New and Improved ottoneu Arbitration Process

The off-season arbitration process in ottoneu is likely the single most polarizing aspect of the format. In fact, in the FanGraphs Q&A section, there is a thread titled “Do you hate the arbitration rule in ottoneu?” with split answers. The initial post simply says, “I hate it.” A later reply says, “I love it.”

Personally, I am a fan. I believe some form of arbitration can help restore balance. But the system we have in place now is probably not the only system that would work and so for the past few months, the ottoneu founders have been developing rules for a new arbitration process, one that lets the market decide which players need to have their values raised, without pulling anyone off a roster.

The new system works like this:

Each team gets $25 to allocate to players on other teams. Every owner has to allocate at least $1 to every other team and can allocate no more than $3 to any given team. The dollars to a given team can be given all to one player or split among up to three players (due to the $3 limit).

At the end of the day, salaries in the league will have increased by $300 – which we found to be roughly the same amount of increase seen under the original arbitration system – with each team taking on between $11 and $33, depending on how the league assigns values.

To help make this more clear, check out this Google spreadsheet. This is a sample allocation that was conducted by the original ottoneu league. There is a tab for each team and on each tab is a column for each owner. So if you click the tab for Pretzels (my team), you will see that the guru of ottoneu, Niv Shah, allocated $2 of his $25 to my team – $1 to Jordan Zimmermann and $1 to Allen Craig. Geoff Newton, the brains behind the creation of ottoneu, allocated all three of his eligible dollars to Craig.

Let’s look at another team – Tiger Striped Dick(s). While the dollars allocated to my team were split amongst three (and primarily two) players , all except one of the dollars allocated to this team went to bringing Mike Trout’s salary up to where people felt it belongs. Dave Stewart’s Balls, on the other hand, saw eight different players receive allocations.

In this case, no team got a full $33 allocation, although Gerbils on Speed came close, with $32. No one only took on $11 either – the low was West Coast Wellness with $17. And there was almost no correlation between place in the standings and dollars allocated. The last place team at the moment (BrewCrew for a While) took on only $22 while the Gerbils took on $32 from 11th place. The top four teams did get $29, $28, $28, and $27 allocated, but the fifth place team took on just $17.

Part of the beauty of this system is that each league can decide for itself (or let the market decide) what the goal of the arbitration is. Clearly our league took two approaches – first, we focused on bringing underpriced guys up to the market value, hence the big hits on Trout ($5 to $35) and Andrew McCutchen ($13 to $33). Second, we punished the top teams, hence four of the six largest allocations going to the top four teams. It seems to me we heavily valued the first goal over the second (as evidence by the other two top six allocations going to bottom three teams).

As I have discussed this with ottoneu players a few questions regularly come up:

Woo hoo! When can I switch?
The new system is being built as we speak and should be ready to launch for this off-season. If you don’t want another season with the vote offs, you can switch to the allocation system this year.

If I like the old system, do I have to switch?
No, absolutely not. The new system is an option and league commissioners will be able to change the settings for each league to reflect the system they want.

If I switch, what happens to the $5 coupons we had under the old system?
Gone. You get to keep guys if you want, and if you cut them loose, that is your choice. As a result, there are no more coupons.

So if this is an option, what are you going to do in your leagues?
Well, the original league has already agreed to this change and we will be making it this off-season. For my other leagues, I am going to strongly recommend we make the change – I think this system is more fair and more interesting.

Then why would anyone not change?
This system is also more complicated and more time-consuming. ottoneu is pretty complicated and time-consuming, as is, and I fully expect that some leagues will decide that the voting system is simpler, cleaner and quicker. Another of the owners in the original ottoneu league felt that the allocation prevented certain players from reaching the salary they should. Specifically, he felt Trout would have gone for way more at auction than his salary was raised to via this system. I am sure some leagues will decide that is a good reason to stick with the existing system. Finally, there is also some risk. We have worked hard to build a system that works, and the test run results I shared suggest that we did well, but this has never been used in practice, so there is a chance it proves to be a less-than-ideal solution (although I am confident that will not be the case).

