Audit Week – 2021 May 25, 2021 This week it’s time to tighten up the franchise financial books. The following feature was written by Nagasaki. This week it’s time to tighten up the franchise financial books. As we’ve explored the rookie and draft aspect we covered briefly how the Worth Chart can be a guide for determining if long term an investment can be beneficial to your franchise. Using the same steps, one can gauge if any pieces have become a negative investment. Whether acquired via draft or through auction (and long term signing), it’s time to determine if any financial burden exists, and whether or not severing may be in best interest. There are several indicators to use as guides when deciding if the move is right: Worth Chart Collective position budget allocation Robbing Peter to pay Paul Player potential improvement Replacement options Opponents’ rosters/needs/cash Rookie boomerang Cap penalty as a positive The Worth Chart is a guide and never definitive, however, has been created based off of 10 years of scoring to determine expected salaries for each position to provide an expected ROI (return on investment) and indicate based on a player’s finishing rank, at what cost would be a break even point. The posted salary values work as follows. If we were to evenly disperse all players to make 12 rosters, and the PPG were distributed evenly, and every team spent $100M in salary, that’s how the dollar amounts are created, using the average finish for each position over the past 10 years. Ex, the top RB, whatever his name, has returned a set percentage of PPG of the total points scored in the whole league, and when compared to the second guy, or 12th, or 36th, we can determine how much that player should cost to produce that amount of points. The task for any owner is to accurately predict the finishing rank of a player. If you feel your WR will finish top 24, then paying him $7.00 is appropriate. Any higher of a finish and you received more PPG than you paid for, and you received value; otherwise, you have overpaid and could have produced similar points with a less expensive player. Don’t be tempted to chase because you like a player. If his salary exceeds the rank you feel he can reach, then he’s just not worth paying for. Collective position budget allocation – This gives you some flexibility to pay a player more than what his presumed cost should be. There may be players that you feel have upside and can finish higher in rank than originally valued prior to the season. This alone is worth a chance to overpay at times for a risk-reward opportunity. It isn’t always good to do this too often, however, if you can use CPBA to hedge your bet, it becomes less risky to take a chance even if the player doesn’t break out. How does CPBA work? Every owner should create a budget indicating how many PPG they would like at each of the roster groups; QBs, RBs, WRs, TEs, K/Ds, and most importantly FLEX. Let’s say you allocate $40M for your WRs (which would be a collective position budget allocation) If you use the Worth Chart and determine that you have $38M projected worth at WRs but have some favorable low contracts, and are collectively paying them $26M, then it may be a good opportunity to spend up to $14M on that last WR that you believe can be a top 12 WR but is ranked much lower. Even if you got WR36 results, you may have overpaid but collectively you still exceeded $40M in results for less than or equal to $40M in cost, because of the favorable contracts of your other WRs. On the flipside, he could pan out and have a breakout year and you are rewarded by taking a chance with minimal financial risk. Robbing Peter to pay Paul – This relates to the previous, however a simplified 1 to 1 regardless of position. You may look at your team and feel someone is overpriced. He may be worth cutting, but you believe you can get some value from him and might not be able to get equal upside potential from a replacement player. If you are paying RB10 money for a player who ranks RB30, BUT, you have WR10 and are only paying him WR40 money, then the two negate and it may be worth it to retain an overpriced player on the opportunity of your lower priced player. Essentially you are paying each player for the other player’s results. Any breakout in performance and you benefit. Player potential improvement – This is a dynasty league so it is always important to be looking at least 3 years at a time. We covered this previously in the rookie articles, but it’s also applicable to multi-year auction signings. Its not always a good idea to be quick to dump a contract. If a player seems overpriced this year, you must also try and calculate where he might rank the remaining years you have him under contract. More common in young players, there may be a chance for breakout in a year or two. Things to consider are age, years in the league, but also, his opportunity. You can look up any NFL player’s contract and identify when they become free agents and guess if they may move on to another NFL team, opening an opportunity for playing time for your player. At times its worth retaining a players contract and overpaying this year if you feel the future years might come at a value. Replacement options – Always consider what players are left for the coming auction. Some years the talent is bled by keepers, and there isn’t much available. It doesn’t always make sense to cut a player with a high contract only to end up overpaying in auction for another player because supply couldn’t meet demand. Your opponents – Know what the other 11 teams need, how much they have to spend, and gauge how they may approach the auction. Having a good idea of the other 11 budgets is almost as important as having a grasp of your own. Rookie boomerang – With escalating rookie contracts there comes a time, more often than not, that a player just isn’t worth the cost you’re paying. You may like that player though. You may consider his salary using CPBA or Peter/Paul, but consider the Rookie boomerang. If you were to cut him, you aren’t penalized any cash, could you get him back in auction for cheaper? Cap penalty as a positive – There are a couple out there right now but the best former example is David Johnson of 2020. Under the final year of a $26M contract, if you cut him you pay a penalty of $13M to have no one. However, if you cut him you save $13M as well, and bid on him in auction.. If you win him back for $7M you still have him and although overpriced at $20M (cap hit + new salary) you still saved $6M by doing so. Take the time this week to look through your roster as well as the other 11. Use these to help determine if its worth trimming any fat in preparation of final cut down. You will use these again post-June 1 as rosters are set for 2021 cap space and you prepare for the 10-12 weeks leading up to the auction. However, even if your full preparation has yet to begin, don’t fade this opportunity to make some needed tweaks prior to June 1 deadline. Coming next, a suggested guide for each team on how to handle their current budget.