The first known form of currency originated in Mesopotamia around 4,000 years ago. At the time, grain was the most common trading good, with entire warehouses bartered in exchange for other items of need. The problem with warehouses of grain, however, is that they were difficult to transport around.
As a result, people started using metal chits to represent the grain that they had available for trade. They could travel to market, purchase items with the chit, and the buyer could then redeem the grain from the granary at his leisure.
This system was successful except for one minor issue; granaries, at the time, had an inconvenient habit of being raided by bandits. One’s willingness to accept these metal chits was directly related to how much he trusted the local military to defend the stores. As a result, trade became more difficult the further out someone got from the seat of military power.
In case you’re confused, no, you are not lost. Yes, this is still a fantasy football site. You have not mistakenly clicked a link to www.CentralBankerGuys.com. I tell this story partly because history is cool, but mostly because it highlights several key features of currency that are directly applicable to dynasty leagues.
Lesson #1- Currency must be desirable. At the time, grain was used as the instrument of trade because everyone needed grain, so the buyer knew that if he wanted he could turn around and sell it for something else.
If I wanted to trade a camel for a goat, I would have to find a goat owner who was looking to buy camels. Alternately, I could sell my camel for grain and then use that grain to purchase a goat from any goat owner at all. Even if the goat owner didn’t need grain, he knew he could turn around and sell that grain for something else he did want.
Lesson #2- Currency must be portable. Warehouses of grain, despite all their desirability, suffered from a fatal flaw. One could not simply take a warehouse a hundred miles to to market. Storage was limited, and the more of it one gathered, the bigger a target he became for potential thieves. Early merchants needed something just a tiny bit smaller.
Lesson #3- Currency must be durable. A chit representing a storehouse is only as valuable as the buyer’s faith that the storehouse will still be there. The greater the risk for thieves, drought, or bad faith, the less the chit is worth.
Making Money in Dynasty Leagues
Clearly there's a lot to be said for having some sort of currency. It facilitates trade and eases the flow of value to where it is most valued. It has enabled many advances in society. Fantasy football could certainly benefit from the establishment of some sort of currency. Redraft leagues, unfortunately, are entirely out of luck.
Is there any asset in dynasty leagues that is universally desired, infinitely portable, and perfectly durable, though? It just so happens that there is: rookie draft picks.
If you’re trying to sell Jamaal Charles, your potential trade partners are limited to owners who (a) need an RB, (b) have something you want, (c) and are contending in the short term and willing to take on an aging piece. In a league with a finite number of trade partners, such a mix will be hard to come by.
The market for draft picks, however, is universal. Some owners might value draft picks more and others less, but there’s not a team in any dynasty league that flat-out doesn’t want more draft picks. The rookie draft is the primary means by which incoming talent is distributed. Cut off from a steady supply of picks, rosters will atrophy and fall to irrelevance.
There are some other assets that are relatively universally desired. Young prospects at receiver and running back can function as a pseudo-currency, for instance. Everyone needs a steady supply of youth to replenish their squad. But unlike prospects, draft picks are infinitely portable.
In a league where teams have 24 roster spots, a certain number of those spots are going to be earmarked for the day-to-day operations of winning fantasy football games. Every team needs a certain number of starters and quality backups to field a competitive lineup every week.
Of those 24 spots, perhaps 8 will be reserved for long-term prospects with no immediate value. The implication, then, is that an owner who already has eight prospects he loves will not be in the market to acquire more. There’s a functional limit to how many he can have.
Draft picks have no such limit. Even if a league only has 24 roster spots, there is nothing to prevent an owner from hoarding 80 future draft picks, if he’s able to. Unlike grain silos in the fertile crescent, draft picks are easy to transport around.
While it would be impossible for the owner to actually execute all 80 of those draft picks, their universal desirability means he won’t have to. Just like a goat owner doesn’t have to personally eat the entire warehouse of grain he just bought. Both are free to sell their assets for something they can actually use whenever they so desire.
Finally, draft picks are perfectly durable. A future draft pick has never sprained an ankle or torn a ligament. It has never done drugs, gotten cut, or been passed over by a more talented backup. To be sure, individual players owners might be targeting at a specific draft pick can still do all those things. But if they do, the owner is free to use his draft pick on someone else.
A currency's two primary functions are as a medium of exchange and a store of value. Because they are desirable and portable, draft picks are the ideal medium of exchange. Because they are durable, draft picks are the perfect store of value.
We’re entering the regular season, which means future draft picks are declining in value as owners start focusing on the immediate needs inherent in the week-to-week operation of a fantasy football team. They think of the rookie picks merely as "future players", and view trading them away as simply sending players who will be helpful later to acquire players who will be helpful now.
The problem with this is that it ignores the role of draft picks as a currency. In essence, this short-term discount amounts to a sale on money. And any time money goes on sale, it’s probably a good time to start stocking up.
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