How will the allocation work?
The technical details are still being hashed out, but the idea is that teams will be able to allocate over at least a week-long period after the end of the season, and the allocations will be transparent (meaning that when I allocate, I will know how everyone who allocated before me spent their dollars). The idea here is that I may want to change my allocation once I see what others have done. Perhaps I want to boost Trout to $30, but not higher – if I know everyone else has put their dollars on him, maybe I want to put my dollars elsewhere. In our test run, we found this to be really helpful. Owners didn’t (at least I don’t think…) do anything spiteful or try to get back at someone who hit them hard; but they did make adjustments based on what had already happened, which helped to spread the $300 over a wide range of players, instead of concentrating it on only 12.

Why $25 per team? And why the limits on allocations per team/player?
As mentioned above, our sense was that leagues were seeing about a $300 price correction from the old system. The issue we were trying to solve for wasn’t the price correction, it was that the price correction was being concentrated on 12 guys instead of spread over many more (62 different players received at least a $1 allocation in our trial run). We aimed to keep that $300 total after considering $22 per team (so $2 to allocate to each other team), and many other variations. The per team limits were put in place to avoid any one team being hit overly hard. We want to keep values in line, not punish an owner who expertly built a great team of undervalued players. This should maintain competitive balance, keep salaries in line, and limit the value of lucky buys – it should not prevent an owner who consistently finds great values from building a dynasty or being regularly competitive.

Did you know that ottoneu was the single greatest thing ever invented?
Yes, I did. I propose that in the future we use it to replace “sliced bread.” So if you are super excited about this new rule, you should say, “This new rule is the greatest invention since ottoneu, which is way better than sliced bread.”

How can I provide additional feedback on ottoneu?
In the FanGraphs Q&A section, I have created a thread called “ottoneu Suggestions Thread.” This is a place where you can post comments, concerns or questions about the format. If you want to suggest a rule change, comment on the site, etc., add an “Answer.” If you want to support someone’s rule change, vote for it. If you want to comment on it (something other than “I agree,” which you can express as a vote) reply to that answer. Niv and I will be actively tracking the thread, looking for recommendations that can improve the game, and clearing up any confusion about why certain rules are set how they are set. I can’t promise quick responses all the time, but we will do our best! You can also always email help -at- ottoneu -dot- com or tweet @ottoneu.




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60 Responses to “New and Improved ottoneu Arbitration Process”

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  1. LuckyStrikes says:

    This is outstanding, maybe the best fantasy news I’ve seen this season. This was on my Ottoneu wish list but didn’t expect to see it so soon. Great change, and great to make it an option to adopt in 2013. Thank you!

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  2. Rob says:

    Question:
    I know the ideal is that all participants in the league will take part in arbitration. However, I know from my league last year that about half of the owners voted on arbitration. Under the new system, what happens to that unused arbitration money?

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    • Chad Young says:

      Niv is still working out technical details, but we have a couple things in mind for this. We’ll follow up when we can.

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    • doorbot says:

      This is my biggest concern too. My league had about half the owners participating as well, and unless there’s some way of prorating arbitration awards, arbitration won’t have much of an effect.

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  3. metsmarathon says:

    what’s the timeframe for the arbitration process? is it open any time from the start of the offseason till the day of the draft, or is the arbitration period only open for a month or two following the season?

    is it possible to change an arbitration allocation once it is assigned?

    does the arbitration period open up before or after the yearly salary increases?

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  4. soamx says:

    Don’t like it at all, and I might not continue in any of my leagues that switch over.
    This system risks penalizing the returning champion far too much.
    You drafted a $1 Encarnacion, $1 Reddick, $1 Dickey, $1 desmond, $10 trout, $1 Medlen $1 Salvador Perez You crushed your keeper draft and your team is set up to dominate for years. Except now the 11 other owners throw their $25 all your way and your now completely screwed over.

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    • jpjazzman says:

      Soamx – Not sure you completely understand the old and new systems here… Under the legacy system, your $10 Trout likely would have gotten voted off and placed back into the free agent pool. Do you actually believe you would have gotten him back on your team for less than $35 in the draft again next year? Probably not and you could easily be better off than you would have otherwise been.

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      • jpjazzman says:

        I might have misinterpreted your last line.

        As per the article, each team can only allocate a max of $3 to each other team. The absolute most your salary can go up is $33.

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      • soamx says:

        I understand the old system completely, and I think losing Trout to arbitration is a much easier pill to swallow than having most the players on my teams salaries go up significantly.
        This new system is designed in a way that it doesn’t treat everyone as equals.
        Those who did the best, will suffer the most.

