Dynasty Salvage Values
By Jeff Tefertiller
July 25th, 2011

Many fantasy owners play in dynasty leagues. Dynasty leagues are growing in popularity. One of the most difficult things for owners is determining values for players. This could be for the initial draft or for trades. How do I compare the value of player A versus player B? One aspect of a player's value that does not get discussed much is the concept of "salvage value". Sometimes, this is called "residual value" in the business world. We will use these terms interchangeably. Those familiar with accounting principles understand this concept in terms of valuing an asset. How much will the asset (player) be worth after X number of years, whether via ownership or after a contract has expired?

  • Answers.com defines the term "residual value" as: Anticipated value of an asset at the expiration of a lease.

  • Answers.com defines the term "salvage value" as: The estimated value that an asset will realize upon its sale at the end of its useful life. The value is used in accounting to determine depreciation amounts and in the tax system to determine deductions. The value can be a best guess of the end value.
  • The first thing dynasty owners should do is to define how large of a window in time they want to use for dynasty values. This is referred to by many as the "Dynasty Window". By this, how many years into the future do I want to consider in determining the current value of the players? Most fantasy owners use a window of time that is around three years. Defining this "window" is imperative for fantasy owners. It is all a function of risk. Each owner has a different level of aversion to risk. Some do not mind the risk of a shorter "window" while others want the longer time period. If an owner uses a "window" of less than three years, he is perfectly fine acquiring and rostering older players, even as the key players on the roster. Later in the article, we will discuss some appropriate uses for shorter "window" players. The "residual" or "salvage" value of the player is his perceived valued after the "Dynasty Window" has expired.

    Most times, fantasy owners factor in the salvage value without realizing that they do. An older player is worth less than a younger player for this reason. Even if both are expected to produce the same amount of fantasy points for the defined "window" of time, the younger player has greater value because he is expected to be worth more at the end of the window. For this reason, Larry Fitzgerald is worth more than Reggie Wayne even if both are expected to have similar production during the "window". This is why Fitzgerald and Calvin Johnson are heavily sought after in dynasty leagues. Barring an injury, each is expected to be worth just as much (or more) in three years as they are today. The same cannot be said about Wayne.

    Players with the most "salvage value" are primarily at the wide receiver position. The receivers usually have a long career and many at the position have value. The average career length for starting running backs is not much longer than the "Dynasty Window" so the salvage value rarely comes into play other than for players at the beginning or the end of their careers. Injuries to backs also de-emphasize the salvage value. Quarterbacks play so long that salvage value does not come into play until a passer is a few years past thirty years old. Only the elite tight ends have any salvage value. There are just a handful of top tier players at the position, so salvage value is not a common thought for tight ends unless an elite player is nearing the end of his career. This is why Tony Gonzalez is discounted even though he is still performing at a relatively high level. Fantasy owners know the end is coming for the future Hall of Famer.

    There are two extremes in relation to salvage value that offer dynasty owners a value position, one positive and one negative - they are at the opposite ends of the value/production spectrum. On the positive side, inexpensive veteran receivers offer extreme value since the salvage value is already factored into price. Older receivers can be effective fantasy starters for a couple of years at a great price tag. The second instance is with younger players in their first or second year in the league. These 22 or 23 year old players have higher salvage values than they probably should just because of potential. The value swings wildly based on situation and the most recent game or practice. Each extreme is explained in detail below:

    Many dynasty owners recognize the value of buying older receivers due to their reduced cost. The price to acquire the players already has the salvage value factored in. A fantasy owner can acquire a proven wideout like Santana Moss, Steve Smith (CAR), or Chad Ochocinco with the full knowledge that he may not be worth much at the conclusion of the "Dynasty Window" if he is even playing then. But, this is fine. If my team has a good chance at being a title contender during the "Dynasty Window", I can get a WR2 or WR3 at a reduced rate for my fantasy team just because there is little expected salvage value. Even the top tier wide receivers see their price decrease after they turn the magical age of 30 years old. Stud receivers like Reggie Wayne, Roddy White, Andre Johnson, etc. will soon be cheaper just because they have passed the magical age threshold. But, this is one way a savvy, competitive owner can gain value. These are the perfect receivers to acquire if the biggest need is a fantasy WR1. They cost considerably less than their younger counterparts. A tried and true stud receiver will give his owner great production during the "Dynasty Window". In addition, these veterans are more consistent than their younger alternatives, while offering less risk for failure. A second-year player with a similar cost has fewer years of proven productivity. Think about the past few years. Players like Eddie Royal and Michael Crabtree have seen their respective values swing from worth more than many elite fantasy wideouts to now when neither is worth much in comparison to their rookie years.. The value is volatile with the youngsters. With the older pass catchers, you are buying established, proven ability to perform. Successful fantasy owners are able to have key younger players, holding substantial salvage value, with a few aging, cheap veterans mixed in.

    There is some concern when fantasy owners heavily weight the salvage values. Many times, a fantasy owner is worried more about the salvage value than examining the true ability and productivity of the player. We see this all of the time. The owner that loads up on young players but is rarely competitive. Sure, his young players that "hit" might be worth more in three years, but many will fall short of expectations and be worth less than an older veteran that offers productivity along the way. Younger players do offer more risk than the older receivers as well as unknown upside. They are less proven, but could always break out in a bigger way than expected.

    Balance is the key. Having a mixture of young and old offers a fantasy owner the most value and production for the team as a whole. A team full of older players will have issues in three seasons unless its draft rookies very well. A team focusing solely on finding the next great young wide receiver will have plenty of failures compared to the players they "connect" on. Many remember how hot of an item Michael Clayton was after his rookie season. Brian Griese force-fed him the ball that year. The offseason following his first season saw Clayton trading for a mint in dynasty leagues. But, he has yet to come anywhere near the vicinity of those rookie numbers. There have been plenty of Michael Claytons over the years. Striking a balance between the valuable up-and-coming youngsters and the aging veterans minimizes the downside of risk while offering consistent production and some upside.

    This article came from a conversation with Steve Wyremski. Many in the Footballguys.com community may know him better as "Patoons". Steve is a knowledgeable poster and an advocate of the Salvage Value Theory. He targets players because of their expected value after the "Dynasty Window" has expired. Steve wants players worth more in the future than they are today. So, the example above with aging wide receivers is not something he embraces. One thing Steve does that is interesting. He tries to trade players a year before the expected decrease in "Salvage Value". This way, he stays one step ahead. This idea would make an interesting article on its own. By going this route, Steve and others like him, are willing to forfeit the one year of upside a star may give in the twilight of his career. The reason is simple in that the risk increases every year, and possibly week, as a player ages. All it takes is for the football community to see the player slow down or get nicked up and the residual value approaches nil.

    Please feel free to email me at tefertiller@footballguys.com with any questions or comments. Also, I am on Twitter, so feel free to ask me questions there.

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