IPR Strategies 1st Place
All of the entrants had things we liked and disliked and the vote totals were very close. The following offering was voted #1 by a close margin.
My strategy has been evolving since I started about two years ago. I think that most people are missing the value in players being on good teams. I think there is a market bias or inflation if you prefer, on players that have a lot of hype around them. Players that are in bigger markets or that are part of playoff teams get more exposure and that influences their price. I’m not saying I agree or unknowingly participate in it but rather just stating a fact. Take a look at players on small market teams that always seem to be good values based on what they earn in bonuses or their Hall of Fame potential compared to guys that play for the Patriots, Lakers, and Dodgers. My point is that if you buy to sit and hold making bonuses then you should be focused on the lesser hyped players of the market. If you are looking to trade a lot you can usually find more trading partners at higher prices with those that are on playoff type teams or bigger markets. That isn’t why I like the playoff teams though. Because there are no direct playoff bonuses at Jockbrokers I think that many disregard the impact of players that are constantly in the playoffs. A great example is Clay Matthews from the Packers. He is over-hyped from the day he entered the league and his numbers are not nearly good enough for bonuses most years but he is in the playoffs virtually every season. Because of the hype and his playoff numbers carrying him to a solid Hall of Fame level he will always hold his value where the same player on a weaker team wouldn’t be worth $1 but due to that 100 points per playoff start he will be about a $10-$20 Hall of Famer. The Hall of Fame is really the only time there is a guaranteed buyer and those levels are what holds value in the market. I also ran a lot of older stars and found that without good playoff numbers it is virtually impossible to get to the top 3 levels of the Hall of Fame. My point can be proven looking at players like Kris Bryant and Mookie Betts over Nolan Arenado. They are all great but Bryant and Betts are the best values because they will be in the playoffs a lot. Arenado has defensive numbers and in Colorado he will score high from year to year but Bryant and Betts will both be worth more total if you add their lifetime bonuses with their buy back level. Arenado might not be the best example because with his defense and gaudy numbers he might actually buck the trend. Having a guy in the playoffs just extends the points earnings for that player. What is funny is that you could buy Bryant and Betts cheaper as IPR and even now they tend to run lower than Arenado.
Sorry this is getting long but there is one other thing that I think people do not give enough weight to in their valuations and that is the age of the player. Most baseball players start out as full timers around the age of 24 but sometimes you get that rare player that starts at 20 or less. Players like this are worth so much more than the average ones. I cannot stress this enough and cannot put a dollar value on it but I would generally say that a 20 year old in baseball is worth 50% more than if he was 24. This is not about when they are released as an IPR but when they got into the league to start accumulating stats. Someone like Bryce Harper with 4 years under his belt before most guys are even in the majors is worth at least 2 levels in the Hall of Fame.
I want to have solid resale value and I think there is hidden value in playoff stats my strategy centers around those players. Here is how I do my valuations.
I look for the average season that a player will do by looking at their history and projections from at least 3 sources. The general path for baseball players shows that they will increase in production between 26-31 years old and start to decline after. This is slightly different for other sports of course but a similar curve can be projected. Most players in the IPR are come out before their peak so I use a flat line extrapolation so that my projections are a bit lower than what their best seasons will be. Once I find the average season for the player I put those numbers into the calculator and multiply the annual amount he would be paid by 10. For instance, if someone’s average season would earn them a $1 bonus they are worth $10 in the IPR. I adjust that number a little for age and the team they play for giving them up to a 50% premium for each. So if the base price is $10 and the guy is 21 years old he would get a 30% premium, which is 10% per year under 24. I also add a few cents so that I’m not competing with all the lazy people who would bid even dollar amounts. So my bid on this player would be something like $13.03. I rate the teams from 5-0 and give a 10% premium for each level. So the Dodgers would be a 5 and Colorado would be 0. In many cases the average season yields points that are below 400 but not to worry. In that case I divide the points by 400 to get a fraction then multiply that times the $0.25 that is paid for the bottom bonus. Lets say a player’s average season would earn 180 points. The math is 180/400 = 0.45, then I would multiply that by the $0.25 to get $0.11 then by the career multiplier of 10 to get $1.10 and that is my base bid.
The career multiplier of 10 is designed to cover the monthly and seasonal bonuses as well as the eventual Hall of Fame buyback. I have only been using this method for a little over 1 year but so far no player that has reached my projection for their average season is selling for less than I paid and more than half of my portfolio is over 3x what I paid. I know I made this very long but the process is simple and works great. I just spend too many words to explain it.
Things we liked about this one:
- It is effective.
- It can be duplicated by any user with the information provided.
- Good examples given
- The logic behind it was sound
Things we felt were lacking:
- There was not much explanation of how to get to the best projection of an average season.
- We were hoping there would be an entry that had a Plug and Play sort of equation but none did.
- Not sure where the 10x career multiplier comes from and while there are claims made about success a lot of IPR bids are too low. This is not always a bad thing because you are getting great deals many times but the multiplier will have to get higher as the IPR bidding is more competitive.