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      • Chad Young says:

        The old system “punishes” the owner with the single best value (likely Trout). The new system spreads the allocations more easily. No one with a $5 Trout will suddenly have to pay $65 to keep him. Max, they’ll pay $40 ($33 allocated plus $2 natural increase), and if that happens, no one else on their team will get hit at all.

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      • Geez... says:

        Soamx, how aren’t you getting this? The other owners can only allocate $3 of their total arbitration kitty your way. One (1) player of yours can go up by 3 * however many teams are in your league.

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    • indyralph says:

      Under the old system, the other owners would have thrown at least the full $33 dollars your way on Trout alone. Discussion on our league board was putting the over/under at $70 on an arb’ed Trout.

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    • LuckyStrikes says:

      Keep in mind each other owner can only allocate up to $3 on only 3 total players on your team. In your example, it’s possible 11 owners would allocate all $3 each onto Trout, raising his price from $10 to $43, allowing you to keep all the other guys mentioned at the low prices. In the vote-off scenario, you would have lost Trout anyway and risk the chance of getting him for more than $43.
      In our league, Trout is priced at $20 and rostered by the last place team who is likely to be a strong competitor next season. If Trout is voted off, there’s about a 1% chance he goes for less than $43 in our league next season (he’d likely be a $60+ players). Now that owner gets to keep him for under $60 and the benefit of knowing he will be rostered before the draft can’t be underestimated either…

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  5. David says:

    It seems like this system incentivizes collusion. I don’t like that there’s the potential for two teams to agree not to vote on each others players, which would lower the total dollars added during arbitration for those teams. You couldn’t really solve this problem by forcing people to cast all their votes because instead of not voting, players could agree to add dollars to players that they were going to drop anyway. The only way around this that I can see is that there would have to be some sort of review process for each set of votes, but that would mean reviewing 121 sets of votes, which would be very time consuming. The current system doesn’t suffer from this problem because if two teams agree to cast their votes a certain way, those votes would just be out-voted by the majority.

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    • LuckyStrikes says:

      Like the old system, the votes (dollars) are transparent, so you’ll be able to tell if collusion is occuring and the commish can address it.

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      • David says:

        That’s fine for obvious cheating, but there’s lots of room for gray area here. Say 10 of the other owners have voted and all allocated $ to to $3 Josh Reddick bringing him up to $33. I might think that’s too much and I won’t resign him anyway, in which case I could go to the final owner and try to get him to allocate his $3 to Reddick, too. That way there’s not really any way for the commish to point a finger and say anyone cheated, but it still happened. I think the system has to be constructed in a way that avoids problems like this all together.

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    • Chad Young says:

      I don’t think it incentivizes collusion any more than any other system. If collusion is happening, it’s up to the owners in the league to address it. That said, the old system isn’t going away – you can pick either one as a league. So if your league prefer thats system, you are able to keep it.

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  6. soamx says:

    We previously had a fair system, where everyone had to go through the same arbitration process and pay the same penalty whether they were successful or not.
    Now, if you built a better team, you will suffer for it.
    It’s not really a collusion issue either, it makes sense for the other owners to target the best cheapest players, and when your team has a lot of them you are going to suffer.
    New and improved system? For losers maybe.

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    • David says:

      I’m actually confused as to why some of the arb money went unassigned in the trial run. Why wouldn’t you allocate all of your $33? If a bad team doesn’t have any good, cheap players, why not just assign the $3 to a good, expensive player and try to force him back into the free agent pool?

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      • Chad Young says:

        Teams get $25 to allocate, not $33. All the money was allocated.

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      • indyralph says:

        You only have $25 to assign. You can assign $3 to the best 8 teams and $1 to the 9th place team, but that leaves you with $0 for the 10th – 12th teams.

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      • David says:

        Ah, okay. That clears things up for me. I do like that this system would generally help create parity more than the current one.

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      • Chad Young says:

        To clear up one more thing indyralph said – you cannot allocate $3 to the 8 best teams – you have to allocate at least $1 to each other team. The most unbalanced this could be would be $3 to the top seven teams and $1 each to the bottom four teams (not including yourself).

