Pujols and A-Rod will be about what they usually are, but a lot of the mid-tier players or prospects will be greatly overvalued or undervalued.

The guides are just guides. You can discount them or take them as the written word of God, but either way, the only true value of a player is what he’ll fetch in a the market place, which during an auction is dynamic.

For example, if there’s a run on closers, then the price goes up. It’s happening in real time, which static months-old guides can’t evaluate.

This is tremendous, I’m constantly impressed by the folks that stop by to read our articles and throw some feedback on them as well.

I like the idea for Keeper Rule #3 - the auction or draft should have enough players in it each year to keep it an exciting and enjoyable event that players look forward to.  So I think a cap is definitely necessary.  I like the idea of capping the dollars one could keep (versus a flat number of players), though I’d limit it to a lower number like $100 out of a $260 team budget (or less!).  Most people will be keeping bargain guys, not the $43 player they happened to get for $41.  So I think a lower salary lid for keeping purposes would help maintain rule #3 and keep some good talent in the auction/draft.

It seems like a lot of you guys take a contract approach to keeper leagues, which I find fascinating.  I’d imagine it serves to help mimic true baseball management, as well as keep people active and involved.  Surely if I had Longoria and Lincecum locked up for 4 more years, there’s no way I could leave a league like that!

I also like the idea of setting the draft order like 8,9,10,4,5,6,7,3,2,1.  It definitely incents the people at the bottom of the league to stay in it until the end.  My solution to this potential issue was simply to have part of the entry fee go towards a weekly prize for the best team performance.  Even the last place team can luck into that, provided they pay attention and don’t miss starting their pitchers, etc.

I also like the idea of keeping one player from each range of draft rounds (1-5, 6-10, etc), though that can sort of bring some unintended consequences.  I wouldn’t want to “take chances” on injury risks or potential breakouts with too many picks in a row.  In other words, if I picked a few promising rookies with my 12th, 13th, and 14th picks, I should strongly prefer to pick a solid, known quantity with my 15th round pick.

Lastly, I like the idea of keeping 4 players, with the added price being tacked onto them ($1,4,7,10).  There’s definitely a bit of regression there, in that you clearly can’t keep all of your ridiculous deals forever.  But, if you really like a player, you could keep designating him your +$1 keeper each year, to ensure he stays on your team.  Tons of strategy potential here, I like this a lot.

I tried to read through all of this for my answer, but ran out of time.  I’m in a keeper league and we use espn for it.  The problem is that they do not keep the entire minor league pool of players in their database - so we’re forced to use google docs to track this.  This has its obvious drawbacks - but every time we tried a new site, it was not nearly as slick as what espn has.  Any suggestions for a fantasy site with a stong UI and a full MiLB database? 
Many thanks for the help.

We’ve had extremely good luck with a freeze system where you may freeze a player for the previous price, but for only one year.  If you find Albert Pujols for 4 buck you reap those rewards the next year.  But the year after that, he’s back in the pool.  This is combined with a tier where the best and worst teams may only freeze at most 4 players, the 3rd and 4th and the slightly less worse 5 and everyone in the middle 6 players.  Between these two rules you get a nice balance of reward but no dynasties.  It also insures no more than 1 year between open drafting of all players so you get a shot at your favorite players.

If you need another article idea, we have had yeard of debates over firesales.  2/3 of the league does nto want them but 1/3 does adamantly.  We have made it a rule that no player traded may be frozen.  Basically, if players can be traded for freezes, and many teams are out of it by july, they should logically sell whatever they can for freezes as their players no longer have value to them this season.  The tiers above are intended to also provide incentive to not tank.  The wore you finish the less freezes you get as incentive.