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    • indyralph says:

      The penalty under the old system was not the same for everybody, nor proportional to your team’s success. The entire purpose of the system is to promote competitive balance. It is supposed to hit the best teams the hardest.

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      • jjdouglas says:

        A competitive balance tax, like the one proposed, should not be enforced to hit the best teams the hardest. What is the point of competing if you know that your success just brings on more of a penalty in the coming year?

        The old system was much more fair. All teams voted off one player. The fact that some teams get hit harder by losing Trout, Harper, etc. Is just the penalty they pay for not making smart moves to help protect those players. In the old system, peoples’ lack of knowledge about how to prepare for arbitration was not rewarded, in the new system, it is (more so than it was previously).

        All this said, I think the new system is an adequate way to move forward. However, lets consider one point. We all knew when, when we signed up for ottoneu, what the arbitration system was. (If we did not, we had no one but ourselves to blame. As not reading the rules isn’t something that should be rewarded). I believe that it is possible many teams have made certain moves to better themselves, under the old system, that are now being negated. I would be fine if my league switched, but the change should go into place after next season. So that everyone is on a level playing field.

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      • Chad Young says:

        jjdouglas; a couple thoughts.

        The point of competing is to win. Saying you don’t want to compete because you might get hit more in arbitration is like saying you don’t want to win the World Series cause your arbitration eligible players will have to play well and you will have to pay them more the next season as a result. Maybe there are some owners who think this way, but I would hate to be a fan of their team!

        The old system actually made it impossible to “protect” Trout or Harper…you could have every great prospect and value ever and Trout is going to get voted off in the old system. The new system allows a truly smart owner to get enough cheap talent that other owners will split their allocation and no one will get hit that hard.

        Finally, the new system is totally optional, so if you would prefer your league wait until next year, you can definitely do that. I imagine the most popular choices will be to a) change now, b) change next year or c) never change, in that order. Personally, I think that if no one in the league was aware of the new system (and no one was) when trades were happening, there is no real concern here and everyone is still on a level playing field. But I definitely understand owners who want their leagues to wait another season.

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      • jjdouglas says:

        @Chad

        My main point is that certain roster moves could have been made because of the old system, that are now devalued in the situation of an immediate change.

        For example: Someone traded a $5 Trout, Harper, Sale, etc. to a rebuilding team (since they would have lost him at season end). However, if this team knew about the new system, it is reasonable to expect they may not have traded said player. Since keeping him with the new system is most likely better than having to go through the current arb system.

        I am fine with switching, but I would to decide now (for the following year). This way everyone knows about the change at the start of the season and can prepare equally.

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    • jrogers says:

      I don’t think it penalizes the best owners that much. The average salary increase given to each team should work out to $25, and at worst a good team will get hit with $33.

      Say you have Mike Trout at $5. His price could go up to $38 in the new system. But in the old system you would have to wait for the auction, buy him if you wanted at, say, $60, and then pay $55 (with the coupon). This version penalizes you less in that case.

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  7. wjylaw says:

    Seems kind of ludicrous to change the rules near the end of the year. I took over a team in a classic league this January after the arb voting process (and by my count so did 3 others in my league). Numerous trades were made with the understanding that certain guys would probably be voted off and as a result the following guys all got traded at one point or another: $5 Darvish; $8 Myers $10 Trout; and $14 Harper, none of whom I think would have been traded if this “option” was known or more importantly declared by the Commish as the way to go in the future. To now let the league commish, or even the whole league (unless it’s unanimous), change the setting if he wants at this point is nuts.

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    • soamx says:

      Agreed. I don’t think any existing league should be able to do the switch unless its a unanimous vote.

      I certainly would have approached my trades this season differently had I known this would be in place.

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    • Chad Young says:

      It’s an option, not a forced change. You should work with your league to come to an agreement on switching now, next year, never…whatever works for your league.

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    • Niv Shah says:

      This is absolutely not a forced change, it is just an option your league can consider.

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  8. themiddle54 says:

    Niv/Ottoneu team: Please communicate important changes like this via email to everyone who is playing–you have our email addresses in our profiles, yes? Customer service at Otto is typically top-drawer, but communicating league changes is part of that. When I drafted I didn’t realize that pitcher points changed from the time I created the league to draft day. I didn’t see the Rotographs article that the scoring was changed, and I would not have seen this one if a generous soul in my league had not emailed me to let me know about it. Reading Rotographs daily should not be a requirement to keep up with changes to the league structure.

    Thanks

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    • Niv Shah says:

      Don’t worry, an announcement about the various site changes was coming once the offseason hit.

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      • theeiffeltower says:

        I agree with themiddle54–as with the pitching points scoring change, there should have been an e-mail out to every single Ottoneu user as soon as you guys came to this decision. It’s really nice that it’s optional this time around though.

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  9. Eno Sarris says:

    I love it. I understand the reticence for changing it up right now, but that’s why it’s optional.

    The whole idea of arbitration was to put market forces on protected superstar players, in a ‘super two’ sort of way. But it was a little clunky, and the mechanism — voting a guy off your team — upset people because it was unnatural. Why would I lose my best player completely? And a five dollar coupon didn’t do enough.

    So now we have an idea where the market gets a say. Yes, it penalizes success to a point. But there’s a real-life penalty if all your prospects ‘hit’ — they hit large arb raises and you struggle to keep your team together. $2 a year isn’t enough to make a team full of prospect hits uncomfortable. This is.

    You don’t want the team full of prospects to get uncomfortable? Then there’s likely one way to play ottoneu. Punt the first year or two, go all prospects, and then ride your cheap team for five years. I don’t think that’s ideal.

    I really love the new rules. I think they work more like real-life. In arbitration, your best young players are measured against comps and get raises based on their market value. Now, the market comes into your team and gives some of your players raises.

    As for the leagues that don’t have 100% participation in all phases, that was a problem in the last set of rules. But it was way more on/off. If not enough people voted, strange players got voted off teams. Now, it’s a difference of a dollar or two on a single player, and more gray than black or white.

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    • Shawn says:

      Couldn’t have been said better. Much more realistic system that allows teams that have a cheap superstar to keep them – at a fair value. Much better then simply voting a player off the roster.

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    • LuckyStrikes says:

      Agree with this completely. Also, don’t forget that there is now a very underrated benefit in the new system of knowing, in season, exactly what your roster will look like in the next season. You can now keep anyone you want (for a price), without a player being arbitrarily plucked from your team. Teams looking to build for future years don’t have to worry about doing so with the uneasy feeling of whether their Mike Trout will be around or not. There’s a greater sense of stability in the new arbitration rules.

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    • themiddle54 says:

      Eno, if you want to make it “real-life” for when prospects hit, it’s real easy: No one is allowed to allocate ANY arb dollars to ANY player who does not have two years of MLB service time.

      I built my team cheap. I have exactly enough MLB players, mostly scrubs, to fill my roster, and my bench is Jason Parks’ wet dream, a cornucopia of porno-skills prospects. In “real-life” no one can take a player out of a team’s farm, or increase their cost.

      As commish of a high buy-in league I’m strongly considering just unilaterally making that decision, and saying that any player who has not appeared in a MLB game cannot have arb dollars allocated, so that we keep with the spirit of real-life baseball.

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      • Chad Young says:

        I think you make a good point about minor league players, and as the commish, you have the power to take guys off/add guys to rosters, which means you can enforce this, if your league wants you to. I would caution against unilateral decision (particularly since in this case it seems like a decision that would greatly favor your roster), but I think leagues making alterations to the rule to fit their needs makes sense.

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      • Daniel says:

        Again though is this just not people annoyed over losing their $5 Mike Trout? Because I don’t think anyone’s going to be too bothered assigning arb dollars to your $2 Taijuan Walker.

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    • PXF says:

      I am somewhat persuaded by Eno’s point that in real baseball you might have lots of young players go to arbitration, but I think you also want to reward managers who are smart and stock up on lots of good contracts. Every team will have one lucky value player — but some teams will have one and others will have ten. I think the new rule penalizes the manager who made multiple shrewd moves.

      We’re not really mimicking MLB, if we were we’d also have the option of signing players to long-term contracts at fixed terms. As it stands, everyone is on year-to-year contracts.

      Note that there’s already a penalty on my hypothetical shred talent scout manager — having ten players at bargain prices is great in theory, but keeping those ten players means they all get a $2 raise ($20 team salary). Chances are I’ll have to drop some of those players anyway. If I concentrate my budget on a (say) three star players, my core players get modest raises ($6 team salary). Okay, I have to admit I’m not sure if this point argues against or for the new system.

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  10. andrewf says:

    Of course, your $10 Mike Trout who was increased to $40 this year will be increased to $70 next year, and then you’ll have to cut him. So that does suck.

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    • Daniel says:

      Sure but then you shouldn’t expect a perpetual reward for hitting on Mike Trout once. Where’s the fun in that?

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      • andrewf says:

        Sure, but when you get a superstar on the cheap, it’d be nice to be able to keep him for more than one year. I think there’s a bit of space between “one year” and “perpetual.”

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      • Daniel says:

        I don’t know. It’s fantasy baseball, not real life. Two years of good value seems enough to me.

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    • brian says:

      If EVERYONE jacked up Trout’s price the rest of your roster would remain in tact without raises, while other teams without the clear star would see many players have their value decrease. Everyone is citing Trout as the example, yet under the original system you’d just lose him regardless.

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  11. LuckyStrikes says:

    While we’re discussing these changes, it’s becoming clear that some owners like it, some don’t. Having the option to select which one works best for your league is great. However, not having a physical “poll” option within the league makes this a tougher effort in the off season. Any chance adding a “poll” feature is in the works to support this?

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  12. scott says:

    how do I get into an ottoneu league? Can I create my own?

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    • Chad Young says:

      ottoneu.fangraphs.com has sign up info. You can set up a private league (invite only) or a public league, or you can join a public league if any are currently open. At some point in the coming months, commissioners will start posting abandoned teams and that is a way to get into an existing league.

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  13. davisnc says:

    People keep bringing up Trout–a once-in-a-generation outlier–to argue for or against the new system. Yes, this system is incapable of adjusting in one offseason the value of someone who obliterated their previous value by that much. So in the rare, rare event that that happens, the owner gets rewarded for his early investment with one year of ludicrous value and one year of good value. By the third year, the market will have corrected itself. Even in this extreme example, it will take no more than 2 times through this process to get a superstar to market value, or close enough to it that the arb dollars are best allocated elsewhere. Seems pretty fair to me–and that’s, again, a once-in-a-generation example.

    The question that’s more important than Mike Trout hypotheticals is: how many players have out-performed their previous year’s salary by more than $35? The answer, of course, is “not many.” This system is great for 99% of cases, and even when Mike Trout breaks the system, is it really so bad that his owner gets one more year to reap the reward? That’s actually pretty realistic.

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    • schneidler says:

      “Even in this extreme example, it will take no more than 2 times through this process to get a superstar to market value…”

      My problem with the system is not that it takes too LONG to return players to their market value, but that it happens too quickly. I agree with “themiddle54″ above that this negates the moves of a shrewd owner too QUICKLY (and I also love his proposed rule that arbitration can only apply to players who are actually arb-eligible in real life!). I have RA Dickey at $1. Yes I got kind of lucky but I really did also think that was a really good price at the time. I think most teams have undervalued assets like this, and for me it’s one of the most fun parts of the game, the prospecting for “gold” so to speak. To see that value evaporate after 1 year is really disappointing.

      I get what the system is trying to do but maybe it would be better if each team had an amount of less than $25 to allot to other team’s players. Maybe like $15 or $20 with a single team max of $2.

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      • oPlaiD says:

        The flip side to this is that if Trout is getting all that money assigned to him, that guy’s other players are staying cheap.

        What if you have Trout and Machado/Darvish/whoever this year? Then sure the league can boost up Trout, but you’ll get to keep the other guy for nothing for cheap for a lot longer.

        So if you manage your team well there are still plenty of rewards.

        Vote -1 Vote +1

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    -5 Vote -1 Vote +1

  15. This new rule is the greatest invention since ottoneu, which is way better than sliced bread.

    Vote -1 Vote +1

  16. strewth78 says:

    I love this concept… Really was not a fan of the old way.
    However, I would like it even ore if leagues were able to set their own limit to how much can be allocated to a single player.
    This way, in the extreme case of a team with Trout and no other player worthy of allocating, at least that team gets to keep him a little longer than 2 years.
    The league could set a player limit of say 30 fr leagues that like the idea of Trout being available every 2 years, whilst those leagues that like to be able to keep a Trout for 4/5 years, can set the limit to say 10.

    Vote -1 Vote +1

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